Case study: Supply chain risk assessment

Nico_Snyman.jpgIn this month’s SmartProcurement, Crest Advisory Africa’s Nico Snyman outlines a case-study on supply chain risk assessment.

Crest Advisory Africa (CAA) recently performed an Online Supply Chain Risk Assessment (OSCRA) on a site within the Gauteng area for a leader in the construction environment who works with a number of value chains and supply chain processes, which specifically affect project lifecycle and project delivery.

The OSCRA consists of a three-stage process to identify supply chain based risks (strategic risks, operational risks or project risks), whether within the inbound supply base or processes.

The OSCRA consists of three interactive stages of implementation:
Stage 1: focuses on the internal activities within the site
Stage 2: reviews 150 primary suppliers and their processes
Stage 3: focuses on secondary suppliers, where there is limited spend or deliveries

For the purposes of this case study, the review reflects the findings of stage 1 only.

The assessment identified the entity’s inbound supply process as an overall medium risk. It is important to note that although the risk is identified as medium, it is in the upper percentiles of medium, closer to high risk. Notwithstanding being a medium risk, the assessment highlighted high risk areas.

Risk_rating_per_area.jpgRisk management within the supply chain environment results in nine pre-defined areas of measurement. Below is a summary of the nine supply chain risk categories and their status, reflecting the areas that should be prioritised. Further detail is provided in the table (below) highlighting the potential risks to the specific entity.

In the interests of brevity only matters needing management attention are highlighted. All items reported on are classified as either:
Red: high-risk and requiring focus in the short term
Amber: medium-risk and requiring management action in the medium term

Risks_to_the_entity.png“From CAA’s observations, it has become evident that companies know the supply chain environment, but have limited understanding of its complex measurables,” said Snyman.

The OSCRA is a valuable tool that determines where risks lie in the total supply chain value chain. Through this in-depth analysis, one knows where to allocate resources or where to change a strategy.

Nico Snyman, SA’s risk guru and Chief Executive Officer of Crest Advisory, will give a keynote address at Smart Procurement World Western Cape on “Rising to the challenge and driving procurement success by leveraging the economic downturn”.

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