How to control and report risks?

In a final step, the risks must be reviewed with regard to their efficiency and effectiveness. Various methods are suitable for this purpose: In addition to a balanced scorecard, which is supplemented by a risk dimension, the risk indicator method can be cited alongside workshops and benchmarking procedures (see Tab. 3-2; Romeike 2004c, p. 185; Bergener 2006, p. 268; Schorcht 2004, p. 187f.).

Furthermore, controls can take place in different ways: in addition to controls at management level, they can also be carried out at activity or process level. Physical controls can also be distinguished from controls based on key figures. Controls can be manual or automated (Brünger 2009, p. 184ff.).

In addition to controls, communication plays an important role in the SCRM process (Mohr & Spekman 1994, p. 137). To facilitate handling and communication during the SCRM process, so-called risk management information systems (RMIS) can be used. If different departments, such as sales and purchasing, have access to each other’s same data sources, information exchange is more likely to occur well and efficiently (Brünger 2009, p. 209).

Associated reporting is also of great importance for SCRM success. The frequency of reporting, the volume of the report, and the target audience can promote or hinder the SCRM process (Kersten et al. 2013, p. 41).

How to audit SCRM? Conducting the Audit (8/9): List of questions (part c)

Below is a list of questions that can be used to audit the SCRM, concerning the topics Monitoring and Inspections and Communication and Reporting.

Monitoring and Inspections Are important SCRM documents stored in a central database?
  Are important SCRM documents stored in a central database?
  Is there a control process for operational supply chain risks?
  Is there a control process for strategic supply chain risks?
  Are important documents signed by the responsible persons (e.g. department heads) in order to increase commitment?
  How many and which metrics have been implemented to manage the supply chain?
  Are the supply chain management metrics considered in an SCRM context?
  What additional metrics have been introduced for SCRM?
  Is there an up-to-date historical log of key metrics?
  Is feedback from SCRM-related supply chain partners systematically handled and followed up on?

Communication and Reporting

Does a cross-departmental SCRM team meet at regular intervals?
  Is top management regularly informed about supply chain risks?
  Does supply chain risk documentation comply with external requirements?
  Have all of the applied measures been documented in compliance with external requirements?
  Are all affected employees aware of the internal communication channels in the event of an accident?
  Are all potentially affected employees aware of the available external communication channels in the event of an accident?
  Is there adequate access to information to support the identification and assessment of supply chain risks?
  Is a software-based solution available that allows relevant SCRM data to be entered?

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editor: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

How to audit SCRM? The preparation phase (4/9): Defining the auditing policy — configuration and reporting

The auditing policy must further specify whether audits are regulated using a longer-term auditing program or whether they are carried out only when required. The latter are referred to as “ad hoc audits”. Closely related to the auditing policies are the design variables of the auditing configuration, which are concerned with regularity/frequency, scope, and focus.

Reporting designs should be agreed in advance. In this regard, a suitable information and communication system should be established for all phases of auditing. The system should primarily enable general communication between the auditor or auditing team and the key person(s) responsible. To ensure unrestricted and confidential communication both within the auditing team and within the organization, appropriate information and communication tools must be available to all parties involved. In addition, an appropriate information and communication system can promote the efficient delivery of results and enable the application of the auditing methods described below.

The requisite questions for the beginning of the SCRM audit are therefore:

Scope and process of the SCRM auditing program
Have the subjects of the SCRM audit (e.g. sales or production departments) been selected?
Have the specific business aspects to be audited (e.g. logistics, supply chain management, etc.) been selected?
Have appropriate auditing techniques been defined (e.g. site visits, employee interviews, job observations, work-environment inspections, etc.)?
Is there a schedule for the SCRM audit process with the sequence, times, and duration of each individual department’s necessary approvals and access procedures?
What is the date of the SCRM audit kick-off meeting?
What is the date of the SCRM audit wrap-up meeting?
Has comparative criteria for the SCRM audit process been developed, which can be used to conclusively evaluate the audit findings?

Communication
Have all involved employees been informed of the SCRM audit schedule?
Have the physical workstations and corporate departments which will be audited been informed of the dates for the SCRM audit?
Are the communication channels for the SCRM audit defined?
Which employees will receive the final SCRM audit report?

Documentation
Is access to all the would be audited documents and details ensured?
Does the auditor have all necessary documents for the SCRM audit?
Does the auditor have any and all supplementary documents for the SCRM audit?
Have possible overlaps in content with other auditing systems been considered in order to avoid duplication of work?
Has a checklist for implementation of SCRM measures been prepared for the auditor?
Are the results of previous SCRM audits available? Where?

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editor: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

How to audit the SCRM? The preparation phase (3/9): Organizational location and target setting of the audit

In addition to the responsibilities (see previous blog post), the organizational location of the auditing must be determined before beginning. In compliance with auditing principles, the auditing should be based in an independent office within the company’s structure; this can be achieved via the establishment of a separate auditing department or via integration into an existing department, such as “internal auditing”.

The objective of the audit must also be defined in the preparatory phase (ISO 2011a, p. 17). Here, the literature distinguishes between three motives for conducting an audit:

To assess compliance with standards and specifications

To assess overall effectiveness and efficiency

To identify areas of potential improvement

 Accordingly, the following questions should be answered at the beginning of an SCRM audit:

Was an SCRM Auditing Goal set?
Has a decision been made as to whether this should be an ad hoc audit or part of a continuous auditing process?
Have the SCRM audit objectives been communicated to all stakeholders?
Have all costs associated with the SCRM audit been considered? 
Are sufficient physical independent premises available to carry out the SCRM audit?      
Are all necessary information and communication technologies available to the SCRM audit team?            

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editor: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

How to audit the SCRM? Preparation of an SCRM Audit (Part 1/9)

Long-term efficiency of the SCRM process can only be achieved if comprehensive monitoring of the SCRM implementation process is performed in all phases. To this end, SCRM-related auditing is a suitable method.

In risk management literature, the additional process monitoring for the risk management process is being actively discussed but has not yet been applied to SCRM. Since there has been no attempt to date to develop SCRM auditing, either within the scientific literature or in practice, this topic has been addressed as part of our research.

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editors: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

MBP 15/16 Measures and Best Practices for “Communication”

“The reporters stood outside our doors with microphones and cameras. By this point we had learned, to a certain extent, how to handle this internally–by having everyone “Please keep their mouths shut”. […] What if, for example, one of the very top corporate officers dies in a plane crash? Such an event is very specifically regulated here.” (Interview – Managing Director Food and Retail)

The design of communication is another factor in the success of SCRM. In addition to risk reports and reporting, associated internal and external communication can also influence the success of SCRM.

In the numerous expert interviews and focus groups with company representatives and scientists for the development of the maturation model, the following measures were identified:

  • Define procedures for the frequency and scope of SCRM-related communication. 
  • Formally establish meeting minutes to record relevant details.
  • Ensure that employees are largely aware of the internal communication process.
  • Outline the expectations of internal communication within the department and link this with aspects of the internal reporting process.
  • Ensure that the communication process is both bottom-up and top-down.
  • Use a risk management information system to facilitate communication as well as the documentation of SCRM.
  • In addition to internal communication, also formally regulate the process of external communication (for example, with supply chain partners, authorities, etc.) and ensure that this system is understood by all relevant employees.

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Reihen-Hrsg.: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

 

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