New England Supply Chain Conference & Exhibition

APICS - The Association for Operations Management North Shore Chapter 20 and Boston Chapter 10    --   The Council of Supply Chain Management Professionals (CSCMP) New England Roundtable    --    The Northeast Supply Management Group, A Special Interest Group of ISM®

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New England Supply Chain Conference & Exhibition

2011 New England Supply Chain Conference and Exhibition - James V. Kelly Presentation

Four Steps to Improved Supplier Risk Management
James V. Kelly, C.P.M., CEO of JVKellyGroup, Inc.

Supplier risk management is defined as the process of predicting and preparing for the probability of variables which may adversely or favorably affect the supply chain. Supplier risk management is not a new concept; however, the type of risk that can affect the supply chain and the way in which these risks are managed and mitigated has evolved significantly. The need for proactive and predictive management strategies is ever present in business today.

If you’re implementing a supplier risk management process, examine the following four steps to ensure that you cover every aspect of risk through the entire supplier lifecycle:
    1. Certify
        a. Understand the marketplace and the suppliers’ health BEFORE you sign a contract
        b. Collect pertinent information from new and existing suppliers in one centralized system
        c. Validate your suppliers’ information
        d. Make the process repeatable so information is always up to date
    2. Monitor
        a. Identify the weaknesses in your supply chain; both INTERNAL and EXTERNAL
        b. Monitor the right metrics
            i. “If you are not measuring it, you’re not controlling it.”
            ii. “If you are measuring the wrong thing, you’re wasting your time.”
            iii. “If the decision-maker doesn’t have the information on their desktop, you’re wasting your time.”
    3. Analyze
        a. Visibility leads to better, more informed decisions
        b. Combine third party intelligence with your own supplier performance and criticality data for impact analysis
        c. Evaluate, trend and report on quality and performance metrics
        d. Conduct an in-depth analysis and view your supplier spend data by risk, SIC, diversity and more
    4. Mitigate
        a. Develop Disaster Recovery and Continuity of Business Plans specific to your supply chain
        b. Create and document alternative sourcing strategies
        c. Continually evaluate suppliers via targeted questionnaires that enable you to collect more information such as inventory, financial results, technology and awards and certifications

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