Nick Wildgoose 8 March 2012 BCI Workshop DELETE THIS TEXT AND PUT COMPANY LOGO IN THIS WHITE SPACE...
-
Upload
simon-reynolds -
Category
Documents
-
view
213 -
download
0
Transcript of Nick Wildgoose 8 March 2012 BCI Workshop DELETE THIS TEXT AND PUT COMPANY LOGO IN THIS WHITE SPACE...
Nick Wildgoose8 March 2012BCI Workshop
DELETE THIS TEXT AND
PUT COMPANY LOGO IN THIS WHITE SPACE
Understanding Risk within your Supply Chain
SC1(V1)Jul/05/10GC/ZCA
© Z
uri
ch In
sura
nce
2
Due Diligence Self Assessment
1. Do you know who your critical suppliers are and how much their failure would impact your company’s profits?
2. Have you fully mapped your critical supply chains upstream to the raw material level and downstream to the customer level?
3. Have you integrated risk management processes into your supply chain management approaches?
4. Do you have routine timely systems for measuring the financial stability of critical suppliers?
5. Do you understand your tier 1 production facilities and logistic hub exposures to natural catastrophes?
6. Is supply chain risk management integrated into your enterprise risk management approach?
7. Do you record the details of supply chain incidents and the actions you have put in place to avoid future incidents?
8. Do your tier 1 suppliers have business continuity plans that have been tested in terms of their viability?
9. Have you provided risk training to your supply chain management team?10. Is risk on the agenda at performance meetings with your strategic suppliers?
Your supply chain ‘Health Indicator’How many ‘Yes’ answers did you score?8-10 –You probably have a good understanding and control over the risks you face5-7 – You may have a number of key gaps which could impact your reputation or profitability3-4 – How are you sleeping at night?0-2 – Good luck
© Z
uri
ch In
sura
nce
3
Actions taken to drive costs out of the supply chain can drive greater risk in
Actions taken to drive costs out of the supply chain can drive greater risk in
Understanding the challenges
SC2.1(V2)Jul/05/10GC/ZCA
Global sourcingGlobal sourcing
Partnerships/strategic suppliers
Partnerships/strategic suppliers
Single sourcingSingle sourcing
Just-in-time manufacturingJust-in-time
manufacturing
Market ShortagesMarket Shortages Increased ComplexityIncreased Complexity
© Z
uri
ch In
sura
nce
4
And if something happens ….Implications on shareholder value
4
Source: Vinod Singhal/Kevin Hendricks
The Effect
The Duration
© Z
uri
ch In
sura
nce
5
BCI Survey 85% of companies experienced at least one disruption
15% 56% 16% 6% 4% 3%
0 1-5 6-10 11-20 21-50 51+
Zero incidents
At least one!
15% 3%56% 16% 6% 4%
More than 51 incidents
Between 21 and 50 incidents
Between 11 and 20 incidents
Between 6 and 10 incidents
Between 1 and 5 incidents
© Z
uri
ch In
sura
nce
6
9%
30%
61%
The source of the disruption was with our immediate, Tier 1, supplier
The source of the disruption was with our supplier's supplier, i.e. at Tier 2
The source of the disruption was much lower down the supply chain i.e. Tier 3, Tier 4 etc
40% of disruption originates below tier one
Tier 3+ Supplier
Tier 1 Supplier
Tier 2 Supplier
265 respondents were able to identify the tier in which the disruption originated across 327 incidents.
© Z
uri
ch In
sura
nce
7
8%
9%
9%
10%
11%
13%
15%
16%
17%
21%
21%
41%
51%
Adverse weather (windstorm/tornado, flooding,snow etc)
Unplanned outtage of IT or telecommunication systems
Transport network disruption
Earthquake/tsunami
Failure in service provision by an outsourcer
Loss of talent/skills
Product quality incident
Volcanic ash cloud
Insolvency
Civil unrest/conflict
Industrial dispute
Fire
Cyber attack(e.g. malware, DDOS attack)
Leading causes of disruption...
Adverse weather
Unplanned outage of IT or telecoms
Transport network disruption
Earthquake / tsunami
Failure in service provision by an outsourcer
Loss of talent / skills
Product quality incident
Volcanic ash cloud
Insolvency
Civil unrest / conflict
Industrial dispute
Fire
Cyber attack (eg Malware, DDOS attack)
Identify vulnerabilities
Identify vulnerabilities
Quantify and benchmark risk exposures
Quantify and benchmark risk exposures
Prioritize mitigation actions
Prioritize mitigation actions
Informed decision makingInformed decision making
Understanding where and how your supply chain could be vulnerable
Support operational profitability
Support operational profitability
SC8(V1)Jul/05/10GC/ZCA
© Z
uri
ch In
sura
nce
9
Supply Chain Risk - the challenges?
Mapping the interdependenciesHaving the right skills and toolsCross functional approachDeveloping solutionsIn assessing your Supply Chain Risks consider:
Information/financial flowsAssets and infrastructureOrganisations & inter-organisational networksMacro issues including economic and political
© Z
uri
ch In
sura
nce
10
Assessing the risk – the industry and supply exposures
What external factors influence the vulnerability of the supply chain?
First 8 factors
EconomicSupply chain
Political
Structural
Geographical
© Z
uri
ch In
sura
nce
11
Analysis of Supplier Locations
© Z
uri
ch In
sura
nce
12
Product ManagementProduct Management
Supplier SelectionSupplier Selection
Supplier managementSupplier management
Suppliers Security of supply
Suppliers Security of supply
SC7(V1)Jul/05/10GC/ZCA
Due Diligence information on key suppliers
© Z
uri
ch In
sura
nce
13
Will your suppliers still be around?
© Z
uri
ch In
sura
nce
14
Understanding the challengesRisk factors other Due Diligence Areas
Contract management
Contract management
IP IssuesIP Issues
Regulatory IssuesRegulatory Issues
Business ContinuityBusiness Continuity
© Z
uri
ch In
sura
nce
15
How companies have benefited through risk assessment
SC11(V3)Jul/05/10GC/ZCA
Two key suppliers at the next level in the supply chain were in significant financial trouble
Two key suppliers at the next level in the supply chain were in significant financial trouble
Company discovered that key component supplier and its alternative were located in earthquake zone
Company discovered that key component supplier and its alternative were located in earthquake zone
Exposure due to potential failure of a supplier higher than initially estimated:USD10 million vs. USD1 million
Exposure due to potential failure of a supplier higher than initially estimated:USD10 million vs. USD1 million
Actual reliance on one supplier significantly greater than presumed: 70% vs. 20%
Actual reliance on one supplier significantly greater than presumed: 70% vs. 20%
© Z
uri
ch In
sura
nce
Supply chain loss events
© Z
uri
ch In
sura
nce
Supply chain loss events – AutomotiveCountry of event
© Z
uri
ch In
sura
nce
18
Risk Rating Model
GSP
M icro L C D
GRADING - ComparisonsSupply / supplier 1
TA MT ML RT AV AA OR GATS adj
Risk Factor As is As is As is As is As is As is As is As is
Industry/Supply-Specific - Geographical Exposures B C A C BIndustry/Supply-Specific - Economic Exposures. C B C C CIndustry/Supply-Specific - Political Exposures. C C C C CIndustry/Supply-Specific - Structural Risks B B B D BSupplier Specific - Geographical Exposures B C B C BSupplier Specific - Economic Exposures C C A C CSupplier Specific - Political Exposures C C C C CSupplier Specific - Structural Risks B B B D BProduct Management / New Product Development B B C E (=C) BSupplier Selection Management B B B B CSupplier Management (Financial Strength) B B C C DSupply Chain Performance B B B B CInternal Risk Management C B C B CBusiness Continuity Management (BCM) C A B C CVulnerability To Accidents / Errors B C C C BVulnerability To Malicious Intervention A C B B CCommercial Contract Management B B C B BSkills And IP Management (Insured) E (=C) C E (=C) E (=C) E (=C)Regulatory Issues A C A A ARelationship With Supplier (Influence, Maturity) B B A C CSupplier's Security Of Supply B C B B BSupplier's Knowledge And Experience Of Providing Required Supplies A B A C A
Skills and IP Managament (Supplier) E (=C) C E (=C) E (=C) E (=C)Risk Engineering Factor B B B B B
Micro LCDGRADING - ComparisonsSupply / supplier 1
TA MT ML RT AV AA OR GATS adj
Risk Factor As is As is As is As is As is As is As is As is
Industry/Supply-Specific - Geographical Exposures B C A C BIndustry/Supply-Specific - Economic Exposures. C B C C CIndustry/Supply-Specific - Political Exposures. C C C C CIndustry/Supply-Specific - Structural Risks B B B D BSupplier Specific - Geographical Exposures B C B C BSupplier Specific - Economic Exposures C C A C CSupplier Specific - Political Exposures C C C C CSupplier Specific - Structural Risks B B B D BProduct Management / New Product Development B B C E (=C) BSupplier Selection Management B B B B CSupplier Management (Financial Strength) B B C C DSupply Chain Performance B B B B CInternal Risk Management C B C B CBusiness Continuity Management (BCM) C A B C CVulnerability To Accidents / Errors B C C C BVulnerability To Malicious Intervention A C B B CCommercial Contract Management B B C B BSkills And IP Management (Insured) E (=C) C E (=C) E (=C) E (=C)Regulatory Issues A C A A ARelationship With Supplier (Influence, Maturity) B B A C CSupplier's Security Of Supply B C B B BSupplier's Knowledge And Experience Of Providing Required Supplies
A B A C A
Skills and IP Managament (Supplier) E (=C) C E (=C) E (=C) E (=C)Risk Engineering Factor B B B B B
M icro L C D
GRADING - ComparisonsSupply / supplier 1
TA MT ML RT AV AA OR GATS adj
Risk Factor As is As is As is As is As is As is As is As is
Industry/Supply-Specific - Geographical Exposures B C A C BIndustry/Supply-Specific - Economic Exposures. C B C C CIndustry/Supply-Specific - Political Exposures. C C C C CIndustry/Supply-Specific - Structural Risks B B B D BSupplier Specific - Geographical Exposures B C B C BSupplier Specific - Economic Exposures C C A C CSupplier Specific - Political Exposures C C C C CSupplier Specific - Structural Risks B B B D BProduct Management / New Product Development B B C E (=C) BSupplier Selection Management B B B B CSupplier Management (Financial Strength) B B C C DSupply Chain Performance B B B B CInternal Risk Management C B C B CBusiness Continuity Management (BCM) C A B C CVulnerability To Accidents / Errors B C C C BVulnerability To Malicious Intervention A C B B CCommercial Contract Management B B C B BSkills And IP Management (Insured) E (=C) C E (=C) E (=C) E (=C)Regulatory Issues A C A A ARelationship With Supplier (Influence, Maturity) B B A C CSupplier's Security Of Supply B C B B BSupplier's Knowledge And Experience Of Providing Required Supplies A B A C A
Skills and IP Managament (Supplier) E (=C) C E (=C) E (=C) E (=C)Risk Engineering Factor B B B B B
Micro LCDGRADING - ComparisonsSupply / supplier 1
TA MT ML RT AV AA OR GATS adj
Risk Factor As is As is As is As is As is As is As is As is
Industry/Supply-Specific - Geographical Exposures B C A C BIndustry/Supply-Specific - Economic Exposures. C B C C CIndustry/Supply-Specific - Political Exposures. C C C C CIndustry/Supply-Specific - Structural Risks B B B D BSupplier Specific - Geographical Exposures B C B C BSupplier Specific - Economic Exposures C C A C CSupplier Specific - Political Exposures C C C C CSupplier Specific - Structural Risks B B B D BProduct Management / New Product Development B B C E (=C) BSupplier Selection Management B B B B CSupplier Management (Financial Strength) B B C C DSupply Chain Performance B B B B CInternal Risk Management C B C B CBusiness Continuity Management (BCM) C A B C CVulnerability To Accidents / Errors B C C C BVulnerability To Malicious Intervention A C B B CCommercial Contract Management B B C B BSkills And IP Management (Insured) E (=C) C E (=C) E (=C) E (=C)Regulatory Issues A C A A ARelationship With Supplier (Influence, Maturity) B B A C CSupplier's Security Of Supply B C B B BSupplier's Knowledge And Experience Of Providing Required Supplies
A B A C A
Skills and IP Managament (Supplier) E (=C) C E (=C) E (=C) E (=C)Risk Engineering Factor B B B B B
Historical database of supply disruptions
Assessment and grading
Industry and supply research
Other lines of business
Insolvency assessment
Accumulation database
Value flow mapping
Zurich supply chain rating risk model
© Z
uri
ch In
sura
nce
Reduced fluctuations in results
Reduced fluctuations in results
Balance sheet protectionBalance sheet protection
Protect brand & reputation
Protect brand & reputation
Informed decision making
Informed decision making
Protecting profitability and balance sheet funding
Maintain customer relationships
Maintain customer relationships
Tailored to Your Needs
Tailored to Your Needs
SC12(V2)Jul/05/10GC/ZCA
© Z
uri
ch In
sura
nce
Unique peace of mind through broad coverage
SC13(V1)Jul/05/10GC/ZCA
© Z
uri
ch In
sura
nce
21
Risk identificationsRisk identifications
Risk insightsRisk insights
BenchmarkingBenchmarking
Proactive alertsProactive alerts
Balance sheet protection
Balance sheet protection
Quantification of disruptions
Quantification of disruptions
Due Diligence a process that protects your supply chain and profitability
SC19(V2)Jul/05/10GC/ZCA
© Z
uri
ch In
sura
nce
22SC25(V1)Sep/23/10GC/ZCA
Getting started on your 3 top priorities?
New products/services check your supply partners
New products/services check your supply partners
Risk assessment top 3 suppliers in profitability
Risk assessment top 3 suppliers in profitability
Drive cost savings and supplier compliance
Drive cost savings and supplier compliance
© Z
uri
ch In
sura
nce
23
Conclusions
Performance managementPerformance management
Proactive competitive Advantage
Proactive competitive Advantage
Supply chains are lifeblood of your
company
Supply chains are lifeblood of your
company
Supplier Due DiligenceCritical
Supplier Due DiligenceCritical
© Z
uri
ch In
sura
nce
24
Thought leadership to help you understand today’s and tomorrow’s risks
SC21(V1)Jul/05/10GC/ZCA
Nick WildgooseGlobal Supply Chain Product ManagerTel. 0776 428 2065Email [email protected]
SC22(V1)Jul/05/10GC/ZCA