LP Magazine

NOV-DEC 2018

LP magazine publishes articles for loss prevention, asset protection, and retail professionals covering shrinkage, investigations, shoplifting, internal theft, fraud, technology, best practices, and career development.

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40 NOVEMBER-DECEMBER 2018 | LOSSPREVENTIONMEDIA.COM ■ Have they been victims? Did an employee improperly share sensitive information or provide access to a facility? Was there a computer network intrusion? ■ How do they protect their internal computer networks? The furniture dealer also needs to know about its suppliers' processes and procedures to verify the quality of its products or third-party products and services: How is the quality of product verified? What mechanisms are in place to ensure products meet requirements? Is an inspection process in place to review materials and/or services? Distribution is another category: How do suppliers transport products? Are they warehoused during transportation, and if so, where? Who has access to those properties? And what about finances? Are the suppliers stable? Again, these are just some of the necessary risk-management questions to help neutralize a small sampling of external risks, from a few slivers of the supply chain. And while partnerships with top suppliers are typically strong, these questions should also be asked and answered for second and third-tier suppliers. Of course, our fictional furniture firm faces an equal number of internal risks, including manufacturing risks, business and process risks, and planning and control risks. It faces risk from shrinkage resulting from holding too much inventory, for example. And what about risk from product defects? Or high labor costs? Or poor planning? What if key personnel leave? How might that impact business processes or how purchasers communicate to suppliers and customers? The consequences of failure are hardly hypothetical. A new commercial airliner was delayed three years because of a failure to assess supply-chain risks properly. A candy maker's stock sank 8 percent when it couldn't deliver for Halloween. And in 2015, a cascade of technology missteps in a major big-box retailer's supply chain, which caused the prospect of patchy or empty store shelves, forced it to withdraw entirely from a country's marketplace. Conducting a Company ‑ Wide Risk Assessment A robust SCRM process starts by identifying this world of risk—conducting a comprehensive, organization-wide risk assessment to determine what can go wrong. Relevant metrics, multiple sources of input, and augmented data analysis are necessary to get an accurate picture of the current situation. Risks then need to be scored and prioritized, based on their likelihood of occurrence and potential impact on business. Once risks have been identified and prioritized, organizations need to create a comprehensive risk-mitigation plan based on short-term, medium-term, and long-term risks; to identify the right people to implement it and assign responsibilities; and to create escalation mechanisms for each risk and contingency plan. A clear risk picture and planning are the base layer. Organizations must also monitor and track the progress of their risk-mitigation initiatives to ensure that they work in real-life business situations. Risk-management tools and insightful dashboards can help steer an organization through interactions with suppliers and other operational stakeholders and prompt timely, informed decisions. Broadly, SCRM is critical to manage interaction between suppliers, information, technologies, products, and logistics service providers. So what does our furniture company stand to gain? By improving its management of supply-chain risk, it can maintain control over inventories and distribution, thereby matching and managing supply with demand to reduce costs, improve sales, and enhance company profitability. That, too, sounds simpler than it is. It requires: ■ Understanding the business, the customer and customer needs, and adapting the supply chain to find the balance that maximizes profitability. ■ Customizing the logistics network to meet the service requirements of various markets, which may influence the size, number, location, ownership, structure, and mission of warehouse facilities. ■ Recognizing market signals and aligning strategies accordingly to ensure consistent supply forecasts and optimal resource allocation. ■ Strategically locating/warehousing products close to the customer base and speeding conversion efficiencies to react quickly to market signals and store/customer needs. ■ Managing supply sources strategically to reduce the total cost of owning goods, as well as teaming with business partners to reduce costs across the supply chain to lower prices and enhance margins. ■ Developing a technology strategy and IT system capable of integrating all the above information—one that makes all this critical decision-making possible. A well-managed supply chain—one that mitigates risks—is essential to a successful operation. In today's global manufacturing environment, where merchandise often moves across oceans or continents before appearing on store shelves, the risk of loss or delays due to cargo theft, weather, work stoppage, and even paperwork errors requires innovative and comprehensive supply-chain risk-management solutions to manage successfully. When we consider that every single piece of merchandise must in some way pass through the supply-chain network, it's easy to see the need to implement appropriate controls and protect our interests against an increasingly complex world of risk. A robust supply-chain risk management process starts by identifying this world of risk—conducting a comprehensive, organization - wide risk assessment to determine what can go wrong. continued from page 38

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