Disruption Management has become a major discipline in today’s Supply Management doctrine. The abatement of supply risks is at the heart of such doctrines and strategies. NLPA designed the Supply Risk Ecosystem Framework to conceptualize supply landscapes regarding supply risks.
The Supply Risks Ecosystem™ puts supply risks and the need for supply risk management into perspective. It serves as a mechanism to foster a clearer understanding of the positioning of supply chain risk factors. It is easy to fall victim to a siloed view of supply chain risks. However, many of the forces and factors in supply chain environments function in silos—often with competing goals and priorities.
Supply chains can be broken up into four parts:
- General Environment: This dimension is made up of:
- legal forces
- demographic forces
- technological forces
- economic forces
- political forces,
- competitive forces
- ecological forces
- Customer Requirements: The reason why an organization is in business or exists.
- Organization or Business Environment: The Procurement Function is mandated to support its operations, manage spend, and protect it from supply risks.
- Supply Environment: The people, skills, metrics, supply chain technologies, procurement/supply chain processes, and culture. A critical aspect of this environment is the supply chain network nodes.
Figure 1, The Risk Eco System
All four environments pose supply chain risks. Effective procurement and supply chain leadership requires a robust understanding of supply chain complexity. It is critical to understand the trends in these environments, the impacts on organizational cohesiveness and continuity, as well as how organizations are positioned to address such impacts, mitigate risks, and improve their profitability. Such insights should be leveraged as inputs to procurement buying plans, tactics, and strategies.