Challenges Integrating & Aligning Supply Chain Risk Management Practices

Companies tend to have supply chain risk management practices that are informal, ad hoc and siloed within functional divisions and they struggle to transform them into a more dynamic and coordinated effort. "The risk management activities at a majority of companies we encounter are functionally-driven with little or no internal integration," acknowledges Erich L. Gampenrieder, KPMG's Global Operations Advisory Lead. "But things are changing; in the last few years, we are seeing increasing demand from clients to integrate and work across supply chain processes and risk functions".

"Many companies are now focusing on integrating their functional efforts, not only to optimize them, but also to aggregate them to obtain a more comprehensive picture of their risk exposure across the enterprise," elaborates Niul Burton, EY Procurement Lead and Total Supplier Reliability Co-Lead. "More companies are asking for an integrated 'single source of truth' that captures and consolidates all sources of risk across the enterprise," notes Graham J. Murphy, Third Party Risk Management Lead in KPMG's US Risk Consulting practice.

As companies seek to integrate their risk activities, they need to consider and select among various organizational structures and operating models and different designs portend important tradeoffs for risk management. "Operating models range in degree of centralization, there is no one best model. Some firms centralize governance to establish consistent expectations, but then decentralize operations for engaging suppliers and managing risk in any number of functional areas to retain independent and agile local behavior," observes Mathew Moog, EY Principal, US Third-Party Risk Management leader, Financial Services.