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Supply Chain Risk Management now has its own community of experts
Risk management is a profession, a set of skills and a state of mind that organizations need to develop. Does this profession already exist in your company? By creating a dedicated community, co-hosted with Renault Group and the consulting firm Wavestone, we hope to help the profession collectively develop its skills, thanks to feedback from the various participants and the methodological insights of our facilitators.
In this article, we look back at the community's first workshop on Supply Chain risk classification and the associated rating methodology .
Enterprise risk management, a prerequisite for speed and resilience
"The Covid-19 crisis and the war in Ukraine were the catalysts for the loss of control over supply chains. They revealed our customers' lack of anticipation and preparation for risk management". Wavestone's testimony on risk management within organizations sheds light on how far we still have to go.
The growing number of crises and the uncertainty that accompanies them have prompted companies to strengthen their crisis management processes. Nevertheless, these efforts are mainly focused on reacting to proven risks, rather than on preventive measures to mitigate exposure to risk and know how to act accordingly.
Supply Chain risk management is part of the company's overall risk management. It involves controlling risk factors, events and circumstances that could compromise the Supply Chain in all its activities.
Implementing a risk management process is becoming a prerequisite for a sustainable business model. It is a response to the challenge of controlling the supply chain, but also to economic issues (control of industry costs), commercial issues (service levels and relations with partners) and issues of national sovereignty (relocation of production and independence of the French model).
Renault Supply Chain challenges:1st feedback from the community
"The risk of product shortages linked to capacity limits, lack of raw materials and manpower" represents the number 1 risk for organizations in 2023" (Source: KYU,4th Risk Barometer), which means that companies will need to monitor their supplier relations more closely.
Thierry Blein, SupplyChain governance, performance & risks officer at Groupe Renault, adds that the current context is characterized by an upsurge in risks:
- Climatic risks , with the example of flooding in Slovenia forcing some automakers to close their sites for a time.
- Scarcity of raw materials such as copper, demand for which is around 4 times greater than the volume mined.
- Loss of talent , with a general increase in the number of people leaving the supply chain and a lack of attractiveness of the field, which is struggling to recruit.
- Operational due to rising transport costs, container shortages and capacity risks.
To cope with this new environment, we need to change our corporate philosophy. From now on, we need to take into account the level of risk and resilience of the Supply Chain in our sourcing decisions. The automotive manufacturer also indicates that it is working on the major issues of product standardization to reduce the complexity of its Supply Chain, better capacity management and more reliable forecasting.
Risk mapping and rating methodology: the fundamentals of good risk management
The aim of this first meeting was to present Renault's approach to risk mapping and management. The upstream identification phase is based on a census of the main risks that could hinder the achievement of the organization's objectives. This approach is replicated at the level of each department.
For each element detected, a risk tolerance rating scale is set up and translated into a highly visual mapping.
Once the situation has been assessed, success can be summed up in two words: governance and management. The Group has therefore decided to position the Supply Chain function at the highest corporate level (CEO-1). This allows for a more cross-functional approach and a holistic view of risks. The decompartmentalization of data also leads to cross-functional decision-making governance.
In concrete terms, risk management action plans are monitored 2 or 3 times a year by the SCM CODIR, and each department (business line) is responsible for managing the risks associated with its activity, through the appointment of a Risk Owner. For example, the risk of talent attrition is managed by the HR department. Similarly, the "transport capacity" risk is the responsibility of the Logistics Engineering Department.
Upcoming group sessions: climate, technological and cybersecurity risks
Session #2 on 18/10: Supplier relationship management, led by Wavestone, with feedback from Sopra Steria in the aeronautics sector.
Session #3 on 29/11: Technological risk management & Cybersecurity, led by Wavestone
Session #4 - date to be confirmed: Climate risk management, led by Wavestone and France Supply Chain
Communitiesare self-help and experience-sharing groupswhere confidentiality and non-commerciality are paramount. They provide aprivileged forum for exchanges between professionals from all sectors of activity. Since 2023, they have been growing in popularity among our members.
