CIPS L5M2_Managing Supply Chain RISK_Tutor_Slide.pptx

L5M2 - Managing Supply Chain Risk module slides.

1. CIPS Level 5 Advanced Diploma in Procurement and Supply Module: Managing Supply Chain Risk [L5M2]

2. Learning outcome 1: Understand and analyse the nature of risk affecting supply chains 1.1 Define the different types of risk that can affect supply chains 1.2 Assess operational risks in supply chains 1.3 Compare methods for eliminating bribery, corruption and fraud in supply chains 1.4 Contrast risks in supply chains that can impact on organisational corporate social responsibility and sustainability standards Slide 1

3. 1.1 Categories of risk Slide 2 Table 1.2 categories of risk

4. 1.1 Positive and negative consequences of risk Slide 3 Figure 1.1 Risk/reward matrix (Source: www.cips.org/en-gb/knowledge/toolsandtemplates-revised/risk-analysis--management1/)

5. 1.1 The nature of fraud in supply chains Slide 4 Figure 1.7 Pre-conditions for fraud

6. 1.2 Supplier cash flow and insolvency Insolvency risks The loss of a major customer Loss (attrition) of key employees Fraudulent activity Large fines Excessive or uncontrolled expenditure Uncontrolled growth Late payments Slide 5

7. 1.2 Quality failure Slide 6 Figure 1.8 Deming’s ‘Plan, Do, Check, Act’ cycle

8. 1.3 Corporate governance Recommendations to raise standards in corporate governance: There should be a clear division of responsibilities at the top. The majority of the board should comprise outside directors. Remuneration committees for board members should be made up in the majority of non-executive directors. The board should appoint an audit committee, including at least three non-executive directors. Slide 7

9. 1.4 Standards for sustainable procurement Slide 8 Figure 1.10 The Decent Work Agenda (Source: adapted from www.ilo.org/global/about-the-ilo/mission-and-objectives/lang--en/index.htm)

10. Learning exercise: Evaluating risk Jewels was starting a project to resource one of her biggest selling products within her confectionary business. She needed to be sure that the new supplier would not let her down. What four categories of risk should Jewels research? What type of matrix could Jewels use to evaluate the impact of each risk? Name two financial checks that Jewels should conduct on potential suppliers Slide 9

11. Learning outcome 2: Understand and analyse processes in managing risk in supply chains 2.1 Examine the use of contractual remedies for managing risks in supply chains 2.2 Analyse the use of outsourced third parties in risk management in supply chains 2.3 Assess the use of insurances for protection against risk in supply chins 2.4 Examine the use of contingency plans to overcome risks in supply chains Slide 10

12. 2.1 Allocating and managing risk in a contract Slide 11 Figure 2.1 How the contractual risk is allocated and managed in the contract

13. 2.1 Intellectual property Slide 12 Table 2.1 Intellectual property protection

14. 2.1 Testing, inspection and acceptance Slide 13 Figure 2.3 Testing, inspection and acceptance flow chart

15. 2.2 Procurement practices that drive risk Slide 14 Table 2.5 Procurement practices driving greater supply chain risks

16. 2.2 Using third parties to conduct audits Slide 15 Figure 2.8 Supply chain audit non-conformity process

17. 2.3 The categories of insurance Slide 16 Table 2.8 Overview of insurance provisions to cover risk in the supply chain

18. 2.4 Continuity plan and disaster recovery plan Slide 17 Figure 2.13 Contingency plan timeline

19. Learning exercise: Delilah’s Drawings Delilah has invented a new style of drawing which has never been seen before. Her concept is based on computer generated art and can be printed and framed. Some of her early prototype work is hanging in a local library. If there is demand Delilah will take orders for art commissions from the local community. What type of IP protection should Delilah take out against her idea? What could Delilah do to help ensure nobody copies her work that is in the library? What type of insurance should Delilah take out? Slide 18

20. Learning outcomes: Understand and analyse risk mitigation strategies in supply chains 3.1 Identify the use of probability and impact assessments to manage risks in supply chains 3.2 Analyse a risk assessment and a risk register to mitigate risks in a supply chain 3.3 Explain the development of a risk management culture and strategy to improve supply chains 3.4 Compare stratigic approaches to mitigate risks in supply chains Slide 19

21. 3.1 Assessing probability and impact of risk Slide 20 Figure 3.2 Probability versus impact matrix

22. 3.1 Vulnerability assessments/sources of risk Slide 21 Table 3.2 Areas where a vulnerability assessment may highlight issues

23. 3.2 Risk assessments (a) Slide 22 Figure 3.7 Risk register

24. 3.2 Risk assessments (b) Slide 23 Table 3.7 Information typically included in a risk register

25. 3.2 Engaging stakeholders Directors Line managers and departmental employees A risk management department External stakeholders Slide 24

26. 3.3 The risk management process Slide 25 Figure 3.9 Stages in the risk management process

27. 3.3 Improving risk management in supply chains Compliance – 1970s This is based on simply fulfilling legal obligations, e.g., health and safety. Hazard management – 1980s This takes a total cost of ownership approach, as developed by the insurance industry. Control management – 1990s This includes internal audits. Opportunity management – 2000s Risk management is seen as a key interface with business strategy. Slide 26

28. 3.4 Preparing a business continuity plan and disaster recovery plan Slide 27 Table 3.13 Business continuity plan Click to add text

29. Learning exercise: Building Foundations Marcus owns a construction company converts integral garages into an extra room in his clients’ homes. Marcus has researched the compliance, hazards, control and opportunity management. He has also plotted the potential risks on a matrix with their likelihood and impact. Marcus has also written a lengthy document which would be used if a disaster occurred. What four stage risk Lifecyle work has Marcus carried out? What time of matrix has Marcus created? What document has Marcus created? Slide 28