Over the last 10 to 15 years, many companies have reduced their business costs and expanded their product lines though an aggressive supply chain strategy. Low-cost country sourcing, multi-tiered supplier networks and business process outsourcing are among the supply chain initiatives that companies, large and small, have employed. The benefits of these initiatives are apparent — companies are able to reduce the cost of goods, develop new markets, and free-up resources to focus on core value-adding activities. However, these benefits are often accompanied by greater supply chain complexity and exposure to new risks.
At every stage in the process — developing a sourcing and supply-chain strategy, selecting suppliers and partners, managing established relationships and processes, or even discontinuing a relationship or process — risks need to be acknowledged and effectively managed. PwC helps companies to make an inventory of these key risks; to evaluate their potential impact, using established and tested risk-quantification tools; and to assess the likelihood of their occurrence.
PwC can help companies that have conducted an assessment of their supply-chain risks to design an appropriate risk-control framework. Our methodology, which is based on the enterprise risk-management framework developed by the Committee of Sponsoring Organisations of the Treadway Commission (COSO), systematically considers each of the components required for effective risk management — internal environment, business objectives, event identification, risk assessment, risk response, control activities, communications and monitoring procedures.
One of the most challenging aspects of supply-chain risk management is ensuring the proper implementation and continued application of an effective risk-control framework — procedures, training, monitoring and reporting. Companies that have identified their key risks and defined the appropriate responses require adequate capabilities and the organisational discipline to implement the risk-control framework effectively. PwC helps clients to implement effective risk-mitigating activities and controls by providing training and monitoring services.
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