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EVENTUPDATE
Risk:
the 80/20 factor
By Russel Beron
When business is booming, eyes are more on the next deal than on the next business threat. The word
“crisis” has been an effective catalyst to getting people thinking about risk. On June 17, the China Supply
Chain Council organized a one day summit on the topic of supply chain risk management where the most
current risks and mitigation strategies were discussed.
Supply Chain risks vary according to the issues of the day. Last raise the biggest red flags.
year the Olympics in China raised supply chain concerns, next year Lily Zhou, Logistics Director at Herbalife, which makes weight
it will be the Shanghai Expo. Ongoing risk factors include security, management products, says that “one of the biggest risks for
quality issues, natural disasters and diseases such as swine flu. their business is food safety and quality.” The difficulty she says
Right now the biggest issue of the day is is in complying with regulations and po-
probably supplier risk management. Ac- tential recalls. Herbalife operates in 65
cording to Duane Bolinger, managing di- countries and needs to comply with each
rector of BBK Consulting, 15% of Chinese country’s regulations and laws. Often it is
manufacturing companies are distressed, difficult to understand the laws and set-
while in the U.S., 55% of all private suppli- ting up systems to manage this is cost
ers are financially distressed. For some prohibitive.
companies who depend on one or two James Cranford, Director of Procure-
suppliers, supplier viability can mean the ment at Ammex, which makes latex/
success or failure of a business. rubber gloves among other products,
faces similar compliance issues, in that
Where are the Risks? they need to meet FDA requirements. If
Sectors such as such as toys, textiles and the automotive in- products are held up due to a compliance issue, it can disrupt
dustry are often in the risk spotlight; they are close to the radar their supply chain, forcing them to stock more product or not be
of consumers. In fact most businesses face risk of one form or able to supply orders. Another risk Ammex faces is the need to
another and it is perhaps the hidden or veiled risks that should understand the product supply, given the limited supply of latex/
www.chainaonline.com JULY/AUGUST 2009 47
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