Supply Chain Brain Avoiding Pitfalls in an Integrated World

Supply Chain Brain
Avoiding Pitfalls in an Integrated World
SESSION CODE: CLM013
Speakers:
Nigel Henley, Executive Director, Ernst & Young LLP
Jill Powell, Senior Manager, Ernst & Young LLP
What to Expect
The reliance on complex and expanding
supply chains has increased risk
management exposures. Risk Managers
need to understand how their supply chain is
changing, assess the risk, proactively
manage the risk, and determine the
opportunities for mitigation or transference.
Learning Objectives
• Assess Risk
• Manage Risk
• Mitigate Risk
• Transfer Risk
Focus on Supply Chain Risk
Catastrophic events in recent years have made companies
increasingly aware of the exposures created by the dependencies
in our supply chains.
Focus on Supply Chain Risk
Catastrophic events in recent years have made companies
increasingly aware of the exposures created by the dependencies
in our supply chains.
Supply Chain Risk
•
Assess
•
Manage
•
Mitigate
•
Transfer
Assess Supplier Risk
•
Number of suppliers
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How well do you know and understand your Tier 1 and/or Tier II suppliers
Where are suppliers located?
What are your supplier Risks?
How are your supplier and external manufacturer contracts structured?
Risk profile of key suppliers and potential loss scenarios
Specialization of items supplied
Geographic dispersion of suppliers and external
manufacturers
Ability to resource parts within a supplier’s own network
Supplier capacity utilization – available excess capacity
Internal capacity utilization vs reliance on External
Manufacturers
Manage Supplier Risk
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Proactively identify potential risks and loss scenarios
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Production disruption to various tiers of suppliers
Logistics interruptions
Upstream Risks (risks of loss of business/customers)
Build in redundancy to suppliers or within a supplier
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Time needed to qualify new suppliers
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Increased inventory of key components
•
Monitor key supplier business continuity planning process –
test it
Mitigate Supply Chain Risk
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Understand opportunities to diversify supplier risk
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Consolidate supplier risk where appropriate
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Partnership
Transfer Supply Chain Risk
•
Contingent business interruption / dependent time element
insurance
•
Transit Insurance
•
Supplier/External Manufacturing Contracts – insurance /
liability
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Are you a named insured on your supplier’s insurance policy?
Avoiding Pitfalls
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Lacking knowledge and/or visibility on the complete supply
chain and external manufacturing network
•
Assuming systems are set up to capture or maintain
documentation that will be needed to transfer or mitigate risk
•
Not having full understanding of insurance coverages that
address supply chain risk and their applications
Questions, Comments, Final
Contact Information
• Nigel Henley– nigel.henley@ey.com
• Jill Powell– jill.powell@ey.com