Globalization, cost-cutting have increased corporate risk; INSIGHT counters with holistic audit and mitigation services
Manassas, VA — July 14, 2006 — INSIGHT Inc., an international provider of planning solutions for supply chain design, announced INSIGHT Supply Chain Audit, which provides services to uncover risk and vulnerability within supply chain networks.
Terrorism; civil wars; dock strikes; attacks on oil fields in Saudi Arabia; potential pandemic; last year's disastrous hurricanes; and the ongoing threat of political, social and economic instability around the world have exposed U.S. firms to more than $300 billion in supply chain disruptions, according to a recent study by Aon Trade Credit. Initiatives to minimize supply chain costs and increase responsiveness, including narrowed supply networks, single sourcing, manufacturing consolidation in less stable countries and other cost-cutting has unintentionally exposed corporations to higher risk.
In the last five years, supply chain vulnerability has risen from an obscure topic, scarcely worthy of serious discussion, to a vital concern of senior executives responsible for preserving corporate continuity, said Jeff Karrenbauer, president of INSIGHT Inc. Existing vulnerability practice and literature today focuses only on the certification of what would better be termed reliability of primary suppliers and outsourced manufacturing, as well as that of upstream components of their own supply chains. These are important concerns, but they constitute a small fraction of a comprehensive vulnerability analysis.
INSIGHT recently introduced SAILS 21 Version 4 with functionality extensions that enable a series of analyses designed to uncover and mitigate vulnerabilities in the supply chain. INSIGHT's supply chain vulnerability audit service is a three-step holistic process that encompasses the entire supply chain, starting with a company's customers and the products they purchase, then working back to the uppermost tier of raw material suppliers. INSIGHT said the result is a plan for resiliency in the form of right-sized and strategically located facilities with flexibility for the supply chain, thereby hardening it against disruption. The three steps involve:
1) Education — Case study examples, given by experienced strategic supply chain planners from INSIGHT, quickly establish first principles, dispel false tribal wisdom, define concise business terminology, and overview risk categories and mitigation methods.
2) Audit — INSIGHT 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, DC 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. Insight provides comparisons with best practice peer groups for real-world context.
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 existing tools, INSIGHT quantifies and ranks/orders the cost and service effects of various loss scenarios, and prescribes, in detail, the supply chain design modifications and associated cost, capacity, and service impacts required to mitigate the risks. In short, INSIGHT provides a detailed plan of action, not simply a recommendation for further study.
— Supply chain executives are discovering new ways to apply technology and innovative processes to the challenge of managing uncertainty. Read more in "Rethinking Risk," cover story in the August/September 2005 issue of Supply & Demand Chain Executive.