Supply Chain Risk Management (SCRM) A Handy Tool for Measuring, Analyzing and Reducing Supply Risk
The double whammy of Sino American trade war and COVID-19 crisis has suddenly brought SCRM at the top of strategic priorities in the Board Rooms around the world. This article provides CDMOs with an affordable, easy to implement method to reduce supply chain risk through a continuous improvement process.
CDMOs (Custom Development Manufacturing Organizations) performance is strongly depending on its supply chain. The pandemic made it abundantly clear that CDMOs must have a plan to reduce the exposure to supply risk. SCRM has become overnight a critical element of strategic management.
We propose in this article a practical method for analyzing risk, defining a prioritized action plan, and measuring the improvement both at the organization level and at the individual level. In addition, this can be used as a KPI (1) in the reward bonus.
In the first phase, the management defines 3 indexes as key parameters for each raw material:
- The Raw Material Risk index (RMI) evaluates the probability of a shortage risk.
- The economic index (EI) measures the impact on the company revenue/contribution.
- The time index (TI) evaluates the time and difficulty of remediation of the supply interruption. ...