I recently interviewed Robinson Balestero who discussed his views on supply chain risk management. Robinson graduated from a university in Brazil where he studied foreign trade, which is a popular topic in Brazil due to the explosion of import and export operations over the last 10 years. He then went to an MBA course at Babson College in the US. The focus of the MBA was entrepreneurship. Robison then graduated from another MBA course from Fundação Getulio Vargas, which is one of the most prominent colleges in Brazil.
Why supply chain risk is increasing
For example, technological advancement is one factor leading to the rise in supply chain risk. Technological progress has led us to apply new skills which were not required in the past. Globalization and worldwide communications integration require the management of supply chain in most markets. The management of supply chains is becoming increasingly challenging.
Supply chain is requiring a lot more of engagement and skills to be properly and efficiently managed. Rapid responses are increasingly required now that we have all of these elements working together in this modern world. This demand leads to increased risk.
The real challenge is to know how to manage this risk. For example, is it wise to spend more on freight and less on inventory, or more with inventory and less with transportation? Robinson thinks the wise answer usually is neither of these two. There must be a breakeven point between these two factors.
To summarize, supply chain risk is increasing due to many elements present in our modern world.
The key to minimizing risk is assessment. One must properly assess the situation. In order to get good results you need an analysis capacity and skills. This is of foremost importance. For companies to get this analysis capacity and ability to properly assess the risk situation, they need to properly invest in training. They need to train their managers and decision making employees. Otherwise, their ability to properly assess a situation will be hindered.
The key is proper assessment of supply chain risk.
Robinson’s experience with supply chain risk management
Robinson is currently acting as supply chain director with a company which provides language and professional education. They operate under a franchise model. Each brand of school has more than 1,000 schools per brand. The company has many books for each school brand. Many books are required because each student will go through many stages or steps. The beginner starts with step 1, step 2 etc. To supply the customers who are the franchisees, the company needs to get books ready to ship whenever they place an order. This requires a lot of inventory and transportation.
Therefore, the company recently assessed the risk situation and came to the conclusion that outsourcing of the logistics would be more efficient. As a result, the best financial result would be realized. This is an example of how a company needs to assess a situation in order to properly manage supply chain risk.
About Robinson Balestero
Supply Chain Director