'Centralised, top down approach key to maximising supply chain risk ROI'

Will Green is news editor of Supply Management
25 June 2014

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25 June 2014 | Will Green

Just 7 per cent of firms are generating a return of more than 100 per cent on their supply chain risk management investment, according to a survey.

The Accenture Global Operations Megatrends Study – Focus on Risk Management found while 76 per cent of companies describe supply chain risk management as important or very important, 39 per cent received an ROI of between 1 per cent and 25 per cent.

The study said those earning the most ROI made risk management a priority, centralised responsibility for it, and invested “aggressively in risk management with a specific focus on end-to-end supply chain visibility and analytics”.

Mark Pearson, senior managing director for operations at Accenture Strategy, said: “As demonstrated by the leaders in our study, a centralised, top-down approach to supply chain risk management tends to generate the highest ROI on risk management.

“Such a commitment to risk management also can help managers guard against business disruptions in the wake of natural disaster, geopolitical events, shifts in commodity or shipping prices, or any number of circumstances that can endanger a company’s operations.”

The top three sources of risk were IT, cost and pricing factors and the global economy. Suppliers were cited by 22 per cent of respondents and natural disasters or unforeseen events were mentioned by the fewest at 17 per cent.

The areas of the supply chain most frequently exposed to risk were quality, planning, skills and talent, and sourcing and procurement, according to the study.

The report said: “Regardless of the approach taken, visibility is vital: Companies should invest in capabilities that enable them to effectively monitor their end-to-end supply chain in real time so they can identify potential threats and proactively respond before they become problems.”

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