In a recent ISG white paper, I discussed how organizations of all types face increasingly dire, diverse and evolving risks to their supply chains. Risks are coming from new and unexpected directions and sources, threatening operational stability, revenue streams and brand reputations. Indeed, one of the more insidious aspects of supply chain risk is its nebulous character – you don’t know where the risk lies, when it will strike or what the impact will be.
What’s perhaps equally troubling is that responsibility for managing supply chain risk is equally nebulous.
In numerous discussions with C-level client executives and legal teams, ISG has found that many organizations recognize the extent of the supply chain risk management and mitigation problem, but they lack a clear sense of ownership for dealing with the problem. Typically, execution of a supply chain risk management strategy flows through the procurement organization. But when asked who takes the leadership role in defining that strategy, a lot of businesses aren’t really sure.
The ownership of supply chain risk management often defaults to a shared hybrid role, comprising the Chief Procurement Officer, Chief Risk Officer, CFO and legal team. While a range of perspectives is essential to addressing different types of risk, the potential problem here is that if no one is solely responsible for the risk mitigation strategy, no one is solely accountable when something goes wrong. Moreover, a vaguely-defined leadership team with a mixed agenda is likely to be ill-equipped to deal with the myriad supply chain risks businesses face today.
Global organizations face the challenge of developing a supply chain risk management strategy that is broad enough to encompass the range of prevailing risks businesses must confront, yet focused enough to ensure accountability and clear lines of responsibility and ownership around defining, anticipating and responding to risk.
I would welcome reader feedback – how is responsibility for supply chain risk management handled in your organization?
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