With effective risk management , organisations can benefit in a number of ways . “ The benefits that are most likely to catch the eye of senior management are those that protect revenue and margin . Other benefits may support regulatory compliance and brand protection , thereby avoiding significant fines or unwanted end-customer pushback ,” says Nicolas .
Using automotive manufacturer Toyota as an example of a wellestablished supply risk management programme , Nicolas says : “ Toyota , for example , learnt from the Fukushima disaster in 2011 and changed its management philosophy as it related to holding stock and waste . The company opted to maintain a 36-week supply of semiconductors for all crucial supply chains .
“ As a result , in 2020 , while other automotive companies issued profit warnings , this company managed to sustain its operations longer . Consequently , it generated billions in additional revenue and profit margin relative to its competitors . It wasn ’ t until later in 2020 that production was severely impacted and Toyota in turn had to announce its own profit warnings .”
As such , organisations should focus on preparing for significant risks in the most critical supply chains . “ Agility can be created through creating mitigation and response plans ahead of time . Conducting ‘ what if ?’ simulations and ‘ war-gaming ’ exercises allows teams
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