ERM Starting Points

Improvement is particularly needed in recognising Supply Risk Management as a senior level activity in Supply Management itself The tools available to Supply Management professionals must be adapted to current and future challenges of the business world and further developed to comprehensively manage snpply risk (Zsidisin et al. 2005). 

This short example shows the importance of inbound supply dependency and the related risks for companies. No matter which company in the value chain is identified as the source of failure, every single participant is obliged to manage risk to avoid financial losses or a detrimental effect to its supply chain constituents. 

Companies should develop and implement a comprehensive Supply Risk Management system that can be integrated into corporate or Enterprise Risk Management (ERM). The process model (Matzenbacher 2003, p. 109) for Supply Risk Management (Henke and Jahns 2005, pp. 229-230) represents an important step in the right direction towards proactive and regular handhng of supply risks (please see the centre of Fig. 11.2). 

A process-oriented approach deals primarily with the combination of individual tasks to a logical chain of activities (Labbe and Langen 2004, p. 720). Therefore, the process model of Supply Risk Management needs to proactively influence the (potential) supply risks after formulating and rewoiking the supply risk strategy in the next process phases  

In order to accoimt for the ERM objectives and ERM components for Supply Management not yet included in the process model, the central process phases of Supply Risk Management must be incorporated by other functions and institutions. This includes internal monitoring and external monitoring, among others. 

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