Situation

The Raw Materials Group, for the largest raw material producers and scrap recyclers in the North America, oversees over $8B+ of purchases annually. This Group is responsible for delivering the primary inputs that keep its manufacturing facilities producing as efficiently as possible.

While each division within the organization managed its own risk on an ad-hoc project basis, there was no over-arching risk management process that considers system level risk or ensures consistency across the enterprise. Despite the overall steel industry experiencing some of the best performance it has seen in several decades, there was significant exposure to the company’s supply chain that could potentially cause immediate and substantial shortfalls.

Solution

In partnership with a task force formed with representatives from the raw materials group, steel-making group, and environmental affairs, we helped build a set of Supply Chain Risks Management capabilities through the following:

• Designed a process to identify risks through a top-down (Commercial, Operational, ESG) and bottoms-up review of supply chain maps by raw material

• Created criteria to assess and prioritize risks by probability and impact with input from Subject Matter Experts

• Determined Key Risk Indicators (KRIs) or leading indicators as alarms to track key risks

• Built a reporting tool and executive dashboard for regular risk updates across the organization

• Formed a new cross-functional Supply Chain Risk Management (SCRM) team to manage these efforts centrally over time

Results

• Developed a new risk identification and tracking process that immediately surfaced key risks to the organization’s EVPs

• Initiated consistent and clear communication at all levels of the organization about Supply Chain Risk

• Developed customizable tools and processes for refreshing, differentiating, and prioritizing new systematic risks

• Matured new capabilities and learnings for the new SCRM team to sustain this newly developed process

• Proven importance and success of the new capabilities and function upon subsequent global events (e.g., international environmental regulations, politics) that brought upon considerable risk