Accenture Advises 3PLs to Watch Their Backs

The majority of shippers see supply chain risk management as a vital element on the way to optimizing their relationships with third-party logistics providers (3PLs). According to a new study by Accenture, however, only seven percent of shippers are generating returns of over 100 percent on their supply chain risk management investments.

Indeed, the study suggests that 3PLs hoping to optimize their services for shippers should develop distinct approaches toward risk mitigation.

Seventy-six percent of companies participating in the Accenture Global Operations Megatrends Study—Focus on Risk Management describe supply chain risk management as “important” or “very important.” Of the more than 1,000 companies represented across 10 industries, 25 percent plan increased investments of at least 20 percent in supply chain risk management in the next two years.

The analysis reveals that while nearly all of the companies represented in the study receive a return on their investment (ROI) in risk management, the leaders—those seven percent that generated returns exceeding 100 percent—had three practices in common that distinguished them from others: 

1) Make risk management a priority: The leaders make risk management a strategic imperative and recognize the importance of capabilities that help them gain greater visibility and predictability across their supply chains.
2) Centralize their responsibility for risk management: They have a central risk management function led by an executive in the C-suite or a vice president who oversees all of their risk management activities.
3) Invest aggressively in risk management with a specific focus on end-to-end supply chain visibility and analytics. Leaders were nearly three times as likely to say they planned to boost their investment in risk management by 20 percent or more in the next two years.

“Although unforeseen events or natural disasters lead some to give up on risk management, most risks can be managed to not only minimize the downside, but also to gain a competitive advantage as a result of being prepared to respond to circumstances when they arise,” says Mark Pearson, senior managing director of Accenture Strategy Operations. “Scenario planning and robust analytics can play a key role in developing effective risk mitigation strategies.”

SC
MR