Process and Operations

Logistics Q&A: What risk does a CEO take on by not being concerned about supply chain management?

A new series focusing on plant operations and logistics.

Q. What risk does a CEO take on by not being concerned about supply chain management?

A. If you're senior management in any company, you probably spend quite a bit of time mitigating risk; as a CEO myself, I know I often do. Is the economy going to double dip or will it recover? What if my competitor comes up with an innovative new product at half the cost it takes me to produce it? The questions go on and on.

Logistics is (or should be) part of your risk assessment. What will I do if my trucks break down? What if I can't find enough drivers to move my load to an important customer? How will I accommodate new demands from my customer on delivery times? What happens if my competition is able to dramatically lower their transportation costs and passes that savings on to their customers?

A formalized risk assessment on supply chain management should be part of your business plan. What does that mean for a midsized shipper? You can either take on that risk assessment internally or through a third-party logistics provider. A midsized company may not have the resources or time to complete such an assessment, but it is vital for businesses of all sizes. The industry leaders are already aware what risks are posed by their supply chain management practices and are making decisions and changing business practices to mitigate those risks.

As the old saying goes, "He who stands in the middle of the road gets hit from both sides." Don't leave your business susceptible to the logistical "hit." Begin assessing your supply chain management risks, if you haven't already.