Guest Column: The Case for Supply Chain Audits

A Call to Action - Quantify vulnerabilities, prescribe options to mitigate risks; how to audit, analyze and deal with supply chain vulnerability

Action Gap

A Vital Concern

Action Plan

  1. Education — Case study examples, given by experienced strategic supply chain planners, quickly establish first principles, dispel false tribal wisdom, define concise business terminology and provide an overview of risk categories and mitigation methods.

  2. Audit — Experts gather data for all components of a supply chain: commodity types (raw materials, intermediate products and finished products), customers, channels and facilities (suppliers, manufacturing locations, distribution center locations, cross-docking operations, ports), then identify critical elements, specific categories of exposure and existing contingency plans, if any, for each such component. This step delivers a complete, clean-sheet view of a global supply chain not available from existing business systems, such as enterprise resource planning (ERP) or execution systems.

    These types of questions are answered within the audit process:

    • Can we operate the business after a disaster? If not, what must we do to get back into operation as quickly as possible?

    • Can we secure customer orders? Inventory? Transportation modes? Supplier alternatives?

    • Are our physical plant and warehouse facilities secure and structurally sound? If not, what are alternative plants, warehouses or other locations we can use?

    • Is power available? What alternatives do we have?

    • What can we do if we have computer, equipment or telecommunications failures?

    • What happens if we lose key staff to an epidemic, medical emergency, bomb threat, toxic gas spill or release, hostage situation or labor strike?

    • How do we protect and preserve our corporate assets?

    • How do we ensure the safety of employees? Drivers?

    • If there are transportation problems, how can we deliver products? What happens in the roads are closed? What alternative routes or modes of transportation can we use?

    • Does our corporate insurance policy cover disasters?

  3. Prescriptive analysis finds how and where to make affordable changes. This step identifies the most cost-effective enhancements to harden a supply chain. Specific analyses for a given supply chain are defined by the audit. Techniques generally fall into the categories of critical commodity analysis, critical customer analysis, critical location analysis and short-term crisis response analysis. Using sophisticated supply chain modeling tools, the cost and service effects of various loss scenarios can be quantified, ranked, then prescribed in detail for the supply chain design modifications that are required to mitigate the risks.

About the Author: Dr. Jeff Karrenbauer is president of Manassas, Va.based INSIGHT. More information at

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