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Mike Richman

Supply Chain

Managing Supply Chain Risk in a Complex World

When viewed as parts, processes, and procedures, risk is ultimately manageable

Published: Friday, July 26, 2013 - 16:24

It’s been said that supply chain risk today is riskier than ever before. Why? Well, there are several reasons.

Supply chains are lengthier. Almost everyone manufacturing anything today must deal with a wild proliferation of suppliers, many of which reside in nations scattered across the globe. Of course, original equipment manufacturers remain ultimately responsible for the all the components of the product that reach the customer. More suppliers increases the potential for more supply interruptions for any reason, be it force of God, human error, or anything else.

Lengthy and sometimes convoluted supply chains are an effect of increasingly complex products, especially in high-tech sectors such as electronics or medical devices. More components mean more chances for something to go wrong, and particularly in FDA-regulated environments, risk increases accordingly.

Litigation for corporate mistakes and wrongdoing of all kinds is on the upswing. According to a report from earlier this year, 2013 is shaping up as a big year in the courts, with regulatory investigative requests in particular sharply on the rise.

If you are responsible for your organization’s quality and compliance, test and measurement, or even research and development, you are living under the shadow of risk, whether you know it or not. Today’s multinational organizations typically take an enterprisewide approach to risk, and everyone, in every corner of the company, must understand how he and she may be affected.

So what to do? First things first: document everything. If you don’t have processes in place to capture, date, and track the interactions that you are having with stakeholders, start now. That includes not only designs, drawings, reports, and analyses, but also phone calls, emails, meeting minutes, and anything and everything else you can think of. When in doubt, document.

Have meetings with your managers to get a better handle on your organization’s understanding of risk, and then communicate what you’ve learned to your team. If you haven’t done so already, sit down and perform an honest-to-goodness strengths, weaknesses, opportunities, and threats (SWOT) analysis. Digging into issues will give you insight into how you and your organization might manage in various circumstances. Try to foresee the unforeseen to the best of your ability. Ask as many “What if?” questions as you possibly can. Although you’ll never cover every potentially threatening scenario, you will be able to build up your “risk muscles.” Remember, the idea isn’t necessarily to understand how you would handle every single detail of a specific emergency; it is more to gain an understanding of the processes that would be implemented to contain, correct, and prevent the problem.

Even more important, of course, is to understand what you can do right now to shore up any leaky systems that might be putting you, your company, or your customers at risk. The best way to handle a disaster is to stop it before it occurs. No one can control hurricanes, earthquakes, and tornadoes, but there are plenty of human-derived problems that we can and should be worried about, from impurities in food and drugs to hazardous substances in toys, to faulty or counterfeit parts in defense systems.

Your partners (and they are your partners) at organizations like the FDA and ISO should be helping you audit your systems and ensure that things are ship-shape. There are tools galore to help you track your processes, not to mention all those documents I mentioned earlier.

Risk is a buzzword today, and it is generating more than its fair share of questions and concern; we see it mentioned practically every day in Quality Digest Daily. But risk has been with us all along. Only now is it beginning to be recognized as a discrete discipline within the broader framework of performance excellence. Like anything else, risk is only intimidating when looked at as a huge, monolithic, and potentially threatening “thing.” Broken down into component parts, processes, and procedures, risk is ultimately manageable, and in fact when approached in this way, an understanding of risk can bring great benefit to your organization.

What are your thoughts about supply chain risk? What are you doing to start conversations at your organization about risk and its place within your journey to excellence?


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Mike Richman’s picture

Mike Richman


Risk as Opportunity

And Suppliers not viewed by their above tier Customers as enslaved cotton pickers. Economy history tells us much about suppliers that out-grew their giant customers, it's a "simple" question of risk-taking, therefore. Certainly, risk is more and more spoken of, much less thought of: it seems infants and animals and plants are more vividly aware of it - though they don't uselessly spend time and money to give it a definition - than adult humans. Risk has obviously not only to do with safety and health: it has also to do with an economical, industrial, social environment that we've taken for all too granted, too long. Maybe that cotton will have to be picked by its planters, in the next years. Thank you.