You can build a solid financial plan, commit to an EBIT target, and present a confident forecast to your board. But how much of that plan depends on a supply chain you cannot fully see, predict, or control?

Supply chain risk is not just an operational problem. It directly threatens financial performance and your credibility as CFO. One supply chain disruption can erase 30-50% of a year’s EBITDA (McKinsey). Often 50-80% of your revenue depends on a supplier network you don’t control.

Here is what is at stake:

EBIT and profit: Expediting fees and emergency freight quietly eat the margin you promised the board. Production stoppages, lost sales, idle capacity, and unexpected sourcing costs turn planned profit into missed targets.

Cash flow and working capital: Disruptions force unplanned spending, tie up cash in precautionary inventory, and delay customer payments. Regulatory failures can trigger penalties, compensation claims, and additional costs.

Forecast accuracy: Every supply chain shock that hits cash flow makes your forecasts look wrong. Every unexpected revenue shortfall puts your financial plan under pressure.

Your credibility & reputation are on the line: This is where the issue becomes personal. When your financial commitments repeatedly miss the mark due to supply chain issues, your credibility is on the line.

What should CFOs do now?

Sit at the table when the risk map is built.

Demand a clear picture of exposure.

Demand a clear picture of exposure.

Insist on prevention, not just crisis response.

Make risk management cross-functional

Build supply chain risk into your financial governance

Supply chain risk is a finance risk. Treat it like one, or keep explaining variances you could have seen coming. Supply chain risk belongs on the CFO agenda. The CFO who owns it walks into the next earnings call with answers.

Now, let’s turn those insights into capability. Build people and organizations who are ready to act. My training/workshop will perfectly prepare you for it.
—-
Hi. I am Jan, your SCRM Builder. Not a consultant who theorizes about risk. A procurement leader and risk practitioner who has built 15 SCRM programs globally, trained 1,200 people, and led procurement and risk organizations through crisis. I share what works and help you build an effective SCRM. I work globally.

The post CFOs: Supply chain risk is a finance risk. appeared first on targetP.

The well-known and widely used 3 Lines of Defense model was developed for institutional risk management in finance. Despite years of criticism, too many risk professionals still treat it as the holy grail and believe they can use it across organizations for all kinds of risk management activities.

My experience: For SCRM, the model is not usable at all. However, even the big four consulting firms still bother their clients with this ineffective approach. Experienced supply chain (risk) experts never work with it. So do I, and based on 18 years of building SCRM systems across 15 companies, I developed and use a dynamic five-level risk model that translates the lines-of-defense principle into something that actually works in practice:

Level 1: SCRM Culture Framework: The foundation everything else rests on. If the culture doesn’t support early flagging, transparency, speaking up, and cross-functional accountability, no process or system will compensate. Culture is not soft. It is the prerequisite.

Level 2: Governance & Competency Framework: Strategy, roles, responsibilities, and the skills to execute them. Here, the CPO and procurement leadership define what SCRM means for the organization and how they operationalize it. And this is where the organization becomes agile and responsive.

Level 3: Category & Supplier Portfolio/Network Management: The analytical core: category and market analysis, supplier portfolio assessment, and a risk-centered sourcing strategy. This is where procurement teams actively manage exposure.

Level 4: Core Process Framework: SCRM embedded into daily procurement operations: supplier qualification and onboarding, sourcing and re-sourcing decisions, and ongoing supplier network management

Level 5: Technology Framework: Digital supply chain monitoring running 24 hours a day, 365 days a year. AI-supported signal detection, automated alerts, pattern recognition, scenario modeling, impact analytics. Technology does not replace human judgment.

The critical principle behind this model: These five levels are not silos. Insights from the process level feed back into portfolio strategy. The technology layer supports all operational levels simultaneously. The culture layer at the top is why it all works under pressure. SCRM is never static. The moment you treat SCRM as a project, you have already fallen behind. Forever!

Now, let’s turn those lessons into capability. Build people and organizations who are ready to act. My training/workshop will perfectly prepare you for it. Hi. I am Jan, your SCRM Builder. Not a consultant who theorizes about risk. A procurement leader and risk practitioner who has built 15 SCRM programs globally, trained 1,200 people, and led procurement and risk organizations through crisis. I share what works and help you build an effective SCRM. I work globally.

The post Multi-Layer-Defense Risk Management appeared first on targetP.

Most companies manage supply chain risk backward. They respond to events.

THE MORE EFFECTIVE WAY: They should be reading signals. There is a world of difference between the two. An event is when your supplier calls to say they cannot deliver. A signal is the pattern that predicted the call weeks or months earlier.

In my 18 years of building SCRM systems across industries, the same warning signs appear before almost every supplier failure:

 Payment delays to their own sub-suppliers

 Supplier asking for early payments

 Unexplained and frequent management changes

 Declining quality or rising non-conformance numbers without a clear root cause

 Layoffs, high fluctuation, and strikes

 Shipment and capacity excuses that keep shifting

 Audit requests are being postponed again and again

None of these alone is a crisis. Together, they are a pattern. Patterns are readable if you know what to look for.

The problem is not that signals are invisible. It is that most organizations have never defined what a signal means for their specific supply base, and nobody is systematically looking for them.

Technology might help with signal identification and pattern analysis, and so will educated, aware employees.

Here is a simple starting point: Take your ten most critical suppliers. Do you have a defined set of early-warning indicators you actively monitor regularly? If not, that is exactly where your SCRM journey should begin. Next question you should ask: What signals have you seen precede a supplier failure?

————–

Hi. I am Jan, your SCRM Builder. Not a consultant who theorizes about risk. A procurement leader & risk practitioner who has built 15 SCRM programs globally, trained 1,200 people, and led procurement and risk organizations through crisis. I share what works and help you build an effective SCRM. I work globally.

The post Your Suppliers Are Sending You Warning Signs. Are You Reading Them appeared first on targetP.

A cyberattack doesn’t ask whether you are a DAX corporation or a 12-person family business. A key supplier insolvency doesn’t care whether you are privately owned, government-owned, or publicly listed. A flooded port, a sanctioned trade route: none of it checks your balance sheet first.

SUPPLY CHAIN RISK IS AGNOSTIC

It applies to multinational corporates with risk departments. It applies to the SME with one overworked person doing purchasing, finance, and risk at the same time. It applies to municipal utilities, hospitals, NGOs. None of these organizations are exempt simply because of their size, ownership structure, or sector. What differs is not whether risk will arrive.

What differs is whether anyone is prepared. Risk is not asking whether you are in metal forming or pharmaceutical. It is not asking if you are a small or medium enterprise. I have worked inside large corporates with mature SCRM functions, and I have advised smaller, privately owned businesses with no formal risk process at all. The companies that struggled most were not always the smallest or the least sophisticated. They were the ones who quietly believed disruption happened only to other organizations.

It never is!!!

At the end of all the frameworks, governance models and digital monitoring tools, there is one plain truth that applies equally to all:

This is about staying in business.

About remaining solvent.

About continuing to provide work, income and stability to the people who depend on the organization, whatever its size or legal form.

Whether you are an SME or a global corporation makes no difference. Preparation and investment are required either way; a big budget proves nothing about effectiveness, and there is no excuse for inaction or for hiding behind the excuse that this is only for „the big ones.”

Preparedness is not a luxury reserved for those who can afford a risk department.

It is a basic act of responsibility toward your employees, your shareholders, your customers and, ultimately, yourself. If you run an organization of any kind, the question is not whether risk will find you. The question is whether you will be ready when it does.

I am Jan, your SCRM Builder. Not a consultant who theorizes about risk. A procurement leader & risk practitioner who has built 15 SCRM programs globally, trained 1,200+ people, and led procurement and risk organizations through crisis. I share what works and help you build an effective SCRM. I work and train globally

The post SUPPLY CHAIN RISK IS AGNOSTIC appeared first on targetP.

The next American and Global supply chain crisis is here.

👉The ramifications will be significant: A strike will cause complete stoppages at all involved ports of container and bulk cargo Vessels will drop anchors outside ports and await the dockworkers coming back to work. And the impact will be global regarding vessel and container capacity and schedules. Looks like an exciting holiday season is ahead of us!

Some might say this situation is comparable to the COVID disruptions but it is not. The COVID challenges were caused by significant increases in cargo volumes and a lack of operational capacities to cope with the throughput – in port terminals, rail, and truck as well as warehouse capacity.

For more details refer to the official ILA statement issued yesterday

ILA Update – Monday, September 30, 2024 at 11 am
NORTH BERGEN, NJ: The International Longshoremen’s Association (ILA) reports that United States Maritime Alliance (USMX) continues to block the path toward a settlement on a new Master Contract by refusing ILA’s demands for a fair and decent contract and seems intent on causing a strike at all ports from Maine to Texas beginning in almost 12 hours.
“The Ocean Carriers represented by USMX want to enjoy rich billion-dollar profits that they are making in 2024, while they offer ILA Longshore Workers an unacceptable wage package that we reject”, the ILA said. “ILA longshore workers deserve to be compensated for the important work they do keeping American commerce moving and growing. It’s disgraceful that most of these foreign-owned shipping companies are engaged in a ‘Make and Take’ operation: They want to make their billion-dollar profits at United States ports, and off the backs of American ILA longshore workers, and take those earnings out of this country and into the pockets of foreign conglomerates. Meanwhile, ILA dedicated longshore workers continue to be crippled by inflation due to USMX’s unfair wage packages. “ “In addition, the shippers are gouging their customers that result in increased costs to American consumers. They are now charging $30,000 for a full container, a whopping increase from $6,000 per container just a few weeks ago. In just a short time, they went from 6K, to 18K, then 24K and now $30,000. It’s unheard of and they are doubling their $30,000 fee stuffing the same container from multiple shippers. They are killing the customers.”

Once again an excellent example of the importance of structured supply chain risk and crisis management supported by effective emergency plans and early preventive measures. We are happy to share our thoughts and experiences building robust supply chain risk management programs.

The post ALERT: The next supply chain crisis is here appeared first on targetP.

Port Technology International & Russel Group:

$1.25 trillion – the economic loss caused by disruption in two of the world’s largest shipping routes, the Red Sea and Panama Canal

Blockages at two of the world’s largest shipping routes have thrown shipping schedules and global supply chains in disarray, as vessels are opting for longer alternative routes adding to delays and increasing costs.

Red Sea: Trade analysis from October 2023 through to May 2024, shows that the commodities most impacted are crude oil, plastic materials, telephone equipment, cars, and clothing.

Panama Canal: Russell’s analysis throughout 2023, highlights the commodities most impacted are LPG, crude oil, cars and people carriers.

Clearly, it highlights the potential ripple effect of any disruption within a key transit route, which plays a vital role in moving goods across the world.

What to expect:

Geopolitical tensions will remain high, there are no signs of ending – the opposite

Maritime supply chain disruptions will continue to impact ports with higher levels of congestion and delays and container availability

Companies increase their stocking levels with plans to order much earlier (risk of #bullwhipeffect)

Time to increase your overall risk & resilience program.

Source Content & Graphic: Port Technology International, September 12th, 2024

The post Red Sea & Panama Canal disruptions: $1.25 trillion economic loss appeared first on targetP.

So geht ein effizientes Lieferantenmanagement und ESG-Compliance. Ein Praxis- und Umsetzungsbericht aus dem Mittelstand.

Aktuelle Lieferkettengesetze wie das LkSG oder die CSDDD stellen international agierende Unternehmen oft vor zahlreiche Herausforderungen.

Auch das familiengeführte Hochtechnologieunternehmen ORAFOL aus Oranienburg, Weltmarktführer in der Kunststoffveredelung, nutzt die gesetzlichen Anforderungen als Chance zur Weiterentwicklung und Professionalisierung seines Einkaufs (z.B Supplier (Relationship) Management) und seiner digitalen Architektur und Systeme im Einkauf und den Schnittstellenbereichen.

Unser Kunde ORAFOL ist ein tolles Beispiel, wie man auch im Mittelstand budgetfreundlich und zügig leistungsfähige digitale Landschaften umsetzen kann. Verantwortung für die eigene Lieferkette übernimmt, ie Vielzahl der aktuellen und kommenden Gesetze umsetzt und parallel den Einkauf digital und (!) analog nach vorne bringt

Was stellten wir vor:

Von der Pflicht zur Kür: Warum ORAFOL von Excel zu vernetzten SaaS-Lösungen gewechselt hat und wie das Technologieunternehmen dadurch ESG-Anforderungen effizienter erfüllen konnte.

Single Source of Truth durch Standard-API: Wie ein zentrales Lieferanten-Management-System abteilungsübergreifende Nutzung und Transparenz ermöglicht.

Auswirkungen auf Richtlinien, Einkaufs- und Warengruppenstrategien sowie das Lieferanten-Onboarding.

Compliance und Risikomanagement: Wie vernetzte Systeme zu einem effektiven Compliance-Verbund werden und das Risiko über die gesamte Lieferkette hinweg minimieren helfen.

Lessons Learned: Erkenntnisse aus der Projektumsetzung, inklusive der Zusammenarbeit mit Anbietern, der Sicherstellung zukunftssicherer Systeme und der Bewältigung interner Stolpersteine.

Sprechen Sie mich gerne für Ihren persönlichen Impuls an. Oder auch für eine Zusammenfassung des Webinars. Auf Basis von mehr als 30 digitalen Projekten zur Weiterenwicklung von Einkaufsorganisationen zeigen wir auch Ihnen Ihre Optionen und persönliche Roadmap auf!

The post Digitale Lieferketten für Compliance und Stabilität appeared first on targetP.