Insurer ACE Europe sponsored a recent quantitative research report titled Managing Supply-chain Risk for Reward.  The research was conducted in September and October of this year by the Economist Intelligence Unit. The report examines how companies are being affected by supply chain risk and how they are responding to such risk.  Survey respondents included 500 senior executives with responsibility for risk management in their organizations. About one-half of the respondents were “C-level” or board members and industry sectors were slightly weighted toward services (34%) vs. manufacturing-related (27%). Geographical coverage was fairly balanced to include Asia-Pacific, Western Europe and North America regions.

Similar to other survey findings throughout 2008 and 2009, the increasing occurrences of supply chain risk and disruption are evident across many industry sectors. This latest survey notes that respondents feel that threats within the supply chain are unlikely to go away in the near future. The listing of top threats tends to change, but the concerns remain.  The latest survey indicates that unpredictability of demand, unfavorable currency exchange-rate fluctuation, and fears over input price hikes are at the top of this year’s list.

What interested me more was the finding that more than half of respondents now feel that supply chain risk management merits high or very high priority at board level in their organization.  As one who has tracked these surveys since 2008, this reflects to me a considerable rise in senior management concern. 

Another interesting insight brought out in this global-oriented survey reflects on the regional differences related to risk.  While only one-third of the Asia-Pacific respondents indicated that they have been affected by supplier insolvency this past year, they also indicate that they are over-reliant on a smaller number of suppliers, and nearly one-half indicate they lack expertise to perform effective supply chain management.  This should be of some concern to Asia-firms and their associated supply chains.

Since this latest survey was so heavily weighted toward a senior management view, readers should anticipate much more management focus on supply chain risk during 2010.

Bob Ferrari

Last week I was invited to attend Oracle’s Supply Chain Executive Briefing.  This is an annual event that brings together various supply chain industry analysts to meet and dialogue with the senior management team involved with Oracle’s supply chain management applications. Through my persistence and prior relationships with the Oracle industry analyst community, I’ve managed to be the one and only independent supply chain blogger invited to be a participant in this event, for which I am honored.

The agenda included a review of 2009 for Oracle SCM, as well as some interesting dialogue related to the challenges and successes of selling supply chain management software in such a tough economy.

The most interesting agenda item, however, was a live panel where select Oracle SCM customers talked about their deployments of Oracle’s various supply chain software offerings.  There are not many software vendors who have the courage to conduct an unrestricted live customer panel before an audience of industry analysts, and Oracle should be complimented for its openness to provide such a panel.  There were many nuggets of learning and common themes that came from the panel which I will share in this posting.

The panel was balanced among CIO’s and senior functional business analysts.  Industries represented included a rather large and well known food cooperative, a medical device manufacturer,  a manufacturer of printing devices and a generic pharmaceuticals manufacturer.  Each panelist described his/her business along with the significant supply chain challenges that needed to be overcome. 

Challenges were those rather commonly reflected in this economy, mainly to solve a particular burning tactical problem:

• Getting more intelligence on product demand and incorporating a demand signal repository
• Adapting more readily to a rapidly changing supply chain environment
• Improving fill-rate performance
• Enhancing the Sales and Operations planning with broader access to upstream and downstream information
• Transitioning from low volume-high mix to higher volume-low mix supply chain
• Incorporating more offshore manufacturing in overall planning processes

Lessons learned and what would you have done differently statements were the biggest nuggets of all.  They were:

• Get the most from the technology you already have. If you don’t have the technology, select a technology vendor that can provide the complete capability.
• Insure that vendors demonstrate proof-of-concept with extracts of live data.
• Target 2-3 months for initial implementation; minimize any disruption to the business.
• Scope the implementation to what you can initially manage, move on from the baseline in 6-12 week cycles.
• Determine if the vendor has done the heavy lifting in insuring manageable integration to existing applications.

What I continually find in these customer panels is that technology does add value for supply chain management, and  you, the consumers of this technology are getting much savvier in evaluation, selection and deployment of technology. 

Oracle’s SCM executives noted that in 2009 sales cycles were very elongated.  The reason is somewhat obvious.  In today’s economy, where cost is critical and resources are perilously lean, a decision to bring in additional technology to address a burning tactical or operational problem had better be right.   Technology buyers are much more knowledgeable about their business process and information technology deployment plans, and vendors are responding. 

 Bob Ferrari