In my part one posting, I outlined the fact that the current Version 9.0 of the SCOR-model has begun to incorporate supply chain risk management assessment, tracking, and mitigation methodologies in the overall framework. In this second posting, I’ll provide observations and comments around the definitions of the various supply chain risk enabling tools.

Readers who are familiar with the SCOR methodology may recall that for each of the major processes of Plan, Source, Make, Deliver, and Return, there are associated enablers to monitor compliance, deliver information from other process areas, or highlight dependencies on other process areas.  The Version 9.0 framework now includes the following supply chain risk management enablers, along with some recommended metrics for measurement:

Plan

Manage Supply Chain Plan Risk (EP.9)- defined as the process for identifying, coordinating and managing supply chain risks by aligning with the overall business risk management program. This enabler includes identifying the potential risks, assessing the probability and potential impact of risks, and planning risk mitigation strategies.

Select Performance Attributes:

Supply Chain Agility 

     Industry Benchmark Comparison (%)

     Options or Hedge Rating (%)

Supply Chain Costs

     Mitigation Cost overall or event ($)

I would have expected some further depth in the defining the attributes of risk in supply chain reliability as well as responsiveness, but it would appear that there was a lack of overall consensus among the steering teams to declare definitive metrics for these attributes.  I’m hopeful that later versions will include these metrics.

Source

Manage Supply Chain Source Risk (ES.9)- includes the identifying and assessing of Source risks that could impact the organization’s or the supplier’s ability to deliver materials in a timely manner, at reasonable cost, and with acceptable quality.

Select Performance Attributes:

Supply Chain Reliability

     Supplier Mitigation Plans Implemented (percent)

      VAR of product/customer performance

       Age of Supplier Risk Data (months)

Supply Chain Responsiveness

     External Event Response (average days)

Supply Chain Agility

     Internal event Response Time (average days)

Supply Chain Costs

     Mitigation Cost overall or event ($)

In my view, the area of sourcing should currently have the most mature amount of quantified data related to the managing of supplier risks, and many organizations should be able to make initial inroads with these enabling measurement categories.

 

Make

Manage Supply Chain Make Risk (EM.9)- the process of managing risks related to producing products on-time at a reasonable cost with good quality, as well as planning and implementing responses to Make risks.

Select Performance Attributes:

Supply Chain Reliability

     Supplier Mitigation Plans Implemented (percent)

     Value at Risk (Make)

     Age of Supplier or Customer Risk Data (months)

Supply Chain Responsiveness              

     External Event Response (average days)

Supply Chain Agility                            

     Industry Benchmark Comparison (5)

     Internal event Response Time (average days)

Supply Chain Costs

     Mitigation Cost overall or event ($)

Since the SCOR model has to accommodate both manufacturing and service-related business models, the area of Make can include a wide swath.  My first reaction to these enablers was that they are far too similar to the Source processes.  Readers should keep in mind that with the SCOR-model of a service-related business, Source may be an activity of less emphasis.  In either case, I would anticipate that more depth and implementation team innovation will be required in this area.

 

Deliver

Manage Supply Chain Deliver Risk (ED.9)- the process of managing risks that could impact the company’s ability to deliver product on-time at a reasonable cost and quality.

Select Performance Attributes:

Supply Chain Reliability

     Value at Risk (Deliver)

     Age of Product/Customer Risk Data (months)

Supply Chain Responsiveness

     External Event Response (average days)

Supply Chain Agility

     Industry Benchmark Comparison (percentage)

     Internal Event Response (average days)

Supply Chain Costs                             

     Mitigation Cost overall or by event ($)

These are all reasonable initial metrics and it will take some time to build critical mass of available benchmark data to reasonably map your organization to other similar organizations.

Supply chain risk management has become an increasingly more critical aspect of global supply chain strategy.  As the economy provides a period of business downturn, now made be the time for organizations to take the time to invest in a global supply chain risk assessment.

It would be helpful for our broader community to read additional commentary and feedback from readers who have either made a SCOR assessment in this area, or have attempted to implement enabling metrics of measurement in supply chain risk management. I encourage commentary in the comments section below this post.

Bob Ferrari