1. Supply Chain Resiliency
Supply Chain Resiliency
Supply Chain Resiliency is not merely about managing risk – it’s about building flexible
and intelligent supply chains that allow companies to respond quickly to rapidly shifting
changes in supply and demand. Companies with resilient supply chains are able to capture
otherwise lost revenue and reduce response costs across the extended supply chain.
Becoming Resilient
FINANCIAL LOCATION
WORK
BRAND
RISKS RISKS
FORCERISK
RISKS
MANAGEMENT
INDUSTRY REGULATORY
OPERATIONAL
RISKS
RISKS RISK
RISKS
360 DegreeView of Supply Chain Risk
• Revenue, Cost, Profit
• Liquidity
• Credit
• Currency fluctuations
• Supplier Financial
Distress
• Reputation
• Speed to Market
• Customer Satisfaction
• Intellectual Property/
Counterfeit Goods
• On-time service/
delivery
• Unstable prices
• Entry barriers
• Lack of competition
• Capacity constraints
• Capital requirements
• Capacity
• Inflexible Production
• Warehouse
Inadequacies
• Multi-party
supply Chain
• Poor Process
• Loss of inventory
• Tax/Customs
• Regulatory
• Environmental
• Security
• Legal
• Retention
• Skill Set
• Organized Labor
• Culture
• Aging Workforce
• Inadequate Risk
Planning
• Poor Communication
• Labor Management
• Management Quality
• Strategic Vision
• Natural Disasters
• Political
• Labor Unrest
• Infrastructure
Tier One Suppliers
TierTwo Suppliers
Tier N Suppliers
Customer
s
Maintaining this 360° view of potential risk events and
monitoring the risk environment on a continuous basis is
central to all resilient supply chains.
Then armed with that understanding, executives can
determine what courses of action—from changes in the
supply base, to the design of more flexible operations,
to building culture that rewards fast-response capabilities—
are needed to address them.
Critical to this journey is transforming the significant amount
of data—both internal and external—into insightful, actionable
information that can drive intelligent investment choices and
action plans. By identifying and aggregating data available
from internal enterprise-wide systems, supplier operations,
and a variety of external data source options and then
leveraging advanced visualization and analytical techniques,
this information is transformed into powerful predictive
capabilities that can guide intelligent risk mitigation decisions.
Key characteristics of a Resilient Supply Chain
• Continuous 360° monitoring supported by comprehensive,
accurate data
• Operations flexibility
• Predictive capability leveraging state-of-the-art business
intelligence technology
• Fast response culture and organization
• Proactive risk mitigation strategies
As supply chains become more global and complex, serving more
and varied markets with broader and more diverse product portfolios,
a wide range of potential supply chain disruptions have the potential to
undermine even the best laid plans.
Optimally managing supply chain risk is important to all of a company’s
stakeholders. Boards of Directors want assurances that operations
and supply chain executives understand the potential risks to revenue
and profits and have taken smart steps to address them. Investors want
assurances that potential disruptions will not impact share price. Customers
depend on product availability in making buying decisions – so delivery
and quality performance is vital. Government agencies are requiring greater
transparency and reporting of regulatory compliance risks. And, as important,
managing reputational risk in the marketplace from counterfeit product or
product failures, is paramount. None of these can be assured without firmly
understanding vulnerabilities not only in internal operations, but across the
extended supply chain.
Building resilient supply chains starts with understanding the
vulnerabilities and impact that disruptions across your tiers
of suppliers and in your own operations pose to revenues
and profits. KPMG’s Supply Chain Risk Wheel provides a
high level taxonomy of the broad range of issues and risks
that companies must consider in designing, constructing
and managing resilient supply chains:

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KPMG Experience
KPMG has assisted many companies realize competitive
advantage by achieving resilience in their supply chains.
From assessing your risk environment to designing supply
chains that can withstand the global forces at work,
KPMG can help your organization develop a road map to
achieve supply chain resilience.
About KPMG LLP
Our competencies bridge the disciplines of supply chain
management, operations, finance, and technology,
to offer broad business solutions with necessary deep
functional and process skills to understand and address
your challenges.
With KPMG member firms in 144 countries, we have
global breadth and local-market knowledge of business
conditions, and legal and regulatory requirements to help
you work toward your organization’s long term goals.
Supply Chain Resilience Questions
Do you know where the most important
vulnerabilities are in your extended supply chains
and operations?
1
Do you have a 360 degree view of
supply chain risk?
2
Do you know what vulnerabilities reside in your
tiers of suppliers?
3
Do you know what revenue and profit is at risk
from any potential disruption?
4
Do you have a formalized supply chain risk and
resilience governance process in place?
5
How long would it take you to respond to a
major disruption in supply or spike in demand?
7
Is your organization prepared to respond quickly
when unforeseen events occur?
6
Do you have a continuous monitoring and event
management technology platform in place to
provide proactive and predictive capability?
8
Samir Khushalani
Principal
Houston
T: 713-319-3570
E: skushalani@kpmg.com
Sara Dioguardi
Managing Director
Chicago
T: 312-665-1196
E: sdioguardi@kpmg.com
Mike Judd
Managing Director
Charlotte
T: 704-371-5283
E: mjudd@kpmg.com
kpmg.com
Summary
Supply chain resilience is becoming an ever more important
capability for high performing companies. Building flexible
and intelligent supply chains and operations is not only a
hedge against risk, it can be leveraged for strategic advantage
in serving and responding to the ever more complex
requirements of global markets.
The Supply Chain Resilience Journey
In our experience, working with companies on supply chain
resilience programs, we have found companies are at different
levels of maturity in the journey to becoming more resilient.
Many are at the early stage, just beginning to recognize the
importance of being more proactive in their approach. Others
have begun addressing a segment or two of the risk wheel but
recognize the need for a more holistic approach. Our Supply
Chain Resilience maturity model helps companies assess where
they are and illustrates leading practices that will help them
develop a more robust and comprehensive approach to the full
set of opportunities resilience provides.
KPMG’s Supply Chain Resilience maturity model
Level 2 – Fragmented
Some supply chain risks are identified, managed and potential consequences are
understood for certain risk factors or segments of the KPMG Risk Wheel.
Level 3 – Internally Integrated
Supply chain risk management is more formalized and is integrated throughout the
organization. Routine operational risk assessments are conducted. Point solutions are
integrated into a standard supply chain risk technology platform providing visibility and
reporting.
Level 4 – Externally Integrated
Supply chain risk is managed across the external enterprise and is
incorporated into risk management processes, controls, and governance
models. Tier 1 – n visibility and remediation is integral to the program.
Level 5 – Comprehensive
Supply chain risks are managed on a continuous basis across the
global extended enterprise and balanced with proactive risk mitigation
strategies. Supported by a comprehensive supply chain risk technology
solution for continuous monitoring.
Value&Impact
Degree of Risk Management Sophistication
Level 1 – Reactive
Organizations have limited supply chain risk management standards and
focus on ad hoc responses to disruptions