As a follow up to yesterday’s post on the risk “political extremism” poses to supply chains, I thought it would be helpful to revisit the Ariba LIVE Virtual breakout session with Rob Handfield, Distinguished Professor of Supply Chain Management at North Carolina State. The professor is a strong advocate for compiling the right kind of information - political, supplier, financial, etc - concerning potential risks, analyzing the likely supply chain impacts, and then redesigning the supply chain to reduce those risks. The approach is very well suited for reducing the dangers of political extremism (or any other risks for that matter) and therefore can provide some useful guidance.

Professor Handfield’s session, titled Managing Supply Risk, walked attendees through a number of case studies, including some success stories of companies turning their supply chain risk attentiveness into competitive advantages (replay here - registration required). But it was his “lessons learned” that I think provided the most insight to companies looking to proactively get out in front of potential risks rather than react when those risks surprise them.

Among the key take-aways gleaned from his research:

• Pick your battles. “It is impossible to know everything about your supply chain. So focus on the critical few, key areas that are most vulnerable and exposed.”
• Focus on compiling actionable data. “Metrics should drive action. They’re only useful if they lead to direct attention to the problem. Look for subtle signs and indicators of potential issues.”
• Relationships matter. “Risk can only be minimized through direct human intervention. Sit down to discuss likelihood, probability and think creatively of how to handle the risks.”
• Tougher contracts alone won’t work. “Risk cannot be eliminated through stronger contractual language. This only hurts relationships and is more likely to cause harm than reduce risk.”

Anyone tasked with risk reductions - which these days is probably everyone who reads this blog - the Professor’s presentation is a good primer into his research (replay here - registration required). And for those looking for a little extra-credit, Professor Handfield has authored several books on supply chains that are likely worthy, informative reads.

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.