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The attention being given to the supply chain is getting unbelievable. Manufacturers are being held accountable for wrongdoings, alleged and real, by suppliers and sub-suppliers throughout the chain of supply. Even the folks at Apple or Boeing, who have two of the most rigorous supply chain management systems in the world, face challenges from time to time.
Gone are the days when supply chain risk was just related to traditional property or transit risk. Risk managers and their supply chain partners have to examine every phase of the business practices of every level of the network, including business ethics and financial practices. Still, there is never any absolute assurance that, at some level, there are no inherent risks in your supply chain.
Hypothetically, let’s say, that you are a middle-size company that makes cheese. Cheese for sandwiches, cheese for pizza, cheese for football game snacks. What is the supply chain? Here are a few high-level thoughts:
The list can be endless. But for each of the items in the simple list above, there are additional levels of investigation that must be undertaken, such as:
One very advanced user of the Ventiv Risk Management Information System, RiskConsole, uses the data system to track key suppliers as well as alternate suppliers who have been pre-vetted and can be called upon immediately when a primary supplier has a failure. This kind of supply chain risk management requires detailed understanding of your business and the way it operates.
Even if your firm only sells a product, you have potential liability when you “introduce it into the chain of commerce”. Are you protected contractually by those that supply the product to you? How about those that supplied raw materials to them? Is your product liability insurance adequate to address your actual exposures?
As a risk manager, these are the hard questions that have to be asked, and answered, for every level of your supply chain. More to come on supply chain risk, you can bet on that!
Feb 15, 2016
| Originally posted on
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Ric Henry | Managing Partner, BRP Pendulum
Lisa Mohler | Vice President of Claims and Risk Management, Indiana Public Employers' Plan
Lynn Barrett | Insurance Executive, Travelopia
Steve Robles | Assistant Chief Executive Officer Overseeing Risk Management and Privacy, County of Los Angeles
Katherine Cooley | insurance business analyst, HPIC