Risk management in logistics is key if you don't want a minor disruption to cripple the entire logistics chain. Yet the majority of supply chain managers today do too little to manage any risks. This is according to the study Managing Risk in the Global Supply Chain. For this, 150 supply chain managers of US companies were surveyed, 80 per cent of whom do business globally.
No risk managers in the supply chain
Respondents indicate that they are aware of the risks, but also say that they do not develop strategies to address them. It is striking that none of the respondents seek external advice to identify supply chain risks. Companies often do have risk managers, but these are usually based in the legal or finance departments. Supply chain risks are almost always left out of the risk management strategy.
Risks in logistics
Managing risks is of paramount importance in the logistics sector. After all, even a minor disruption can throw the entire logistics chain into disarray. In the report ‘Risk Management and Logistics’, Professor Walther Ploos van Amstel, amongst others, wrote that it is important for the logistics chain to be resilient: ensure that the damage caused by disruptions is kept to a minimum and that operations quickly return to the desired state.
Managing risks with a 5-step plan
How do you go about it? TNO has developed the following 5-step plan for this purpose:
1- Ensure awareness. Prepare and bring focus within the project. Set up a risk team for this purpose.
2- Map strategy and processes. You would think this is known to everyone, but it may be that the top of the organisation is adjusting the strategy. Since you are concerned with the organisation's resilience, it is important that you know the latest.
3- Step three involves performing an FMEA, a failure mode and effect analysis. With this method, the consequences of a disruption can be mapped out in advance. Using the FMEA, you brainstorm on how to manage these types of risk.
4- Decide what the resilience strategy is going to be. This could include building in more abundance or more flexibility (being able to switch between suppliers).
5- The final step involves making a plan and coordinating with customers and suppliers.
According to TNO, it is important to repeat these 5 steps regularly, as the organisation is constantly changing, so are the risks.
Editorial LogistiekProfs
