Managing supply chain risk in the far east is serious business.
In the coming weeks, I will be starting a multi-post blog series related to managing international suppliers. For my part, I will be focusing on the challenges specific to dealing with companies in China, but the insights that I will be sharing are applicable for other locations as well.
I am focusing on suppliers in China because many of my customers are finding it hard to deal with the myriad of cultural and legal challenges in that country. Also, traditional diligence will not cut it in China, and I am looking to create a simple list of techniques that any company can do to help reduce their supply chain risk in China
I found this article recently discussing the challenges related to mapping and understanding the entire supply chain down through the different tiers. It is an interesting post in that it indicates the importance of managing your supply chain complete with second and third tier product mapping.
Supply Chain Risk Article
Managing supply risk is getting more complicated by the day. It used to be that you only had to monitor your own suppliers. But as supply chains have become longer and more global, you now need to keep tabs on their suppliers as well.
Just scan the headlines. Chinese authorities have accused the China subsidiary of US-based meat supplier OSI Group of intentionally selling meat beyond its shelf life to restaurant companies. This caused key customers to flee and more to review their partnerships and potentially follow suit.
In early August, an explosion at a metal products factory in China killed 75 workers and injured at least 185 others. The supplier was a supplier to another supplier who provided wheels to a major automotive manufacturer.
The road is littered with the remnants of companies that have failed because they didn’t anticipate and take steps to mitigate the risks inherent in today’s multi-tier supply chains.
The connectivity and insight of social and business networks. Consumers tap into personal networks to learn, share and shop better. Just like them, companies are harnessing the ‘knowledge of crowds’ and insights from business networks to detect risks and market changes – and chart recommended courses of action that have been tested and proven by others in the community.
The power and speed of in-memory database and analytics. With business moving at light speed, companies need to capture, analyze and act on information faster than ever before. In-memory technology eliminates the delays and inefficiencies inherent in parallel operational and business intelligence systems by combining both transaction processing and analytics on a single platform,
It also enables companies to aggregate, correlate, and assess countless bits of information and scenarios to determine the best course of action with unprecedented speed.
In-memory database and analytics enable companies to execute a new approach to risk management through which they can pinpoint potential risks that may be hidden deep in their supply network and head off trouble before it happens.
Procurement, for instance, can be alerted to potential future risks in the sub-tier supply chain by triangulating a myriad of real-time supplier performance inputs (e.g., change in payment status, loss of a key customer, change in leadership, commodity price or supply fluctuations) crossed-referenced to historical results when such patterns exist.
These alerts can be supplemented with recommended responses or alternative suppliers based on community-generated ratings and buying patterns of similar buyers on a business network.
As the saying goes, “What you can’t see, can hurt you.” Armed with the right technology, intelligence and insights and connected to the right networks, companies can not only see the future, but seize it to mitigate risk and create competitive advantage.
The Malaysian Accounting Standards Board (MASB) today issued limited amendments to the Malaysian Private Entities Reporting Standard (MPERS). These amendments shall be effective for annual periods beginning on or after 1 January 2017, but early application is permitted.
The International Accounting Standards Board (IASB) has postponed the date when entities must change some aspects of how they account for transactions between investors and associates or joint ventures.
The IFRS Foundation and the Chinese Ministry of Finance has formed a joint working group to explore ways and steps to advance the use of IFRS Standards within China, especially for internationally oriented Chinese companies.
US companies with good credit quality will be able to afford the 0.25% increase in short-term interest rates announced by the US Federal Reserve, but credit risk will increase for some weaker companies because refinance risk will rise for them as interest rates edge higher and the debt market becomes increasingly risk averse, says Moody’s Investors Service.
Supply Cahin Risk