Integrated solutions already exist, helping companies quickly transition from traditional planning to dynamic planning. More commonly, the software team does nothing about risks until something goes wrong. Resources are set aside to deal with them, should they become actual problems. Being in a reactive state means “reacting to events or situations rather than doing something first in order to change or prevent something,” according to the Cambridge Dictionary. Organizations must get control over the risks plaguing the supply chain. There…, The Philosophy Behind OTIF Calculation On-time, in-full – or OTIF as it’s commonly referred to – was borne of the concept that retail stores need…, Supply Chain Optimization: What You Need to Do It Right. Change happens. Reactive risk management: Reactive risk management attempts to reduce the tendency of the same or similar accidents which happened in past being repeated in future. Sorry, your blog cannot share posts by email. Companies need this kind of data that enables them to practice proactive planning with full confidence in these risk scores and data behind them. When risks are allowed to mature, they become dangerous to the supply chain. OTIF Calculations: Not as Simple as You Might Think. Supply chain logistics, if done correctly, identifies all of the risks across the supply chain that are labor-intensive, requiring plenty of data entry, often in static spreadsheets. For instance, when weather data is combined with operational data, prescriptive analytics may reveal a simple change in the mode of transportation may not only ensure the shipment makes it to its destination on time but also at a lower cost. Post was not sent - check your email addresses! The effects can be on people,society, users, customers etc. It takes planning – continual, data-driven planning. The keyword to focus on here is “unanticipated.” While every risk to the enterprise cannot be anticipated, there are plenty of things a company can do to shed light into the darkness. Companies must first measure the right data points in order to implement an effective supply chain risk mitigation strategy. Risk identification is the first step in risk management. Risk scoring is a highly-valuable feature that speeds decisions. Part of this data is incorrect; even more is incomplete and almost all are discovered too late. Reefer trucks, for example, are expensive and potentially unnecessary if temperatures along the route have a high likelihood of remaining within tolerance levels. Failure Mode Effect and Criticality Analysis (FMECA), SECURITY ANALYSIS AND INVESTMENT MANAGEMENT, GGSIPU(NEW DELHI) SOFTWARE PROJECT MANAGEMENT – 4TH SEMESTER – STUDY MBA & BBA NOTES. With traditional planning, there are simply too many risk factors that change too often to be considered holistically. When looking for a supply chain risk mitigation solution, be sure it is capable of continually assessing risks across multifactors, historically, in real-time and predictively. But if you’ve been in the world for more than a few hours, you know to expect the unexpected. We all know that the best practice is to anticipate change, but how? When risks are allowed to mature, they become dangerous to the supply chain. There likely isn’t an organization in any industry that wouldn’t say they’d like to optimize their supply chain. This is often called a fire fighting mode. Decision makers need not spend time gathering and analyzing data but to simply look at a dashboard that displays the risks and their related scores. In the movies that carried his name, Indiana Jones, when faced with overwhelming difficulty, would invariably say, “Don’t worry, I’ll think of something!” Never worrying about problems until they happened, Indy would react in some heroic way. As an organization, how do you approach supply chain risk mitigation? If we’re honest, few of us enjoy operating in a reactive state. This is the dynamic planning that is so valuable, one that enables companies to adapt to change rather than hope it doesn’t happen. An integrated solution that continually collects real-time supply chain data can be configured to provide notifications of risks across all nodes in the supply chain. A considerably more intelligent strategy for risk management is to be proactive. Reactive risk strategies have been laughingly called the “Indiana Jones school of risk management”. Too many decisions are made on incomplete data. There really is no such thing as reactive planning. At best, a reactive strategy monitors the project for likely risks. By shifting towards a more automated, dynamic risk assessment and analysis, companies can quickly respond, often before the risk has matured into a real threat. The right data makes all the difference. Responsive Supply Chain or Can You Have Both? There are simply too many changing data points involved and too few resources. Resources are set aside to deal with them, should they become actual problems. Then, the team … If supply chain leaders are looking in the wrong direction, relying on bad or incomplete data, risks are missed. Organizations do the best they can, but things are missed. Any process that delays the identification of risks will also delay their mitigation. Instead of time-consuming, error-prone and partial aggregation of data, organizations have real-time, actionable data at their fingertips. It’s stressful not being prepared. If you haven’t planned, you’re automatically reactive. Proactive vs. reactive: What’s the difference? Sadly, the average software project manager is not Indiana Jones and the members of the software project team are not his trusty sidekicks. When we think of risk management, chances are that it’s the “proactive” sort that we’re pondering. Risks are potential threats, not ones that actually pose any danger or hazard. Manual hunting and pecking may discover some risks, but this process takes time and frequently misses many of the risks that haven’t historically been a threat. The following tips aim to help your organization move from reactive to proactive, dynamic planning in order to become a more agile enterprise. These scores provide instant visibility into the severity and likelihood of the risk occurring, as well as recommendations for mitigation of each risk. Multiple modes, lanes, carriers, equipment and more can be modelled simultaneously against potential pitfalls to reveal patterns, severity and possibilities. Erroneous and/or incomplete data could cause serious supply chain disruption, leading to lost profits and a damaged reputation. This is why Forbes and KPMG found 84 percent of CEOs are concerned about the quality of the data they’re basing their decisions on. Efficient vs. Instead of proactive planning that leverages real-time and accurate data with prescriptive analytics, business leaders are forced to engage in damage control. Many businesses, however, are doing just that; crossing their fingers that risks won’t materialize and everything will go as expected. Risk scoring operationalized the data to make it instantly usable. Proactive risk management: Proactive risk management attempts to reduce the tendency of any accident happening in future by identifying the boundaries of activities, where a breach of the boundary can lead to an accident. Is there a structured supply chain planning process that anticipates risks so they can be mitigated before they have time to cause interruptions? It’s quite another to see those risks scored, ranked, color-coded and displayed on a dashboard in real time. When it comes to the supply chain, risks can cause upstream and downstream problems that directly and indirectly affect the bottom line. Some of the most common techniques which can be applied to identify different risks are using risk templates, interviewing the stakeholders, project retrospectives etc. A simple definition of the difference between reactive business strategies and proactive ones can be explained in one sentence by Scott Thompson, a contributing writer for Chron.com: “Reactive business strategies are those that respond to some unanticipated event only after it occurs, while proactive strategies are designed to anticipate possible challenges.” We couldn’t have said it better ourselves. At best, a reactive strategy monitors the project for likely risks. The answer is to integrate supply chain risk analysis software that uses machine learning, artificial intelligence and multi-factor prescriptive analytics to automatically identify risks across the supply chain. Once a shipment is in route, the window is closing on what risk mitigation efforts can be launched. There are several supply chain risk identification and monitoring solutions on the market. The primary objective is to avoid risk, but because not all risks can be avoided, the team works to develop a contingency plan that will enable it to respond in a controlled and effective manner. More commonly, the software team does nothing about risks until something goes wrong. How does an organization transition from this reactive mode to proactive planning that constantly surveys the landscape for the most pressing risks? With traditional planning, supply chain status is often unreliable and based on a single mode. Because shipments generally follow the same lanes, the process is repeatable. Then, the software team establishes a plan for managing risk. It’s how you lessen the impact of the unexpected and mitigate those risks that matter. Several formal techniques like Failure Mode and Effect Analysis (FMEA) and Failure Mode Effect and Criticality Analysis (FMECA) are used to find the risk.