Today’s global supply chains are delivering products and services to market better, faster, and cheaper than ever before. Yet advances such as just in time manufacturing, single sourcing, and off-shoring in low-cost emerging or developing economies also have increased volatility risk and the impacts of a disruptive event.

Organizations are beginning to feel the pain of systemic failure caused by a lean, fast moving, and constantly evolving flow of global trade. The consequences of a negative event are gaining C-suite and board-level attention given global economic uncertainty and the interdependent nature of business relationships, which have exposed significant gaps in business resiliency. Governments, NGOs (non-government organizations), and regulators also are pressuring organizations to better understand and manage the risk to their supply chains and their customers.

Marsh Risk Consulting’s (MRC) global Supply Chain Risk Management (SCRM) Practice provides unique, proprietary solutions that can help companies address this challenge through the creation of supplier risk programs, optimization of inventory and network design for resiliency, or assessment and quantification of risk in support of supply chain risk management strategies and objectives.

 Service Highlights

Supply chain risks include everything from natural hazards, terrorism, pandemics, and cyber-attacks to demand variability and supply or supplier failures. Fierce competition and tight margins can further magnify the impact of a supply chain failure as any delay in trade recovery can allow a competitor to grab market share. Today’s economic pressures exacerbate supply chain-related risks particularly in relation to supplier viability given tightening credit markets, downward pressure on costs, and shrinking consumer markets.

 

MRC’s SCRM Practice offers five primary solutions tailored to each organization’s unique supply chain risk management needs. These include:

• Optimizing the supply chain for resiliency

• Diagnosing the supply chain to identify and prioritize risk, including for risk transfer purposes

• Designing supplier risk programs, including supplier risk viability

• Conducting supply chain risk management “jumpstart” workshops

• Developing supply chain risk surveillance systems

Our supply chain risk management solutions are designed to help your organization ensure that:

• the supplier relationships you count on will still be there when you need them;

• your supply chain risk management strategies are risk intelligent, agile, and resilient; and

• you can maximize your risk management investments in viable and efficient practices.

Resiliency Optimization

Competitive organizations—through intensive “leaning” of their supply chains—remove excess inventory or capacity, push non-core services to lower cost providers, and consolidate third party providers or suppliers. Such strategies can create greater sourcing risk, confronting organizations with the question “how do we maximize resiliency while maximizing efficiency?”

MRC’s resiliency optimization solutions support the business decision making process by modeling and analyzing return on risk investments for a given supply chain strategy such as one versus two distribution or manufacturing centers or one, few, or many alternate suppliers for a specific component. We also model RROI (resiliency return on investment) on fill rates and the distribution of inventory across the network and safety stock levels.

Our analysis can show decision makers whether the benefit achieved through inventory diversification far exceeds the carrying costs of an additional distribution center, for example. Supply chain resiliency business analytics not only serves a classical role of achieving the lowest cost, but shows the other side of the equation in simultaneously optimizing resiliency.

Supply Chain Risk Diagnostic

MRC provides a Supply Chain Risk Diagnostic to enable your organization to make better, risk-informed decisions regarding the suppliers, supplies, and services that comprise your product family supply chain and drive your business in general. The Supply Chain Risk Diagnostic evaluates an organization’s supply chain exposures throughout its extended supply chain, identifies interdependency risk and single points of failure, and then develops a customized risk mitigation and transfer approach based on the organization’s particular requirements.

 

This is accomplished through:

• A value (product(s), product families, services) segmentation exercise to help you select the key product or service for supply chain risk identification
• A detailed map of the suppliers, supplies, distributors, and services that comprise the critical resources of your supply chain
• Identification of single points of failure, triggers, and current mitigation strategies with a financial quantification of the impact of disruptions to suppliers, supplies, and services
• Prioritization of supply chain risks so that mitigation and transfer options can be efficiently allocated

The Supply Chain Risk Diagnostic is a prerequisite to pursuing nonphysical damage business interruption insurance coverage, which is designed to protect companies whose operations rely on critical supplies of goods or raw materials. Global Supply Secure (Chartis), Supply Chain Insurance (Zurich), and similarly innovative supply chain coyerages are standalone products that attempt to fill voids in traditional property-focused coverage and should be viewed as complementary to other insurance products and risk mitigation strategies.

Supplier Risk Management Program

Our comprehensive approach blends external supplier information, analytics, and risk management to identify, analyze, and respond to supplier risks. Our supplier review process includes: (1) a supplier self-assessment; (2) a process for analyzing, filtering, and scoring supplier responses; and (3) a reporting process, which will drive risk mitigation activities. Organizations can then select from a range of more than a dozen supplier risk management solutions.

The range of benefits the Supplier Risk Management Program provides includes:

• greater insight into suppliers’ risks that enable the creation of defensive and offensive strategies;

• improved competitive position in the marketplace;

• automation and efficient processes to facilitate data gathering and analysis;

• lower supplier risk and costs; and

• greater supplier resiliency that includes the ability to detect and response more quickly to critical risks.

Supply Chain Risk Management “Jumpstart” Workshops

For many organizations, the biggest obstacle is knowing how to get their risk management programs started or raising awareness of supply chain risk. Getting key management, personnel, suppliers, and stakeholders on the same page regarding the ins and outs of supply chain risk management is crucial to the success of a program. Our SCRM experts can work with your company to develop customized workshops built around your specific goals and needs. These workshops are tailored by industry and can address the risks most relevant to your organization in areas such as trade finance, insurance, logistics, procurement, and production.

Supply Chain Risk Surveillance

Supply Chain Risk Surveillance is designed to help companies better understand potentially critical failure points along the supply chain and help allocate risk management capital, time, management attention, and resources appropriately to achieve adaptive and resilient supply chains. The service includes continuous monitoring of geopolitical threats, allowing for better response to sudden events and for staying abreast of the changing business landscape by tracking risk profile changes over time.

As part of this service we help you to:

• Identify and prioritize what is most critical to your business such as a critical brand, product, or service(value segmentation)

• Document the end-to-end supply chain to illuminate dependencies, the sometimes hidden interdependencies, and the skills generally required to maintain operations (supply chain map)

• Identify the most significant potential points of failure in your supply chain

• Dynamically monitor supply chain risk through a global dashboard that matches critical resources along the supply chain to an intelligent source of data that alerts you to significant geopolitical changes 24/7 and provides information on the threat, severity, or geography of an event