Here's my presentation from the SusMatCrit Autumn School at TU Delft this morning. Please feel free to contact me with further questions and thanks for all your feedback

1. MITIGATING SUPPLY RISK
SUSCRITMAT AUTUMN SCHOOL FOR PROFESSIONALS
OCTOBER 24-26, 2018, TU DELFT, NETHERLANDS
ADRIAN SEGENS
© Adrian Segens2018

2. ©
Risk Management
Cycle
Identify
1
• Scope
• SWOT
• Stakeholder
Prioritise
2
• Impact
• Probability
• Perception
Categorise
3
• Environmental
• Social
• Financial
Strategies
• Mitigate risk
• Take opportunities
• Measure results
4
Monitor
• Triggers
• Assumptions
• Emerging
5

3. ©
1
challenge
3
disruptors
2
concepts
EnablingTechnology
1
challenge
Circular Economy
Natural Capital
Risk - redefined3
disruptors
Value Chain
Engagement
LifecycleThinking2
concepts

4. ©
The way in which
perceive and
manage supply
chain risk is facing
3
disruptors
Circular Economy
Supply chains aren’t linear!
Circular Economy
• New material streams – with new risks…
• Solution to many (not all!) material scarcity risks
“Scarcity in manufacturing:The ticking time bomb”
“the supply of many minerals and metals is struggling to keep up
with rapid increases in consumption, resulting in price hikes and
delivery delays.”
Aluminium
Copper
Cobalt
REE
34%
32%
93%
4%
London Metal Exchange
Cash Purchase Index
October 2016 – October 2018

5. ©
The way in which
perceive and
manage supply
chain risk is facing
3
disruptors
Circular Economy
Supply chains aren’t linear!
Circular Economy
• New material streams – with new risks…
• Solution to many (not all!) material scarcity risks
Aluminium
Copper
Cobalt
REE
34%
32%
93%
4%
Apple Sustainability Report 2017
“We’re going deeper to pioneer a closed-loop supply chain, where
products are made using only renewable resources or recycled
material”
1900 Kg
800 Kg
550 Kg
24 Kg
Apple Sustainability Report 2017

6. ©
Circular Economy
Risk
Location,
condition and
availability of
materials
?
?
?
To mitigate supply risk,
stakeholders must know
Condition
Availability
Location

7. ©
The way in which
perceive and
manage supply
chain risk is facing
3
disruptors
Natural Capital
• Ecosystem services have an economic value = ‘Natural Capital’
• Most sustainability thinking is around impact not dependency
• Dependency on materials = risk
• Measurable and actionable
“Natural capital is another term for the stock of renewable and
non-renewable resources (e.g. plants, animals, air, water, soils,
minerals) that combine to yield a flow of benefits to people.”
Natural Capital
Dependency as risk

8. ©
Natural Capital in
action
Operations
€ 205 m
Material
€ 785 m
End of Life
€ 10 m
Use Phase
€ 6,200 m
90%
Metal &
Electronics
10%
Plastics
€7,200m
Philips Environmental Profit & Loss - 2017
• Impact is understandable - €, $, £ not ‘KgCFC-11-eq’
• Different impact categories are made comparable
• Managers are able to measure RoI with environmental insights
• Risk of dependency on environmental resources is highlighted
• Strategic focus can be understood at a glance

9. ©
The Challenge
(lack of) supply
chain visibility
Tier 1 engagement
• “Beyond compliance”
• Audit fatigue
• Questionnaires have limited
function
• Motivation – comply NOT excel
• New ways to engage and motivate
the suppliers
Risk
“Carbon = cost”
Value Chain
Engagement

10. ©
The Challenge
(lack of) supply
chain visibility
PRODUCT DATA IS FRAGMENTED
SUPPLY CHAIN IS A SECRET
REQUIRED DATA IS UNKNOWN
CENTRALISATION IS UNWANTED

11. ©
Product impact and provenance
• Supply chains are dynamic
• Material traceability and chain of
custody vital for mitigation
Batch
#1
Batch
#2
Risk
The Challenge
(lack of) supply
chain visibility

12. ©
Product impact and provenance
• Jeans rivets
• Electroplated steel
• High risk, toxic process
• Vital to brand reputation
• Counterfeit risk
• 12 Suppliers @T2
• 3 - Sourcing agents – eliminated
• 4 - Did not respond – eliminated
• 5 – Assessed
• 3 - Selected
Risk
• Risk to brand mitigated
• 3 excellent suppliers
• Rewarded by 4x revenue
The Challenge
(lack of) supply
chain visibility

13. ©
Supplier concentration
• Dependency
• Critical path
Risk
• October 2011
• HDD prices rose by 200% in 14 days
• 50% of world production in Thailand
• Devastated by flooding
The Challenge
(lack of) supply
chain visibility

14. ©
Technology to the
rescue?
PRODUCT DATA IS FRAGMENTED
SUPPLY CHAIN IS A SECRET
REQUIRED DATA IS UNKNOWN
CENTRALISATION IS UNWANTED
Blockchain has the potential to provide
the verifiable link between materials and
their provenance

15. ©
IoTBlockchain
Technology to the
rescue? Guided maintenance
Route planning
Optimised supplyExtended use cycle
Predictive
maintenance
Localised sharing
networks Shared use
Increased
utilisation
Precise input
requirements
Reverse logistics
Local sources for
secondary users
Enables digital market
for available material
Loop and cascade
Accurate valuation
Re-use / recycle?
Predictive
remanufacturing
Identify sources
Regenerate natural
capital
Identification of
degradation
2016

16. ©
Every value chain activity contributes to
making and distributing products
1
Every value chain activity has
environmental impact
2
Every product embodies impact
3
Every value chain activity has different
magnitudes and nature of impact4
Every value chain activity has
consequences at other stages of the life
cycle - risk of “burden shift”
5
LifecycleThinking

17. ©
Natural Capital in
action
LifecycleThinking

18. ©
Understanding
materiality
Importance to
stakeholders
High
Low
Impact on
Business
High
(mitigation – weighted by probability and importance)
Environmental
Social
Governance
Light-weighting
Reduced power
Recover EoL product
100% renewable
Reduced power

19. ©
Adrian Segens
t: +44 (0) 7768 726310
e: adrian@segens.uk