10 april 2023

Mastering Supply Risk“Everybody needs to do it”

Drs. M. Nieuwboer CSCP

10 april 2023

Everybody needs to use supply risk management!

• On average, news of a supply risk is associated with a nearly 11% decrease in stock price. The stock market reaction is negative for 75% of the announcements.

• 79% of all companies wants to have SC risk management.

• 96% of the companies in process industries is using some form of supply risk management.

• 84% of supply managers sees benefits is thorough risk-understanding

• Supplier failure is seen as the No 1. threat.

• Supply risks will increase in a globalizing world

Are you using supply chain risk?

And they have learned it the hard way:

• Daimler-Chrysler, Volvo, Jaguar, Toyota

• Cisco, Ericson

• Nike

• Shell, Arkema, Huntsman

10 april 2023

An integrated approach to supply chain risk management

Risk management

is a continuous

process

Risk management

is a cross-functional

activity

December 2008 4

Integrate your risks strategies with your long term corporate strategies.

What do you want to do and which

risks do you want to know?

1. Define and revise your risk strategy

Result: Formalized and aligned risk management strategy

December 2008 5

-High level document which describes companies view on risk.

-Rules and procedures about risk management.

-Roles and responsibilities overview, agreed by top management.

-Impact analysis refined risk strategy.

Deliverables: Define and revise your risk strategy

Result: Formalized and aligned risk management strategy

December 2008 6

•Set criteria for categorizing products and processes in portfolio.

•Collect high level data for risk score-cards (f.i. RPI).

•Analyze product and process portfolio.

•Estimate probability and impact.

2. Quick Scan

Result: Each product group and process is categorized

December 2008 7

•Prioritize product groups

•Establish supplier dependency for selected groups (bottom / top line impact)

•Analyze market dynamics

•Assessment of supplier reliability

2.1 Product and process profiling

Result: A dashboard & analysis for each product group and process

December 2008 8

• Deep analysis of the value chain for selected processes and products

• Value chain mapping for thorough risk understanding

• Complete risk matrix

2.2 Value chain analysis

Result: Deep understanding of value chain and sources of risk

December 2008 9

•Supply risk overview and prioritization

•Detailed probability/impact matrix

•Financial impact calculation

•Analyzed product and process portfolio.

•Calculation of probability and impact.

Deliverables

Result: Each product group and process is categorized

December 2008 10

Deliverables examples

manufacturing1st tiersuppliers

distribution customers

Prof USA

Retail China

Retail A/P

Retail Latam

Retail USA

Supply chain characteristics: physical map

Retail W-EU

OEM W-EU

EuropeRDC

EuropeNSO

USARDC

A/PRDC

NAFTANSO

2nd tiersuppliers

Europe

NorthAmerica

Asia/Pacific

Latam

OPU

PCB

Housing

Housing

PCB

LoaderAssembly

China

AssemblyHasselt

IC

SOURCE MAKE DELIVER

SOURCE MAKE DELIVER

SOURCE MAKE DELIVER

SOURCE MAKE DELIVER

SOURCE MAKE DELIVER

SOURCE MAKE DELIVER

SOURCE MAKE DELIVER

DELIVER

DELIVER

MAKE DELIVER

MAKE DELIVER

DELIVER

DELIVER DELIVER

Exam

ple

probability

Impact

December 2008 11

• Prepare treatment plan for selected risks.

• Visualize benefits en costs treatment

• Sign-off by senior management

• Implement treatment

3. Supply risk treatment

Result: Reduction and acceptation of risks.

December 2008 12

• Review risk management approaches

• Check compliance with new risk management strategies

• If required fine-tune methodology

4. Monitor

Result: Alignment of treatment, actual situation and corporate strategy

December 2008 13

Drs. Michael Nieuwboer CSCP is as a senior supply chain consultant at Coppa , specialized in (global) sourcing, risk management and logistics. Michael worked on projects in the EU, USA and Asia.

Michael has gained large expertise in the Hightech and process industry

He has had his education mainly at the Cranfield University and Radboud University. He is also a columnist for supply chain online and has won an external achievement award.

In his spare time, he likes to work with old Porsches or play football at his club NEC.

About the author

For more information: Michael.nieuwboer@coppa.nl or 0031-(0)628902893