Supply Excellence — Supply Risk Profit Equation

Supply Risk Profit Equation

July 30th, 2007 · by Tim Minahan · No Comments · best practices, supply risk

If you didn’t heed my warning last week to read Purchasing magazine’s cover story, Best Practices in Risk Management, maybe this will entice you to take a look:

Click image to enlarge.

According to the article, “Executives have learned that it’s not just continuity of supply that’s affected: It’s the company’s financial performance.”

Indeed, as the above graphic suggests, 33% - 40% of companies experiencing a supply disruption suffer lower stock returns than their peers. Other areas business performance areas negatively impacted by supply disruptions include lost revenues, profit margin loss, market position, and company brand and image. (Just ask Firestone.)

Supply managers would be wise to use the risk issue to secure the executive and policy support, resources, and budget required to push forward their supply management transformation plan. Be sure to use the above stats to build a case that hits the issues your CFO and CEO care most about.

For more fodder for your supply risk management business case, download the Aberdeen Group’s latest report on the issue, Supply Risk Increasing While Market Stands Still.

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