Nov 7, 2006
Understanding supply chain risk: A McKinsey Global Survey (Free registration required) is a new article put out by McKinsey & Co in the McKinsey Quarterly online magazine. They surveyed executives at publicly and privately held businesses across a range of industries in September 2006.
The key findings:
Nearly two out of three executives say they face increasing risks to their ability to supply their customers with goods and services cost effectively
The executives identify a wide variety of risks; topping the list is the availability of well-trained labor.
The executives most likely to say that their company’s level of risk has risen are those in retailing, manufacturing, and energy; those in the energy industry are by far the most likely to say their risk has increased significantly.
The executives rank labor, regulation, and suppliers as the top three supply chain risks on which they focused during their most recent round of planning.
Executives at the smallest companies (those with annual revenues under $500 million and with fewer global resources) are also particularly likely to say that labor is a problem.
The degree of disconnection between risk and its mitigation may be one reason that executives rate “fairly poor” their company’s ability to mitigate their key supply chain risks, 39 percent say they are at best slightly capable of doing so. Furthermore, 41 percent of executives say that their company does not devote enough time or resources to mitigating risk-nearly five times the number who say that too much time and too many resources are allocated.
More than half of all respondents say their company either undertakes no formal risk assessment or conducts only a qualitative assessment.
Only 18 percent of respondents believe that the Sarbanes-Oxley reporting requirements3 help them reduce their supply chain risks.
I’ll just plug my fellow blogger riskape on this topic – Riskape. I’m sure that managing supply chain risk in a systematic manner is high up there in the area of real needs for supply chain professionals and I’m sure that I’ll be devoting more time to that as well.