Risk

This section will help you assess:

  • • The degree to which your SC has implemented updated risk assessment and management processes
  • • The relative maturity of your SC’s use of data analytics to better manage risk
  • • The degree to which your SC is managing risk in an integrated and predictive manner
  • • How well you believe your SC organization manages and minimizes cyber security and confidential data breaches

The assessment questions will help you develop a better understanding of how your SC function manages, assesses, and mitigates risks due to the shift to digital. DSC risk management practices should be updated to better manage business performance and compliance risks. You can gauge if technology and data utilization is being used to shift from a reactive to a preventative control of risks.

A SC that demonstrates a high level of performance in its management of digital risk will drive improved revenue generation and customer satisfaction while more effectively managing operating costs and working capital investments.

1. The following best describes how we manage SC risks.

a. We are primarily reactive and address problems in our SC as they arise.

b. We have established programs that address the risks that we most commonly face and we our starting to utilize data and technology to improve efficiency.

c. We use data analytics to seek patterns in SC risks and related negative impacts and adjust our risk management program to reduce or prevent occurrence.

2. We have implemented a proactive risk management program for the following types of SC performance risks, (check all that apply)

a. On-time delivery

b. In-full delivery

c. Quality of goods and services received

d. Transportation costs

e. Transportation network failures

f. Product or service cost overruns

g. SC disruption

h. Supplier dependency

3. We have implemented a pro-active risk management program for the following types of SC compliance risks, (check all that apply)

a. Regulatory compliance

b. Cybersecurity

c. Data privacy

d. Labor compliance

e. Environmental compliance

f. Counterfeit goods/materials

g. Product integrity and security

h. Loss of trade secrets/confidential information

i. Corruption

4. The following best describes how we utilize our risk management program to gain a competitive advantage in the marketplace.

a. Our risk management program is focused on mitigating our most common SC risks.

b. We have identified specific risk areas where we can excel and are starting to implement programs to do so.

c. We are recognized for having active risk management programs that make us a top-tier performer in the selected risk areas.

5. The following best describes how we monitor the evolving risk landscape and its impact on our SC continuity.

a. We informally collect information through our existing relationships and relevant publicly available sources.

b. We are starting to use analytics to gather and analyze data to monitor the risk areas that are most important to our business.

c. Our monitoring program uses predictive analytics to gather and analyze structured and unstructured data to generate alerts based on the risk tolerance we have established.

6. We currently do the following to minimize cybersecurity risk and the related loss of confidential information inside our organization. (check all that apply)

a. Provide employees with policies

b. Provide employees with procedures

c. Train employees

d. Classify the value of information

e. Clearly mark information that is confidential or a trade secret

f. Maintain restrictive electronic and physical access controls

g. Monitoring of access, use and transfer of critical confidential information

h. Regular evaluation, benchmarking, and improvement of internal cybersecurity and confidential information protection program

7. We currently do the following to minimize cybersecurity risk and the related loss of confidential information with companies in our SC. (check all that apply)

a. Provide SC partners with policies

b. Provide SC partners with procedures

c. Train SC partners

d. Classify the value of information shared with SC partners

e. Clearly mark shared information that is confidential or a trade secret

f. Require that they maintain restrictive electronic and physical access controls

g. Monitoring their use and transfer of critical confidential information

h. Regular evaluation, benchmarking, and improvement of key SC partner cybersecurity and confidential information protection program

Outside In

One of the most fundamental shifts needed to transform to a DSC is reorienting from an internal focus to a customer focus. To do this effectively means engaging your customers and your suppliers in assessing your SC performance. It also means broad internal engagement. We recommend distributing the Transformation Maturity Assessment to all your SC staff, as well as selected customer facing sales and marketing, IT, and finance staff. In addition, we suggest asking at least five customers and five suppliers the questions below. Ideally, responses would be confidentially collected by a third party.

1. How well does our company’s SC anticipate and match demand? (Select One)

a. One of the very best (4 Points)

b. Better than most (3 Points)

c. About average (2 Points)

d. Worse than most (1 Point)

2. How well does our SC staff collaborate with your company for our mutual benefit? (Select One)

a. One of the very best (4 Point)

b. Better than most (3 Points)

c. About average (2 Points)

d. Worse than most (1 Point)

3. How would you assess the state of our technology and its capabilities? (Select One)

a. One of the very best (4 Point)

b. Better than most (3 Points)

c. About average (2 Points)

d. Worse than most (1 Point)

4. How well do you think we manage business performance and compliance risks? (Select One)

a. One of the very best (4 Point)

b. Better than most (3 Points)

c. About average (2 Points)

d. Worse than most (1 Point)

DSC Transformation Summary Maturity Scale

This scale is applicable to manufacturing and service industries. It seeks to measure the maturity of the transformation and to provide insight into how an organization can prioritize areas for improvement that will accelerate the transformation.

Execution will differ depending on whether your business is historically considered a service business or a product business. Ultimately, we believe that all companies do have DSC and will need to embrace a platform business model to some extent.

1

2

3

Demand

We have not started to integrate demand management or stimulation into our SC.

Performance metrics specifically include demand stimulation, demand shaping, and demand management and we have started implementation.

Our SC program is aligned with the Customer-centric models. Our demand sensing and stimulation program enables us to generate additional revenue through improved demand visibility and the ability to satisfy the demand. We have a program to review and improve our performance against DSC metrics and benchmarks.

Talent

Our staffing, job performance metrics, and leadership development plans do not consider DSC transformation.

DSC and collaboration are integrated in our staffing, job performance metrics, and leadership development plans. We have started

Implementation.

Senior leadership shows clear commitment to the principles of DSC and appropriate performance metrics are fully integrated into how we hire, develop, and compensate people. The effectiveness of cross-functional collaboration and collaboration with value-chain partners is measured. SC leadership is

1

2

3

heavily involved in corporate strategy and has appropriate decision-making authority.

Technology

Our technology implementation plans are not yet specifically linked to our DSC strategy.

DSC and relevant use of platform business are central to our technology strategy and we have started implementation.

We strategically utilize digital technology to improve SC performance. We continually evaluate application of new technologies and data sources and integrate as appropriate. We utilize data and analytics to effectively understand past performance and predict future demand and risks.

Risk

We have not started to specifically analyze risk mitigation opportunities and new risks of the DSC.

Our risk assessment includes an evaluation of new DSC risks as well as how DSC can help manage SC risks. We have started

implementation of programs to improve DSC risk management internally and with the

companies in our value chain.

We use data to reduce business performance and compliance risk through predictive analytics, with a specific focus on cybersecurity and protection of confidential information. We have a risk management strategy that segments risks into those we manage and those we seek to excel at to gain a competitive advantage.

References

Digital Supply Chain Institute (DSCI) (2017). Digital Supply Chain Transformation Guide: Essential Metrics [White paper]. Center for Global Enterprise. https://www.dscinstitute.org/assets/documents/Digital-Supply- Chain-Transformation-Guide-Essential-Metrics_DSCI_Oct2.pdf.

Moss, C., & Kurz, D. (2020). Digital Supply Chain Transformation Maturity AssessmentVl. [Unpublished manuscript].

 
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