Today’s global supply chains are delivering products and
services to market better, faster, and cheaper than ever before.
Yet advances such as just in time manufacturing, single
sourcing, and off-shoring in low-cost emerging or developing
economies also have increased volatility risk and the impacts
of a disruptive event. Organizations are beginning to feel the
pain of systemic failure caused by a lean, fast moving, and
constantly evolving flow of global trade. The consequences of
a negative event are gaining C-suite and board-level attention
given global economic uncertainty and the interdependent
nature of business relationships, which have exposed
significant gaps in business resiliency. Governments, NGOs
(non-government organizations), and regulators also are
pressuring organizations to better understand and manage
the risk to their supply chains and their customers.
Marsh Risk Consulting’s (MRC) global Supply Chain Risk
Management (SCRM) Practice provides unique, proprietary
solutions that can help companies address this challenge
through the creation of supplier risk programs, optimization
of inventory and network design for resiliency, or assessment
and quantification of risk in support of supply chain risk
management strategies and objectives.
Service Highlights
Supply chain risks include everything from natural hazards, terrorism,
pandemics, and cyber-attacks to demand variability and supply or supplier
failures. Fierce competition and tight margins can further magnify the
impact of a supply chain failure as any delay in trade recovery can allow a
competitor to grab market share. Today’s economic pressures exacerbate
supply chain-related risks particularly in relation to supplier viability given tightening credit markets, downward pressure on costs,
and shrinking consumer markets.
MRC’s SCRM Practice offers five primary solutions
tailored to each organization’s unique supply chain risk
management needs. These include:
- Optimizing the supply chain for resiliency
- Diagnosing the supply chain to identify and prioritize
risk, including for risk transfer purposes
- Designing supplier risk programs, including supplier
risk viability
- Conducting supplier risk management “jumpstart”
workshops
- Developing supply chain risk surveillance systems
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Our supply chain risk management solutions are
designed to help your organization ensure that:
- the supplier relationships you count on will still be
there when you need them;
- your supply chain risk management strategies are
risk intelligent, agile, and resilient; and
- you can maximize your risk management
investments in viable and efficient practices.
Resiliency Optimization
Competitive organizations—through intensive “leaning”
of their supply chains—remove excess inventory or
capacity, push non-core services to lower cost providers,
and consolidate third party providers or suppliers. Such
strategies can create greater sourcing risk, confronting
organizations with the question “how do we maximize
resiliency while maximizing efficiency?”
MRC’s resiliency optimization solutions support the
business decision making process by modeling and
analyzing return on risk investments for a given supply
chain strategy such as one versus two distribution or
manufacturing centers or one, few, or many alternate
suppliers for a specific component. We also model RROI
(resiliency return on investment) on fill rates and the
distribution of inventory across the network and safety
stock levels. Our analysis can show decision makers
whether the benefit achieved through inventory
diversification far exceeds the carrying costs of an
additional distribution center, for example. Supply chain
resiliency business analytics not only serves a classical
role of achieving the lowest cost, but shows the other
side of the equation in simultaneously
optimizing resiliency.
Supply Chain Risk Diagnostic
MRC provides a Supply Chain Risk Diagnostic to
enable your organization to make better, risk-informed
decisions regarding the suppliers, supplies, and services
that comprise your product family supply chain and
drive your business in general. The Supply Chain Risk
Diagnostic evaluates an organization’s supply chain
exposures throughout its extended supply chain,
identifies interdependency risk and single points of
failure, and then develops a customized risk mitigation
and transfer approach based on the organization’s
particular requirements.
This is accomplished through:
- A value (product(s), product families, services)
segmentation exercise to help you select the key
product or service for supply chain risk identification
- A detailed map of the suppliers, supplies,
distributors, and services that comprise the critical
resources of your supply chain
- Identification of single points of failure, triggers,
and current mitigation strategies with a financial
quantification of the impact of disruptions to
suppliers, supplies, and services
- Prioritization of supply chain risks so that mitigation
and transfer options can be efficiently allocated
The Supply Chain Risk Diagnostic is a prerequisite to
pursuing nonphysical damage business interruption
insurance coverage, which is designed to protect
companies whose operations rely on critical supplies
of goods or raw materials. Global Supply Secure
(Chartis), Supply Chain Insurance (Zurich), and similarly
innovative supply chain coverages are standalone
products that attempt to fill voids in traditional
property-focused coverage and should be viewed as
complementary to other insurance products and risk
mitigation strategies.
Supplier Risk Management Program
Our comprehensive approach blends external supplier
information, analytics, and risk management to identify,
analyze, and respond to supplier risks. Our supplier
review process includes: (1) a supplier self-assessment;
(2) a process for analyzing, filtering, and scoring supplier
responses; and (3) a reporting process, which will drive
risk mitigation activities. Organizations can then select
from a range of more than a dozen supplier risk
management solutions.
The range of benefits the Supplier Risk Management
Program provides includes:
- greater insight into suppliers’ risks that enable the
creation of defensive and offensive strategies;
- improved competitive position in the marketplace;
- automation and efficient processes to facilitate data
gathering and analysis;
- lower supplier risk and costs; and
- greater supplier resiliency that includes the ability to
detect and response more quickly to critical risks.
Supplier Risk Management “Jumpstart”
Workshops
For many organizations, the biggest obstacle is knowing
how to get their risk management programs started
or raising awareness of supply chain risk. Getting key
management, personnel, suppliers, and stakeholders
on the same page regarding the ins and outs of supply
chain risk management is crucial to the success of
a program. Our SCRM experts can work with your
company to develop customized workshops built
around your specific goals and needs. These workshops
are tailored by industry and can address the risks most
relevant to your organization in areas such as trade
finance, insurance, logistics, procurement,
and production.
Supply Chain Risk Surveillance
Supply Chain Risk Surveillance is designed to help
companies better understand potentially critical failure
points along the supply chain and help allocate risk
management capital, time, management attention,
and resources appropriately to achieve adaptive and
resilient supply chains. The service includes continuous
monitoring of geopolitical threats, allowing for better
response to sudden events and for staying abreast of
the changing business landscape by tracking risk profile
changes over time.
As part of this service we help you to:
- Identify and prioritize what is most critical to your
business such as a critical brand, product, or service
(value segmentation)
- Document the end-to-end supply chain to
illuminate dependencies, the sometimes hidden
interdependencies, and the skills generally required
to maintain operations (supply chain map)
- Identify the most significant potential points of
failure in your supply chain
- Dynamically monitor supply chain risk through a
global dashboard that matches critical resources
along the supply chain to an intelligent source
of data that alerts you to significant geopolitical
changes 24/7 and provides information on the threat,
severity, or geography of an event
Contact Us
To learn more about MRC’s supply chain resiliency
solutions, please contact us as follows:
- Phone: 866 9AtRisk (928-7475), toll-free in the United
States and Canada, or +1 212 345-9589 elsewhere
- E-mail: at.risk@marsh.com
- Web site: www.marshriskconsulting.com