Last week I had the opportunity to upgrade my practioner skills regarding The Supply Chain Operations Reference Model (SCOR) methodology by participating in a SCOR 9.0 Framework Training workshop. The SCOR-model (corporate membership required) was developed to describe the business activities associated with all phases of supply chain process, and is organized around the five primary management processes of Plan, Source, Make, Deliver, and Return. Many companies utilize the SCOR-model to both map their existing processes, drive better linkages to overall business performance, or help drive transformation initiatives within specific supply chain business processes. Version 9.0 of the SCOR-model is the eleventh revision since its introduction in 1996. Among the exciting new changes for Version 9.0 is the introduction of new enabling processes associated with supply chain risk management.
The SCOR definition of risk management which is a bit narrow, reads as follows:
Supply chain risk management is the systemic identification, assessment, and mitigation of potential disruptions in logistics networks with the objective to reduce their negative impact on the logistics network’s performance.
The SCOR view of supply chain risks are that they are a component of all business risks, and, hence, should be integrated in an enterprise risk management framework. Judging from all of the constant risk disruptions occurring in this area these past few months, I would argue that supply chain risk management is one of the most integral aspects of that enterprise risk management framework, with far reaching effects for the business, the brand, and for operations.
Three phases of risk management are now outlined in the SCOR 9.0 framework model:
Phase 1- Risk Identification which can create a list of potential events that could harm any aspect of the supply chain’s performance.
Phase 2- Risk Assessment to provide management with an understanding of where the greatest risks may exist.
Phase 3- Risk Mitigation to determine if risks can be controlled or monitored.
In my part two post, I will outline and comment on the various enablers to identifying, measuring, and mitigating risks in the supply chain. But for now, let’s keep in mind that this is a relatively new area of focus for many companies, and the community-at-large will have need for further experience and maturity of frameworks. But I do hope that you share my excitement that SCOR has now incorporated an initial risk management framework in its reference model. This is surely good news.