Supply Chain Risk Management: Vital Growth Tool

As electronics and high tech companies pursue growth, supply chain risk management is seen as a vital tool they will further need to leverage in the future. In fact, 83% of electronics and high tech executives participating in a recent Accenture study of more than 1,000 operations executives across 10 industry sectors indicated that supply chain risk management is important or very important. That's more than the global response of 76%.

Executives across the sampled industry sets indicated their focus on mitigating supply chain risks was most often driven by concerns tied to cost and pricing factors, IT security and complexity, and the unpredictable global economy within which they work. For the electronics and high tech sector, cost and pricing topped that list.

While most companies receive some return on investment from their risk management, 7% of the surveyed companies generate impressive returns of more 100%. These leaders, as we call them, had a greater propensity than the average respondents did to embrace three practices that distinguished them.

  1. Leaders make supply chain risk management a priority, as do 46% of electronics and high tech executives overall. However, 61% of all leaders consider supply chain risk management very important, and they recognize supply chain risk-management capabilities can help them gain greater visibility and predictability across their supply chains.
  2. Leaders centralize responsibility for the risk management function. While more than 40% of leaders have a central risk-management function they rely on to help oversee the enterprise's risk-management function, only 27% of electronics and high tech executives are structured that way. Having a centralized risk-management function can enable a company to plan and react to risks in a more consistent, coordinated, and efficient manner. Still, they may want to strike a balance between centralized control and ownership close to the relevant organizational functions, since this can be a major factor in whether a company can respond quickly and effectively to risks.
  3. Leaders invest aggressively in key operations risk-management capabilities, with an emphasis on end-to-end supply chain visibility and analytics. Likewise, electronics and high tech executives as compared with those in other industries were most likely to say their companies plan to increase investment in risk management by 20% or more. However, the leaders, culled from the global, cross-industry sample, were nearly three times as likely as other respondents to plan to boost their investment in supply chain risk management by 20% or more in the next two years.

Some of the most important risk-management capabilities in which companies can invest are those that provide greater visibility into their operations. Such capabilities — which include supply chain control towers or demand forecasting factories — enable companies to collect and to analyze quickly rich data across the supply chain to help them identify developments that could affect their operations and mobilize to respond when necessary.

Despite the perceived importance of supply chain risk management, much opportunity remains for electronic and high tech companies to boost their supply chain risk-management capabilities. Regardless of the approach taken, visibility and anticipation are vital. In an industry characterized by continuously shorter product life cycles and volatility in commodity prices and customer demand, investing in capabilities that enable companies to monitor their supply chains — or in fact their extended supply chains encompassing their multi-tier supplier networks and their various distribution channels — can allow companies to identify and respond to potential threats before they become problems within their supply chains.

2 comments on “Supply Chain Risk Management: Vital Growth Tool

  1. SP
    August 18, 2014

    Supply cahin management is as important as designing a product. Getting components in time, ensuring quality of components, pricing, obsolescence management..these are direct factors that builds or breaks a product development. Smart supply chain managers are equally critical to have in the company as good hardware or software engineer.

  2. t.alex
    August 18, 2014

    Supply Chain Risk Management is the most important factor in any industries. Sometimes companies focus mainly on designing products and not have a good infrastructure from the beginning. Companies make money and grow too quick will lose direction by not investing good supply chain risk management. 

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