PART 14. SUPPLY CHAIN LOGISTICS – RISK FRAMEWORKS
This series presents A LEADERSHIP STRATEGY, as the subtitle indicates. They use Supply Chain and Logistics as the focal point for discussing contextual leadership in the face complexity, randomness, risk, flexibility, agility and non-rational decision making. In them I discuss the multi-dimensional approach to leadership: what is leadership? How do we lead? What is our capacity to lead? And specifically, they look at leadership from the perspectives of risk, ambiguity, uncertainty, beyond command and control process management.
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An environment is a force of influence. It has an impact on how we operate within the constraints and opportunities, risks and capabilities constituting that particular environment.
There are two types of environments that have an impact on Global Supply Chain Logistics:
? External Micro Environments, which more closely affect the processes and operations of Supply Chain Logistics, including suppliers, customers, market intermediaries, competitors, and various publics.
? External Macro Environments, which more closely affect the global reach of Supply Chain Logistics, including economics, geo-politics, regulatory regimes, technology, culture, demographics, geography and natural conditions.
These forces are constantly in action and changing, engaging and connecting myriad business opportunities in a complex and multifaceted interplay of issues, causes, and effects. As a result, they manifest foreseeable, as well as unpredictable and unprecedented, risks.
There are several ways to approach risks in global supply chain logistics complex systems: Process and Value Stream Risks, Operational and Inherent Risks, and Risk Criticality.
VALUE STREAM: Focusing specifically on SCL process and value stream issues, we can identify:
OPERATIONAL AND INHERENT: There are 4 “big buckets” in the Global Supply Chain Logistics complex system: Supply, Process, Demand and Environmental. Supply and Process are micro-environments; Demand and Environmental are macro-environments. Each entails operational risks and correlated inherent risks, as follows:
CRITICALITY: The most important approach to risk in Global Supply Chain Logistics focuses on criticality. By identifying critical levels, we can begin to develop mitigation plans.
The dynamism and flexibility of Global Supply Chain Logistics ecosystems present opportunities and challenges: the complex system is evolvable and scalable, but it requires continuous adjustment, and therefore is not controllable. Sustainable success calls for permanent engagement with all stakeholders, improvement and expansion, and innovation and renewal.
As with any business, and even any life situation, Global Supply Chain Logistics faces multiple forces of influence that are constantly in action and changing, engaging and connecting to myriad opportunities in a complex and multifaceted interplay of issues, causes, and effects. As a result, they manifest foreseeable, as well as unpredictable and unprecedented, risks.
Risks cannot be eliminated or even avoided. They are part of the tapestry in which businesses and societies operate. Resilience is about how we handle risk.
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SPONSOR: The Logistics Institute is a Canadian-based professional organization delivering programs that enable practitioners to become certified professionals by earning P.Log, LS, and SC designations. Institute programs are competency based; they validate capability, not just knowledge. By earning these designations one is recognized as a professional and a strategic leader in Global Supply Chain Logistics. For further information go to www.loginstitute.ca