Chapter 2 provided information on the “as is” environment of SCRM during the past decade. Provide a report, incorporating up to three themes that are shared in the development of SCRM as a discipline in the years between 2009-2013. The paper should be a minimum of 500 words, but not more than 1000 words.

ANSWER

Environment of Supply chain risk management

Environment of Supply chain risk management

Introduction

Many organizations are conversant with Standardization (ISO) Group, where they help in making standards about quality control and process reliability. The 2009 ISO was one of the standardization mechanisms, which directly relates to the supply chain risks as was a major recognition of the importance of supply chain risk management. The ISOs help in the provision of the principles, practices, and the guidelines of effectively identifying, assessing, mitigating, and managing the supply chain risk.

A key report in 2009 was Accenture’s global report on Managing Risk for High Performance in Extraordinary Times. The reason for the report was as a way of addressing the 2008 global financial meltdown and had details of what business could do to contain supply chain risks. It was thorough and analyzed cause and effects of risk to the global supply chain. From the 2009 report, it is apparent that a number of actions ought to be undertaken by firms as a way of managing supply chain risks. The mitigation measures can help in protecting the competitive advantage of a company, reputation, credit ratings, and branding.

There were merging SCRM elements in 2010, which needed to be explicitly profiled. It is at this year that there was an emergence of a tool, which could help in codified the effects of supply chain maturity, which relates to risk mitigation. From the analysis, it was manifest that as the supply chain matures, then the risks faced by the supply chain begin to diminish. Various reports on the issue support the notion that SCRM is evolving (Varzandeh, Farahbod, & Zhu, 2016). There is hence a need to have an aggressive risk management agenda. Some of the major reasons behind this include protecting the brand name of an organization, safeguarding a business against an unpredictable global economic environment, and helping a firm comply with the new and changing regulations. It also helps in the maintenance and improvement of shareholder value.

In 2011, the major discussion was on the new normal in SCRM. This featured more global sourcing and manufacturing, long supply chain lead times, hyper demand requirements, and more potential for points of failure. This led to an introduction of principles by Accenture which gave birth to supply chain risk management as a discipline. One of the key principles identified this year include Integration of risk management practices across all business functions with an aim of ensuring more commitment, alignment, and understanding (Zhu & Caniëls, 2017). Other principles include identification, measurements, and prioritizing of risk through mapping out the complete supply chain ecosystems. A third principle is an emphasis on operational flexibility, global visibility, and diversified supplier portfolio to blunt the impact of supply chain calamities.

The British Continuity institute, in 2012 addressed the effects of natural calamities such as earthquakes on the supply chain. The major takeaway from the study was on how such calamities affect the supply chain and what firms ought to do to ensure a quick recovery. Companies ought to have structures in place and risk mitigation strategies that can help them in dealing with such calamities. Having risk management structures is very helpful for organizations, as a way of reducing the negative effects the risk have on them (Talluri, Kull, Yildiz, & Yoon). The CEO is the most accountable person, who ought to hence develop a risk management structure that can help companies in recovering in the event of calamity such as an earthquake. This year, risk management was one of the major topics explored by companies. Firms began concentrating, more on having measures to identify, assess, mitigate, and manage risks. This would help with managing both demand and supply disruptions, where it was identified that the major impact was the loss of sales and revenues. This consequently leads to loss of customers, damage of image and reputation, lower profits, and reduced shareholder value.

There was a report by the World Economic Forum In 2013, which expounded on the need for firms to shift from reactive to proactive risk management. The report indicated that most firms are no more concerned about supply chain resilience. From the 2013 study, it is apparent that there is a need for a common risk vocabulary. It is also palpable that cyber risk may have the greatest implications for supply chains and that risk management needs to be an integral part of chain governance. Companies with high-risk maturity ratings saw greater annual stock price returns.

Conclusion

The supply chain risk management environment has been changing in the last decade. There have been changes in structures and models of companies and how they deal with risks in their supply chains. From the study, it is evident that there is a need for organizations to focus on the changing paradigm concerning the structures of risk management, as a way of keeping up with the changing environments.

References

Talluri, S., Kull, T. J., Yildiz, H., & Yoon, J. (n.d.). (2013). Assessing the efficiency of risk mitigation strategies in supply chains. Journal of Business Logistics,. 34(4), 253-269.

Varzandeh, J., Farahbod, K., & Zhu, J. J. (2016). Global logistics and supply chain risk management. . Journal of Business and Behavioral Sciences, 28(1), 124.

Zhu, Q. K., & Caniëls, M. C. (2017). Integrated supply chain risk management: a systematic review. The International Journal of Logistics Management.