Supply Chain Brain magazine published an interesting interview of Anish Buch, vice president of supply chain for consumer products with L'Oréal, about Risk Management strategy in the field of Supply Chain.
Regarding supply-chain organizations struggle with the issue of risk management, Anish Buch pointed out the gap between the evolution of risk definition and the non-evolution of the way its evaluated. He also specified the lack of shared metrics and growth targets, and over-reliance on precedent.
According to him, the issue of accountability depends on the type of organization, the team dynamic and culture, but as supply chain has becom a top-line driver, especially in the era of e-commerce, the management of its risks has become that of the organization as a whole, in terms of responsability.
He also added that there's a certain degree of sacrifice that has to be taken into consideration when creating a supply-chain risk-management policy. In fact, facing nowadays challenges, organizations must sacrifice what would be considered in the past as an ideal planning process or horizon to act on time. They also need to accept that they are willing to take bets that may fail and also quickly move past individual or functional targets when going for the organizational top line, or even bottom line
As regards investment and preparation requirements, he underlined the environnement evolution that requires to think in short frequent buckets, then come back and reevaluate very quickly. "Test and Learn" process has also become common because organizations realized that what makes a business case relevant today might not be relevant in three to four years.
Finally, when asked how companies instill an awareness of risk management throughout the organization and corporate culture, Anish Buch mentionned the necessity to make risk management into something positive, as a part of the normal course of business. He also added that communication is a major asset for better risk management, especially to stakeholders regarding the organization strategy on risks.
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