How to manage risks?

Based on the results of the first two SCRM phases, management measures for supply chain risks can be developed. Based on the risk strategy, it is decided which supply chain risks trigger an immediate need for action (Denk et al. 2008, p. 127). Risks that are above or close to the defined tolerance range or for which an additional increase is expected in the foreseeable future require appropriate action.

The aim of risk management is to change the company’s risk landscape in such a way that an optimization of the ratio of earnings opportunity to risk of loss (risk/return optimization) is achieved (Rogler 2002, p. 26; Diederichs 2012, p. 126).

Five categories of SCRM control strategies can be delineated in the literature: Avoidance, Mitigation, Limitation, Pass-Through, and Self-Sustainability. The first two (avoidance and mitigation) target cause-related measures and the remaining three (limitation, pass-through, self-sustainability) focus on impact-related measures (Sodhi et al. 2012, p. 52; Gupta et al. 2014, p. 83; Handfield et al. 2008, p. 41; Brünger 2009, p. 163f.; Rogler 2002, p. 25ff.).

The selection of control strategies must be based on the agreed corporate objectives and the risk strategy. In addition, it depends on legal, socially responsible, and environmental requirements, as well as general cost-benefit considerations during implementation (ISO 31000:2009, p. 19).

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

Suche in OpenEdition Search

Sie werden weitergeleitet zur OpenEdition Search