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Supply Chain Risk and Resilience

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This paper is an introduction to the work the Chartered Institute of Procurement & Supply (CIPS) is doing to produce a good practice guide and online tool that can be used to help develop an organisations’ end-to-end supply chain resilience. By The Chartered Institute of Procurement & Supply

The last fifteen years has seen a significant growth in organisational discussions around the topic of ‘Resilience’.

Over this period there have been numerous examples where risks have materialised, impacted, and been seemingly absorbed by some organisations, while other organisations have never really recovered.

What differentiates the overall effect of the impact is how prepared these organisations were to deal with the risk once it materialised.

With the growth of outsourcing and the evolution of multi-tiered global supply networks many organisations now face direct and growing operational and legislative risk from disruption or malpractice in their supply chains.

Strategically focused procurement and supply professionals have begun to investigate what is important to the organisation and the end-customer in order to identify what delivers both customer and shareholder value.

The role of procurement is to understand risk, manage and mitigate it, and build robust supply chains, both upstream and downstream, that can weather disruptions with minimal impact and stay resilient.

CIPS suggests that risk can be defined as ‘the probability of an unwanted outcome happening’.

Risk management facilitates the taking of decisions and actions to control risk appropriately by providing a disciplined and objective approach.

But what is ‘resilience’?

Definition of Supply Chain Resilience
Managing risk and developing in-built mitigation has now become a key part of any procurement and supply professional’s daily activity.

It not only applies to potential new purchases but also to contracts that are ongoing. CIPS sees supply chain resilience (SCR)complementing the traditional rather reactive approaches to risk management and business continuity and drawing on the best of each. CIPS focus is on taking proactive rather than reactive measures.

The Good Practice Guide will concentrate on what measures can be taken to build resilience into all stages of a typical supply chain from conception of a demand through to end of life of product or service.

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