The views and opinions expressed in this article are those of the thought leader and not those of CeFPro.
By Jian Huang, Global Head of Corporate Supply Chain Risk Management, HELLA GmbH & Co. KGaA
How would an organisation best drive momentum to improve end-to-end supply chain risk management?
We focus on three different dimensions in order to drive this topic within our organization in a most efficient way: People, Process and Technology. We consider dimension People as the pre-condition and the most essential element. As we are experiencing a transformation in terms of the relatively new but still abstract topic supply chain risk management, we need people and we have to change the mind set of all our stakeholders, from top management level to operational level, from corporate view to regional and local view.
It’s critical whether top management is supporting this strategic topic. We chose the top-down approach related to the supply chain risk management strategy definition, implementation of standard guidelines and processes. With strong tailwind by top management it’s much easier to achieve the best result by high prioritization of this topic in the global organization. On the other hand, we conducted different workshops with main internal stakeholders (e.g. Purchasing, Logistics, Operations and Sales) from the operational level, since they are the risk responsible units which are close to the different risks in the supply chain.
How has machine learning, changed the way we analyse supply chain risk management?
The advanced technology enables the atomization of entire supply chain risk management process, from the risk identification, assessment to measure implementation and monitoring. We are living in a business world with huge number of internal and external data. The MS Excel solution is not able to analyse and evaluate all the constantly changing data in real time. Therefore, we need certain up-to-date data processing approaches in order to be able react based on the data analysis as early as possible.
We started our pilot project related to the machine learning, meaning we use the historical data from the last two years in our ERP system and set up different mathematical and statistical models to predict the potential upcoming risks in our supply chain, in both directions down streams and up streams. We’ve already seen promising results by using machine learning.
What are early warning systems, and why are they beneficial to supply chain risk management?
We have established a HELLA Early Warning System platform years ago for reactive supply chain risk management. The platform has been developed and re-designed recently by using the up-to-date workflow system from the market. This platform is being used for any kind of escalation management process in case of shortages in the supply chain. The process enables an efficient information exchange and escalation flow throughout the whole organization from plant disposition level to corporate critical parts management level. Clear tasks assignment and pre-defined rules guide different business functions and enable a close collaboration and share of information.
Do you think Corporate SCRM processes have changed due to the impact of the Covid-19 pandemic?
We designed the corporate SCRM process in a comprehensive and standard way before Covid-19 pandemic. The process is independent what kind of risk we are currently going through. The process is a playbook of how to run the risk management in a standard approach within our organization. The roles and responsibilities don’t change in case of Covid-19. The basic principle remains always the same.
In what ways can an organisation improve its stakeholder management by using Enterprise Risk Management?
From the very beginning of the process design we interacted frequently with our corporate risk and control management because we need one standard process and methodology within HELLA for all risks apart from supply chain risks. We introduced a three lines of defence model and defined different risk roles within organization. Additionally, we agreed to separate supply chain related risks and non-supply chain related risks. Depending on the risk category we run different workshops with different business functions. Once a quarter we have an alignment meeting with corporate risk and control management in order to exchange the positive and negative experiences and grow together.
Jian presented at Global TPRM: Cross Industry, which took place virtually on December 8-9. Click here to view the full event agenda, as well as insights from the event.
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