ROI Calculator
Rick Freeman joined Resilinc in July after more than a dozen years in procurement and supply chain for semiconductor manufacturer Micron Technology. At Micron, Freeman developed and managed the company’s robust supply chain risk management strategy and programs, which uses Resilinc’s suite of tools and solutions.
Since moving to Resilinc, Freeman has advised a wide range of clients on their journeys to robust supply chain risk management (SCRM). He has also facilitated Resilinc’s Risk Game—a supply chain role-playing game that engages students and professionals in collaborating to manage real-life supply chain challenges. Resilinc stopped offering the in-person game during the pandemic and has recently re-introduced it for universities, corporations, and industry associations.
Resilinc: What has surprised you the most since joining Resilinc?
Freeman: I’ve been surprised to learn how many companies do not yet have a supply chain risk management program. After the disruptions of the last two-and-a-half years, they know they need to improve their capabilities, but they often don’t know what they need. Because I’ve walked in their shoes for many years, I’m in a unique position to help them understand what they need to do to move to the next stage of supply chain risk management maturity.
Resilinc: Can you give examples of what you share with companies who are seeking to improve their supply chain risk management (SCRM)?
Freeman: One common best practice is learning to filter your historical supply chain performance data effectively to prioritize risk mitigations. This is not easy for a large OEM with thousands of suppliers and hundreds of thousands of parts. If the data is analyzed too broadly and rolled up into averages, high risk suppliers for vitally important parts can be overlooked. On the other hand, if you get too down in the weeds, the mass of data can be overwhelming.
A good place to start is to identify the parts critical to your highest-revenue products—which can include such common items as packaging. Then start looking at the risks in your supply chain for those items, including geopolitical, natural disasters, financial health and where a single source supplies items.
Resilinc: While the pandemic has made C-level executives and boards more aware of the need for SCRM, supply chain teams often must build a case for investment in the necessary staffing, training, and tools. What are some touchpoints for this internal “sales job”?
Freeman: Supply chain risk management, for many OEMs, is this new function that must be integrated with corporate strategy, governance, compensation, ESG, sustainability and other core functions. It takes time and resources to develop, and the return on investment also takes time.
A good place to start is by understanding and weighting the concerns of your internal stakeholders, such as category managers, financial, and risk managers. Then, as you perform some initial risk screenings and assessments, show them the data that links to what they’re concerned about and how your proposed SCRM program will address those concerns. And don’t just show this to the frontline staff—get it in front of the top executives.
Another good practice you can do relatively quickly with a service like EventWatchAI is to communicate weekly summaries of events that could impact your supply chains. This can help leaders see the types of risks that an SCRM program is monitoring. And it will prepare the supply chain team for those inevitable moments when a top executive asks you about the impacts on the company’s supply chain of an event that’s in the news, like a natural disaster in Taiwan or Japan.
As Bindiya, Tom Linton, and other colleagues have often said, there is no better time to be in supply chain management—and no better time to make a case for robust investment in SCRM. Just recently, I read The Hackett Group’s 2022 Key Issues Study. It showed that concern among corporate leaders about supply chain disruptions has increased dramatically in the last year—even more than worries about cybersecurity.
Many corporate leaders are coming to Resilinc to get advice on what to do about risk. They’re starting to see that even when parts cost more, that’s far preferable to the shortages that halt your production and revenues. Logically, this makes sense, but for procurement leadership, this is a new mode of evaluating costs and benefits.
Resilinc: What new aspects of Resilinc’s value proposition are you most excited about?
Freeman: Resilinc is innovating so fast it’s hard to keep track, even from the inside! But one new process called user defined attributes (UDA) is something I think many of our customers will get value out of. It allows you to attach metadata such as revenue at risk, annual spend, and custom parameters to suppliers and their operational and logistics locations. Once you’ve got that data, analyses can reveal all sorts of opportunities to improve the ROI from your SCRM program.
Resilinc: Now that the pandemic is—shhh!—over, what keeps you up at night when you think about customers’ supply chain risks.
Freeman: Risk is always on a spectrum, and a supply chain is never 100% secure. But there are types of risks that can instantly block access to a supplier for a time or even permanently. One of those is legal compliance with the increasingly stringent laws in the U.S., U.K., Europe, and elsewhere around modern slavery and forced labor. Once you find out a company is using forced labor, you immediately cease doing business with them.
Resilinc: And the antidote to that poison in your supply chain?
Freeman: You need a SCRM program in place that allows you to get an accurate and balanced picture of what the risks in your supply chain truly are and what the impacts would be of disruptions. This allows you to take proactive measures to mitigate risks. It enables you to take your data-driven recommendations to category leaders and even C-level leaders. It lets you drive change from the bottom up and influence thinking from the top down.
Resilinc: Awareness of climate change and its impact on supply chains is increasing rapidly, but with so much uncertainty about the scale and timing of climate-driven extreme weather, what can an SCRM team do to integrate this variable?
Freeman: You can easily integrate data from Verisk Maplecroft, which monitors changing environmental risks globally based on physical addresses, into your Resilinc supply chain database. This enables you to see, for example, where suppliers face higher risks because of rising sea levels and increasing precipitation or wildfires. And because these events are increasing over time, you’ve got a runway to evaluate strategies such as alternate sourcing from existing companies, developing a new supplier or building your own production facility. And, of course, the climate risks should influence where you decide to source. You can also integrate the climate risks with other risks tied to geographies, such as political and security risks, risks of fraud and I.P. theft and others.
Resilinc: Let’s wrap up by talking about the Risk Game. You’ve run it twice, once at Wayne State University in Detroit and once in San José. What can you tell us about it?
Freeman: Because it’s played in person, COVID forced us to suspend it for several years. And the pandemic also heightened everyone’s personal connection to supply chain problems because of how the shortages and delays impacted our own lives. So, it’s more personal now.
To play the game, between 25 and 75 participants are assigned to one of five supplier teams in a hypothetical supply chain for transit buses: three tier-two sub-suppliers and two system assemblers. The final customer, a transit bus manufacturer, is played by Resilinc staff.
Over seven rounds, teams must adapt to changing demands of the final customer and cope with real-world disruptive scenarios. We bring events like hurricanes, floods, bankruptcies and material shortages into the picture, and these come as a surprise. They must use traditional and social media and other tools to understand the events and develop strategies to respond.
The instructions are purposely vague, and there’s some anarchy starting out as people grapple with what’s going on. Just like in the real world. Then they get into a rhythm, and start to feel comfortable—and then we introduce more chaos by, for example, knocking out a key supplier while the OEM’s sales and demand for parts are going up.
Resilinc: Is there a winner?
Freeman: There is a winning team, but we don’t focus on winning and losing. It’s about the game and the learning opportunity. It takes about two hours, and then we spend 45 minutes to an hour talking about the experience and the lessons: What does it mean when a supplier isn’t qualified, or is qualified but charges premium prices? How do expedite costs and carrying costs affect the bottom line? It’s a tremendous amount of fun and a terrific learning experience.
For more information or to incorporate the Risk Game in your next corporate team building event, conference, supplier appreciation event trainings and academic programs, please contact us (select research/educational inquiry in the drop down).
