Risk managing the supply chain is a strategic planning tool that supply chain executives can use to increase efficiencies, mitigate risks before they cause damage, and negotiate and manage critical contracts and strategic alliances. Different supply chains are driven by the organizations that they serve and the business/strategic plans they forge to guide them. That difference guides how an SCM executive would risk manage the supply chain. Understanding the type of business a specific supply chain serves and its subsequent role is fundamental to its risk management.

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The Corporate Executive Board published what they consider the top ten risks facing corporate America as of January 2010. According to me, nine of these risks have a disrupting impact on a supply chain, though some are more apparent than others. All of them can stop a supply chain from functioning as an adaptive, smooth process, supporting the organization it serves. If my thinking holds logic, the supply chain is an enterprise (corporate-wide) risk. Why is enterprise risk important? Because the risk mentioned, as it relates to the supply chain, impacts every part of the organization that buys, stores, and transports. Applying risk management tactics to the supply chain is a solution to the disrupting risks. These tactics will yield a mobile, adaptive, and light supply chain that reacts well to changing economic conditions, blips in markets and material shortages. The key is to recognize, analyze, and anticipate risks and make plans to mitigate them.

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Risk and the supply chain will be married soon. But what happens in the interim, before the marriage? Many courtships employ dancing as a way to engage each other; our first date will be a dance at the San Diego Hilton for three-plus days in April, when the ISM 95th Annual Conference provides the first opportunity for this potential couple to dance.

ISM has opened the door to this partnership by including a supply chain-risk track in its conference curriculum. Seven workshops over the course of more than three days will bring the two potential partners together. It starts on Sunday, April 25 with Kishan Khemani, a Partner in the Risk Management Practice of ATKearney, and ends on Wednesday morning with our own Jason Busch and Sherry Gordon. Attendees will be treated to workshops that provide risk tactical applications implemented by Eli Lilly's Catherine Herr; contractual-terms mitigation strategies put in place by Laurie Brooks, Chief Risk Officer for Public Service Enterprise Group, a New Jersey based electrical utility and holding company; a workshop on how to apply risk tactics to the supply chain by Don Dixon, a Director in the Risk Practice at Deloitte & Touche; and an excellent workshop provided by Jason and Sherry on understanding software, providers, and analytical tools. Mickey North-Rizza from AMR Research will define fundamental risk drivers in the supply chain, based on AMR’s research data.

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With increasing frequency, procurement/supply chain management and risk management are becoming more involved. Call it dating today, but I think they'll be married soon (no word yet on what the pre-nup looks like). Watch your mailboxes for the wedding announcement. Everyday, in several ways, I am seeing more of the critical thinkers from Supply Chain Management talking more and more about this relationship.

Recently, David R. Butcher, in a piece on thomasnet.com, dated January 19th, made the point that "A volatile economy will make risk management more of a permanent factor for supply chain managers, and, moving forward, the usual approach to possible disruptions simply won't do." I am totally allied with Mr. Butcher regarding that point. I am also a firm believer this is not the latest rage in SCM or Risk. It is here to stay. As globalization shrinks markets, companies will need to be more innovative, adaptive, and quick to see the strengths, weaknesses, opportunities and threats in their supply chains.

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