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Companies invest to reduce risk

26 June 2014 by Nigel Wardropper

A recent Accenture survey reveals that while most executives believe supply chain risk management is a priority, there is a small group of leaders who employ three practices that help generate a significant risk management ROI. Accenture surveyed more than 1,000 senior executives from large global companies to get their views on the impact of operations and supply chain risk on their organisation, how they are managing this risk and the benefits their supply chain risk management practices are generating. More than 50% of the surveyed executives said their company is boosting investment in risk management within the supply chain function by up to 20%, and another 25% said they are increasing spending by 20% or more. The study found that while the companies are taking different approaches to supply chain risk management, nearly all executives reported generating a positive ROI from their supply chain risk management investments. However, Accenture also found a small group of risk management leaders that have experienced a supply chain risk management ROI that exceeded 100%.

Background

The Accenture Global Operations Megatrends research study is designed to explore key trends in the operations function. The research is focused on three areas of concern for supply chain leaders globally: emerging market growth, supply chain risk management and big data analytics. The intent of the research is to understand the specifics of what companies are executing and planning in these areas, and the effectiveness of those strategies. The research involved a Web-based survey of 1,014 senior executives at large global companies headquartered in the respondents’ locations. 56% of respondents held C-level titles, including chief supply chain officer, chief procurement officer, chief sourcing officer, chief operations officer and chief operating officer. The remaining 44% were senior-level supply chain, procurement or operations executives. Recommendations

Results

•    Operations risk and its impacts are pervasive in today’s global economy. Operations and supply chain-related risk can be found in many places across any large enterprise. Two dynamics that were most commonly seen as driving supply chain risk include information technology and cost/pricing factors.
•    Most companies see operations risk management as important. Seventy-six percent of the surveyed executives consider operations risk management important or very important to addressing supply chain risk issues.
•    Companies are using different approaches to address operations risk. While most companies agreed on the importance of operations and supply chain risk management, there is no standardized approach to managing it. Few companies have a formal risk management organization that resides within a corporate supply chain function.

Recommendations
Accenture found three key practices that distinguished the small group of leaders, whose supply chain risk management ROI exceeded 100%:
•    Leaders make operations risk management a higher priority. 61% of leaders (compared with 37% of others) consider supply chain risk management very important. They recognise the importance of capabilities that can enable them to gain greater visibility and predictability across their supply chains.
•    Leaders have greater centralisation of responsibility for supply chain risk management. 43% of leaders, versus 32% of others, said they have a central risk management function led by a C-level or vice president-level executive.
•    Leaders invest aggressively in supply chain risk management capabilities with a specific focus on end-to-end supply chain visibility and analytics. Leaders are nearly three times as likely as other companies to boost their investments in supply chain risk management by 20% or more in the next two years.

 

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