Manage Supply Chain Risks with SAP Supply Chain Performance Management 2.0
- by William Newman, Managing Principal, Newport Consulting Group
- August 20, 2012
SAP Supply Chain Performance Management 2.0 offers extended performance and risk indicators in a number of key areas, including the Supply Chain Council’s Supply Chain Operations Reference (SCOR) model. Learn how to effectively map these key risk indicators to an enterprise risk management program using SAP Supply Chain Performance Management 2.0 and SAP Risk Management 10.0.
SAP Supply Chain Performance Management 2.0 enables tracking of initiatives and supply chain risks through active and dynamic visualization. The new version includes additional content for procurement and inventory, as well as integration with SAP Risk Management 10.0 for active supply chain risk management.
Taking a comprehensive look at the supply chain from an enterprise risk management (ERM) lens suggests a few areas in which risks can likely be mitigated. For example, are all the logistics running smoothly, or is there a propensity in certain parts of the organization to use exception-based and expediting processes as normal ways of doing business? This scenario can be a result of an understaffed, overtasked workforce, with a reduced talent level, and exacerbated by an absence of management guidance, a scenario that has become increasingly common in large companies as a result of the global economic crisis.
Is there risk exposure to not only the bottom 10 percent of your suppliers (those that have the greatest chance of failure or nonperformance) but also the top 10 percent of your suppliers? The suppliers that are reliably performing might substitute your contracts for more favorable terms and higher margin business, now that the economy is rebounding. Company purchasing officers in particular are keen to ensure that market switching does not occur with highly performing suppliers now that they may have new and broadened markets for their products.
What is the impact to market share and brand reputation if one of your suppliers commits some form of social performance mistake?
Would you like to see this full item?