Risk Mitigation Will Continue to Rank High With Supply Chain Managers

As supply chain organizations rediscover the need for differentiation, they must also determined what the supply chain “stands for.”

For Simon Ellis, who currently leads the supply chain strategies practice area at IDC Manufacturing Insights, that means one of two things, cost or service.

“Companies are constantly defining the relationships with their customers,” he said.

IDC Manufacturing Insights’ Supply Chain Top 10 predictions 2012 provides a general overview of “The Role of Supply Chains in the Intelligent Economy.”

As noted here last week, the value of “differentiation” was a major discovery in the research. Another, was risk mitigation.

“This matures as a focus are for supply chain segmentation,” said Ellis. “But first, one must find where a company has the most exposure to risk.”

He said that companies often over react when a problem is revealed, and that can exacerbate the situation.

“The real solution comes when supply chain managers identify and mitigate a specific risk, rather than trying to address everything all at once. A ‘blanket’ response can make things worse.”

Ellis, who collaborated with IDC analyst Kimberly Knicle on the study, told SCMR that as manufacturers adopt S&OP, they can integrate forecasting to become more responsive.

“And this, in a way, is related to risk mitigation,” he said. “S&OP is a hot topic these days because it competes with the old ‘best-of-breed’ solutions that don’t seem as responsive. Manufacturers now want a more agile system that is rapid and repeatable.”

The study’s seventh prediction is that manufacturers will continue to look at extended lead-times as a source of cost, thereby rethinking sourcing approaches when necessary.

“Long lead-times have a significant cost impact,” said Ellis, “and this is reflected in how supply chains are segmented. We see a concentration of new business moving to Mexico, for example, and away from some parts of Asia.”

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