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Geographic Information Systems as a Supply Chain Risk Management Tool
Geospatial analysis can help supply chain executives map their supply networks, identify vulnerabilities and quickly respond to potential disruptions
Supply Chain Network Vulnerabilities: Potential Gaps in Your Strategy
Today's supply chain professional faces a dynamic range of natural and manmade risks, including hurricanes, earthquakes, avian flu, political unrest and terrorism. Global sourcing and offshoring reduce a company's visibility and control of issues within their supply chains. Additionally, Lean supply chain valuation, just-in-time inventory and sole sourcing create networks even more susceptible to environmental risk. Although corporate risk management mitigates potential loss due to these catastrophes, penalties and insurance cannot replace market share or repair harm to a company's reputation and loss of customer confidence.
According to a 2005 FM Global/Harris Interactive research survey, 69 percent of chief financial officers, treasurers and risk managers at Global 1000 companies in North America and Europe considered property-related hazards and supply chain disruptions as major threats to top revenue sources. How can managers understand the potential of these threats to impact their business, avoid disruptions and recover as quickly as possible from disaster?
Monitoring Risks to Your Operations
Supply chain executives and business continuity managers can be inundated with volumes of data from various internal sources that need to be organized in a logical format. Corporate real estate might supply spreadsheets that contain facilities, offices and warehouse locations. Human resources departments have employee listings and home address, along with expatriates and company representatives traveling abroad. Purchasing or procurement departments have supplier and vendor data. These data form the foundation of a corporation's operational footprint.
The challenge that exists for supply chain executives is gaining the ability to rapidly determine which daily events affect a corporation's operations and need to be assessed and managed. The ability to adapt critical supply chain networks during a disaster, while ensuring minimal disruption, rests in the capacity to identify a network in a pre-crisis condition and assess various potential disruptive scenarios and their impact on a company's operations. Footprint visualization, including geographic identification of the corporate asset base, along with the origins of the supply chain, creates awareness, visibility and sensitizes decision-makers to environmental risk.
GIS for Supply Chain Risk Management
Geographical information systems (GIS) offer a valuable supply chain risk management (SCRM) tool. GIS analysis provides the opportunity to represent information visually, reducing a company's pain of preparing a response to risks or threats to its operational footprint. GIS analysis allows the user to visualize a complete company profile to include manufacturing, office and warehouse locations, as well as employee, client, customer, distributor and supplier locations. It allows for the greater understanding of the operating environment surrounding the corporate global footprint. Relationships can then be drawn between these locations, allowing for the company's supply chain to be identified and monitored.
Various types of risks — either man-made (acts of terror, corruption, crime, political instability and sabotage) and natural threats (earthquakes, floods, hurricanes, tsunamis, volcanoes) — can be mapped, layered and presented for scenarios to stress test the company's network capabilities and business continuity plans. Historical risk trends, such as earthquakes, hurricanes, volcanoes, terrorist attacks and country risk ratings can be over-layered against the network to additionally determine an operating risk environment.
Today's supply chain professional faces a dynamic range of natural and manmade risks, including hurricanes, earthquakes, avian flu, political unrest and terrorism. Global sourcing and offshoring reduce a company's visibility and control of issues within their supply chains. Additionally, Lean supply chain valuation, just-in-time inventory and sole sourcing create networks even more susceptible to environmental risk. Although corporate risk management mitigates potential loss due to these catastrophes, penalties and insurance cannot replace market share or repair harm to a company's reputation and loss of customer confidence.
According to a 2005 FM Global/Harris Interactive research survey, 69 percent of chief financial officers, treasurers and risk managers at Global 1000 companies in North America and Europe considered property-related hazards and supply chain disruptions as major threats to top revenue sources. How can managers understand the potential of these threats to impact their business, avoid disruptions and recover as quickly as possible from disaster?
Monitoring Risks to Your Operations
Supply chain executives and business continuity managers can be inundated with volumes of data from various internal sources that need to be organized in a logical format. Corporate real estate might supply spreadsheets that contain facilities, offices and warehouse locations. Human resources departments have employee listings and home address, along with expatriates and company representatives traveling abroad. Purchasing or procurement departments have supplier and vendor data. These data form the foundation of a corporation's operational footprint.
The challenge that exists for supply chain executives is gaining the ability to rapidly determine which daily events affect a corporation's operations and need to be assessed and managed. The ability to adapt critical supply chain networks during a disaster, while ensuring minimal disruption, rests in the capacity to identify a network in a pre-crisis condition and assess various potential disruptive scenarios and their impact on a company's operations. Footprint visualization, including geographic identification of the corporate asset base, along with the origins of the supply chain, creates awareness, visibility and sensitizes decision-makers to environmental risk.
GIS for Supply Chain Risk Management
Geographical information systems (GIS) offer a valuable supply chain risk management (SCRM) tool. GIS analysis provides the opportunity to represent information visually, reducing a company's pain of preparing a response to risks or threats to its operational footprint. GIS analysis allows the user to visualize a complete company profile to include manufacturing, office and warehouse locations, as well as employee, client, customer, distributor and supplier locations. It allows for the greater understanding of the operating environment surrounding the corporate global footprint. Relationships can then be drawn between these locations, allowing for the company's supply chain to be identified and monitored.
Various types of risks — either man-made (acts of terror, corruption, crime, political instability and sabotage) and natural threats (earthquakes, floods, hurricanes, tsunamis, volcanoes) — can be mapped, layered and presented for scenarios to stress test the company's network capabilities and business continuity plans. Historical risk trends, such as earthquakes, hurricanes, volcanoes, terrorist attacks and country risk ratings can be over-layered against the network to additionally determine an operating risk environment.
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