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SCOR® Risk Management Team Update SCRLC Meeting 19 May 2010 Agenda • SCOR® Risk Management Overview • Proposed Updates for SCOR® 10.0 • Other SCC Risk Management Activities 2 Ideally, supply chain risk management addresses the entire supply chain. Global Environment Organization’s Environment Suppliers’ Environment Customers’ Environment Organization Suppliers Supplier Facing (And outsource Manufacturing) Relationship Risk Supplier Performance Risk Human Resource Risk Supply chain disruption risk Supplier Environment Risk Market Dynamics Risk Disaster Risk Political / Country Risk Supplier Financial Risk Regulatory Risk 3 Customer Facing Customers Internal Facing Operational Risk Technical Risk Financial Risk Legal / Regulatory Risk Environmental Risk HR / Health and Safety Risk Political/ Country Risk Financial Risk Distribution Risk Relationship Risk Market Risk Brand / Reputation Risk Product Liability Risk Environmental Risk Political/ Country Risk SCOR® views the supply chain as built up of five distinct management processes. Product Design DCOR™ Sales & Support CCOR™ Customer processes Supplier processes Product Management Supply Chain SCOR ® Plan Source Make Deliver Return Enable 4 SCOR® 9.0 Enable Processes Plan Source Make Deliver Return Manage Business Rules EP.1 ES.1 EM.1 ED.1 ER.1 Manage Performance of Process EP.2 ES.2 EM.2 ED.2 ER.2 Manage Process Data Collection EP.3 ES.3 EM.3 ED.3 ER.3 Manage Process SC Inventory EP.4 ES.4 EM.4 ED.4 ER.4 Manage SC Capital Assets EP.5 ES.5 EM.5 ED.5 ER.5 Manage Integrated SC Transportation EP.6 ES.6 EM.6 ED.6 ER.6 Manage Process Configuration EP.7 ES.7 EM.7 ED.7 ER.7 Manage Process Regulatory Compliance EP.8 ES.8 EM.8 ED.8 ER.8 Manage Supply Chain Risk EP.9 ES.9 EM.9 ED.9 ER.9 Manage Financial Plan Alignment EP.10 Manage Supplier Agreements 5 ES.10 What’s new for SCOR® 10.0? • Updated Best Practices reflecting team research, member feedback, and industry recognized practices • Metrics Revisions to better reflect the role of SCRM in supply chain strategy and execution • New Risk Research to help SCC members understand risk identification, quantification, mitigation, and response techniques. 6 SCOR® 10.0 will have 13 Risk Best Practices Updated New 7 • • • • • • • • • • • • • Supply Chain Risk Management (SCRM) Supply Chain Risk Identification Supply Chain Risk Monitoring Supply Chain Risk Assessment Mitigate Source Risks Crisis Communications Planning Risk Management Programs Coordination with Partners Supply chain business rules configured to mitigate risk Supply chain information configured to minimize Supply chain network configured to mitigate risk Bowtie Risk Management Approach Risk Program Monitoring Network Prioritization for Risk Identification Proposed Metrics Changes for SCOR® 10.0 Proposed SCOR® 10.0 VAR Hierarchy • Value at Risk (VAR) moved from Cost to Agility – Level 1 (KPI) metric – Include option for nonmonetary impacts – Include option for confidence intervals • Risk Mitigation Costs enhanced – New definition – Level 2 metric 8 Add this diagram: Level 1 Level 2 AG1.4 Supply Chain Value At Risk (VAR) AG2.1 Value at Risk (VAR $) (Plan) AG2.2 Value at Risk (VAR $) (Source) AG2.3 Value at Risk (VAR $) (Make) AG2.4 Value at Risk (VAR $) (Deliver) AG2.5 Value at Risk (VAR $) (Return) Level 3 Time to reach Point of No Return Time to Detect Time to Restore Time Factor Historical Event Data Expert Opinion Risk Management Team Continued Research • Updated research into metrics and best practices • Participation with Supply Chain Risk Leadership Council • Coordination with MIT on risk survey 9 Other Research Activities • In depth interviews with SCRM leaders • Expansion into the DCOR® Model Product Design DCOR™ Sales & Support CCOR™ Customer processes Supplier processes Product Management Supply Chain SCOR ® • Continued coordination with SCRLC (joint event?) 10 Risk Management Special Industry Group • The Risk Management SIG will be a member managed group dedicated to furthering the research and application of risk management. • Call for members planned in mid-2010 • Charter will be to lead SCC risk management activities – – – – – DCOR and CCOR inclusion Future SCOR improvements Research efforts Training Member outreach • Structure will follow other SCC SIGs – Convergence – Aerospace and Defense – Oil and Gas 11 One Day SCOR SCRM Workshop • Supply Chain Risk Management (SCRM) Fundamentals – Introduction to each SCRM component and how each can support the firm's supply chain management – Discussion of SCRM process and all components – Presentation of several example projects and discussion of component use for each specific project • The SCOR Model and Risk management – Background, components, strategies and implementation • Participants who complete this works will be able to – Understand the purpose and goals of SCRM within the context of their firm and supply network – Develop a basic SCRM strategy and plan for their organization – Understand and articulate the business value of a SCRM program • Prerequisite - Attendees must be conversant in the basic SCOR model in order to attend this workshop. The SCOR Framework training includes the required basics 12 SCOR® Risk Management Team Update Taylor Wilkerson [email protected] +1-703-917-7438 13