Four lessons from riskmethods SCRM Summit 2022 Boston

THE RESILIENT ENTERPRISE | THE RISKMETHODS BLOG

Our summits in Boston and Munich provided a unique opportunity to understand how we could “Share and Solve” challenges related to supplier disruption through supply chain risk management (SCRM). Our Boston blog summarizes four lessons that stood out.

It had been three years since our last summit in Hamburg, Germany. As we all know, supply chain disruption has been on everyone’s mind. And given the number of challenges we’ve all experienced related to supplier disruption, both personally and professionally, our summits in Boston and Munich provided a unique opportunity to understand how we could “Share and Solve” the challenges through supply chain risk management (SCRM). How could we summarize what we have all experienced in the past three years?  

Here are four lessons that stood out during the Boston summit: 

1. Supply chain risk management has become a key focus of the executive level

Looking at the news releases over the recent past, the number of topics that relate to supply chain disruptions and their impact has been palpable. Our joint study with Supply Chain Dive earlier this year revealed that 47% of organizations lost 4% to 6% of revenue over the past three years because of supply chain disruptions. Almost a quarter said it was as much as 10%!  

A few years ago, the general perception was that supply chains just functioned. During our summit, one of our key panelists said, “Due to recent disruptions, those of us in risk business now have a seat at the table where we did not have one before. While we are slowly moving this needle. This step alone is huge.”  

As the goal of managing supply chain risk and security continues to be a major issue into 2023, supply chain risk management is now being centralized in most organizations. To reflect this, budgets for factoring in supply chain risk management are increasing in 2022 and beyond. In fact, nearly two out of three supply chain executives (65%) said budgets for supply chain risk management have increased in 2022 and will continue to increase into 2023. 

Voices from risk experts and thought leaders

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As supply chain disruptions have become the norm, our businesses have had to react. We now have a chief supply chain officer, on the top leadership team in the company. Our supply chain team presents to the C-level teams every six weeks.
Lesson One: Supply chain risk management has become a key focus of the executive level
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Before the pandemic, we were disruption responders. But now we are looking to reduce the potential of disruption by becoming disruption shapers.
Lesson Two: Digital transformation is real and demands the adoption of new SCRM processes
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One dollar of spend focused on digital activities that promotes business continuity and resilience generates three to five dollars of cost avoidance, price reduction, and increased revenue. Establishing a strong market position and reputation is thus recognized by customers choosing to get ahead of their competition.
Lesson Three: Supply chain resilience and sustainability create real competitive advantage
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What we’ve learned is building knowledge on Tier 2 and Tier 3 supply chains makes our customers better informed of potential supply chain risks. This helps us measure and improve. We are getting a better idea of who else could be affected, and what to do with supply chain alerts.
Lesson Four: Buyer-supplier relationships have been forever altered
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This recognition is a testament to how well we’ve started this initiative, our strategy to date, and I can only see it getting bigger and better as we move forward.
Dawn White, Lead Sourcing Initiatives Specialist, Wabtec; riskmethods SCRM Award winner

2. Digital transformation is real and demands the adoption of new SCRM processes

A few years ago, when people first heard about digital transformation, many thought it sounded like the newest consulting term. Organizations that embarked on using emerging technologies such as artificial intelligence (AI) often found themselves entrenched in expensive, often siloed, digital transformation projects that were seen as too aggressive or just as pilots.  

But when the pandemic threatened supply chains, most professionals were caught unprepared. As part of a conversation during our opening panel, it was noted that COVID-19 became the litmus test for understanding the success of digital transformation efforts.

And supply chain studies based on challenges experienced since the pandemic demonstrate that executive leadership teams are even more motivated to implement supply chain risk mitigation strategies that will alleviate the impacts of current and future global crises.  

Therefore, amid growing uncertainty and fear of prolonged disruption, many conversations at the summit focused on how businesses today must continue to find ways to digitize and optimize their supply chains. Not only can a digital supply chain enhance visibility and transparency, but it can also anticipate risks and mitigate their impact by reducing the “surface area” of supply chains with better insights through digital tools.

3. Supply chain resilience and sustainability create real competitive advantage

As organizations look to transform their people, process, and technologies, enterprises that could digitally map and transform their supply chains (lesson 2) have an advantage (lesson 2). So, in many ways, Lesson 3 was proven with Lesson 2. 

Such organizations outpaced competitors who were not agile enough to see a threat to a key supplier or an emerging event or the coming domino effect. For instance, during the pandemic, a key factor was the ability to keep global production running, by securing deliveries without any major delays that could jeopardize the business.

This includes improving risk monitoring, linking emerging ESG requirements around business ethics and decarbonization, while leveraging new and emerging technologies for better planning, prediction, and prevention.

Applying advanced supply chain risk management processes supported by digital technologies, has in some cases enabled the monitoring of global situations within seconds. Organizations can make immediate decisions during emergency management meetings. Moreover, the ability to manage risk and shift attention from supply disruption to capturing value from market opportunities provides a key competitive advantage to our customers. 

A sound SCRM solution and approach supports reducing the negative economic impact of disruption by protecting reputation and fulfilling regulatory obligations, but also enables the ability to meet changing demand around sustainability. 

In this regard, another panelist noted that when you are developing a strategy, resilience and sustainability go hand in hand. So, when emergencies come up, such as a recent urgent need to find vehicles, management was already planning around sustainability. The enterprise was able to replace gas vehicles with hybrids thanks to digital planning that was already in place. 

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AT EACH SUMMIT, WE HONORED OUTSTANDING PERFORMANCE IN IMPLEMENTING SCRM PROGRAMS. READ ABOUT OUR AWARD-WINNERS!  

Boston: riskmethods Announces 2022 Supply Chain Risk Management Programs of the Year Award Winners | riskmethods  

Munich: riskmethods Announces 2022 Supply Chain Risk Management Programs of the Year Award Winners | riskmethods 

4. Buyer-supplier relationships have been forever altered

The COVID-19 crisis has shown that the global supply chains are not as resilient as expected, with a main contributing factor being a lack of visibility into the supply chain's lower tiers.  

A report from the Economist states that after the Japanese tsunami in 2011, a global semiconductor giant tried to map its third- and fourth-tier vendors. A team of 100 executives needed more than a year to work out which firms were in its extended supplier networks.

A decade later, supply chain mapping of supply tiers has come a long way. Mapping information across supply chain actors to create a global map of their supply networks has been advanced with improved analytics and emerging technologies in AI.​ 

While the willingness to share data in the supply chain is often low, as companies consider their data as proprietary, many of our clients have started the process of improving collaboration with their most critical suppliers. Since this is not entirely automated,​ it requires that partners work together on a common platform. 

Collaborative mapping​ builds on visibility and transparency, and is based on business relationships that will invariably change. Yet collaboration proves that it can mitigate the risk of potential events, and empowers partners to manage risk events more effectively

And what were the key takeaways at our Summit in Munich?

Watch videos of riskmethods SCRM Summit 2022 in Munich

Thank you for your amazing testimonials of how we share ideas to solve supply chain challenges!
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