How to secure one's Supply Chain - Part 1 -Theoretical approach

Supply chain risks are nothing new. However, the events of the last few years, from September 11 2001 to mad cow disease, oil crises and SARS, have put risk management back in the spotlight.

While it's clear that a number of risks come from the external environment, such as those arising from war, epidemics and natural disasters, it's also true that the very structure of supply chains presents significant potential risks. Some observers now consider this fragility "a characteristic of the supply chain" [1] .

The trend towards globalization of supplies, offshoring of production and reduction of the supplier base; industrial consolidation; and centralization of distribution resources are all factors contributing to the exacerbation of this fragility. The cost-cutting techniques employed over the last few decades, particularly lean management, have certainly enabled higher levels of performance to be achieved, but this has been to the detriment of the robustness and resilience of the supply chain.

Paradoxically, the understanding and apprehension of supply chain risks is still in its infancy in most companies. Not to mention their prevention and treatment.

Against this backdrop, it's time to ask the question of securing the supply chain. A number of studies have been carried out over the last five years, most of which approach supply chain security from the angle of visibility or agility. All agree, however, on the primordial importance of the risk identification stage.

This article is based on work carried out on this subject since 2001, and proposes the following two-part methodology: identifying and reducing risks, then managing residual risks. The application of this approach to a practical case, at Samixco, will highlight the proposed actions in a corporate context.