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Segment your suppliers to reduce risk

by Michael Giguere & Glen Goldbach


(Q3 2012 issue - CSCMP's Supply Chain Quarterly*)

Presentation by - Kumar Pallav

Table of Contents
Reasons of failure and risk related to the suppliers Approach: risk management & segment suppliers Categorization of suppliers & monitoring requirement Leading practices under the risk management Q&A

*Source: http://www.supplychainquarterly.com/topics/Global/20121001-segment-your-suppliers-to-reduce-risk/

9 April 2014

Reasons of failure and risk related to the suppliers

Natural Events Political

Lost customer

Delays in delivery

Econom ic

Fewer revenues

Risk related to the suppliers failure

Loss of good will

Disruption in supplies

Approach: risk management & segment suppliers

Disruption

Solutio n

Supply Chain Risk Management (SCRM)

Segment Suppliers

Categorization of suppliers & monitoring requirement

Strategic

Most valuable and required to develop forward-looking signals

Tactical

Ongoing performance monitoring

Transactional

Receive supply at the promised price

Leading practices under the risk management


Segmenting companys supply agreements on a supplier's role base and basing governance

Effective due diligence watch in place - identify leading risk indicators and risk-adjusted prices
Conduct survey to identify specialized nature of the risks associated with each supply segment for a respective industry Risk analysis of potential weak links - suppliers is itself dependent on the same upstream supplier for certain aspects: - Intellectual property - Outsourcing - Transportation

Leading practices under the risk management


Customized requirements and incorporating supplier-governance policies

Implementing risk mitigation plan by differentiating critical suppliers

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