Member interview: Matthew McEwan on managing supply chain risk

Mr McEwan spoke at both the 2019 Airmic Conference in Harrogate, and the ERM Forum, on the topic of supply chain and has embraced the theme in recent years. He believes the first key for the risk professional is to get a deep understanding of the business and all the moving parts, including what drives the value chains.

"You might think you know what the organisation does and how it operates, but you have to peel back the layers to get a better understanding and the full story - speaking to procurement and commercial plus getting hold of the risk engineering reports, for example," Mr McEwan tells Airmic News.

"To do that you need to make sure you understand who the right stakeholders are to engage with. You might speak to people who understand supply chain albeit from a country specific focus or specialised in one product or component. They will be useful, but you need visibility on the whole supply chain to build a holistic picture."

He also emphasises that supply chain is not just about receiving components and materials into the factory to manufacture a product. The output distribution to customers needs to be understood and risk managed as well.

"There needs to be an end-to-end perspective, because often the focus is on Tiers one, two three," he adds. "Whilst important, you also need to understand how distribution works including logistics partners and customers."

Working closely with the finance department will help to understand the value throughput of operations, while enlisting the support of third-party validation companies can also be useful. Such firms can help organistions ensure they are working with responsible suppliers that meet the customer's procurement standards as suitable and ethical operators.

"Looking at credit risk is extremely important," Mr McEwan explains. "Not just of your suppliers, but again of your customers and logistics partners. You also need to understand the numbers to contextualise how the business works."

With regards to risk treatment methods, Mr McEwan highlights modelling, scenario planning and developing business interruption analysis models. Production and supply chains can be interrupted by a vast variety of events. How might a change in the climate, a geopolitical event or a pandemic, such as the Novel Coronavirus, impact upon on operations?

"Modelling is also a useful tool to map out the business and supply chain," he adds. "This also contributes to scenario planning - it can throw up vulnerabilities that you were not aware of. You can then focus on loss control options including risk engineering on areas that provide value add risk mitigation and resilience upsides."