Supply chain risk management
Supply chain risk management (SCRM) is "the implementation of strategies to manage both everyday and exceptional risks along the supply chain based on continuous risk assessment with the objective of reducing vulnerability and ensuring continuity".
Supply chain exposures
SCRM attempts to reduce supply chain vulnerability via a coordinated holistic approach, involving all supply chain stakeholders, which identifies and analyses the risk of failure points within the supply chain. Mitigation plans to manage these risks can involve logistics, finance and risk management disciplines; the ultimate goal being to ensure supply chain continuity in the event of a scenario which otherwise have interrupted normal business and thereby profitability.
Sometimes, it's possible for supply chain logistics techniques such as supply chain optimization to prejudice contingency planning which would otherwise reduce the overall risk level for that particular supply chain.
Some options to engineer an acceptable risk level include:
- Managing stock
- Considering alternative sourcing arrangements
- Business interruption / contingency insurance
- cf. Andreas Wieland, Carl Marcus Wallenburg (2011): Supply-Chain-Management in stürmischen Zeiten. Berlin.
- Wieland, A., Wallenburg, C.M., 2012. Dealing with supply chain risks: Linking risk management practices and strategies to performance. International Journal of Physical Distribution & Logistics Management, 42(10).
- World Economic Forum Supply Chain and Transport Risk Initiative
- Jan Husdal's private webpage about supply chain risk research, including dozens of literature reviews
- SCRM Blog, Blog on research in supply chain risk management
- Supply Chain Risk Management Software
- Airmic review of the supply chain insurance market (December 2012)