The power of SCAIR™ to help companies understand the value at risk at different points in their supply chain was explored at the Supply Chain Risk Management Conference in Rotterdam on 3rd November 2008. SCAIR™ was the catalyst for the discussion: ‘How to gain competitive advantage from supply chain robustness’. The achievement of competitive advantage comes from taking action once the critical vulnerabilities have been identified.
Supply chain interruptions should simply not be tolerated. The workshop explored ways to:
- Justify risk mitigation by quantifying value at risk
- Get risk and supply chain managers speaking the same language
- Select the most appropriate risk mitigation technique for each critical supply point
SCAIR™ continues to be the leading edge tool used today by businesses looking to quantify their exposure to supply chain interruption.
Once the value at risk can be quantified for critical supply chain points, the business case can be made for taking action to reduce the exposure. If a value can be put on the exposure, a supply chain manager can begin to evaluate the cost benefit case for holding strategic stock or putting effort into increasing the robustness of continuity plans.
The nature of the risk mitigation action will depend on the characteristics of the supply point in question. No one size fits all. This is recognized in an integrated approach to supply chain risk management, proposed by JLT in the following model.
Supply Chains: an Integrated Model for the Identification, Treatment & Acceptance of Risk
If risk reduction is not possible then an increasing number of insurance options exist, including cover for non damage risks that was not previously available.
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