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“Segment your suppliers to reduce risk” by Michael Giguere & Glen Goldbach
(Q3 2012 issue - CSCMP's Supply Chain Quarterly*)
Presentation by - Kumar Pallav
*Source: http://www.supplychainquarterly.com/topics/Global/20121001-segment-your-suppliers-to-reduce-risk/
Table of Contents
- Reasons of failure and risk related to the suppliers
- Approach: risk management & segment suppliers
- Categorization of suppliers & monitoring requirement
- Leading practices under the risk management- Q & A
April 7, 2023
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Reasons of failure and risk related to the suppliers
Risk related to the
suppliers
failure
Fewer revenues
Lost customer
Delays in delivery
Loss of good will
Disruption in supplies
Economic
Political
Natural Events
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Approach: risk management & segment suppliers
Solution
DisruptionSupply Chain
Risk Management
(SCRM)
Segment Suppliers
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Categorization of suppliers & monitoring requirement
• Most valuable and required to develop forward-looking signalsStrategic
• Ongoing performance monitoringTactical
• Receive supply at the promised priceTransactional
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Leading practices under the risk management
• Segmenting company’s supply base and basing governance agreements on a supplier's role
• Effective due diligence watch in place - identify leading risk indicators and risk-adjusted prices
• Conduct survey to identify specialized nature of the risks associated with each supply segment for a respective industry
• Risk analysis of potential weak links - suppliers is itself dependent on the same upstream supplier for certain aspects:
- Intellectual property - Outsourcing - Transportation
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Leading practices under the risk management
• Customized requirements and incorporating supplier-governance policies
• Implementing risk mitigation plan by differentiating critical suppliers