Supply Chain Resilience - Aricia Ltd

Supply Chain Resilience CILT London Event

Name: Andrew Coulcher Date: 6th November 2017 Leading global excellence in procurement and supply

Supply Chain Failures in the News Procurement fraud costs NHS £252m posted by Francis Churchill in Procurement, Public sector 1 November 2017

Procurement and contracting fraud cost the NHS an estimated £252m in 2015-16, a new-anti fraud body has said. The NHS Counter Fraud Agency (NHSCFA), launched today, has estimated all types of fraud cost the health service a total of £1.25bn, with procurement fraud the second largest contributor after patient fraud.

Modern Slavery Act prosecutions more than quadruple

One of its aims is to identify problem areas in preventing – and increasing reporting of – invoicing and procurement fraud.

posted by Francis Churchill in Ethics, Law, Supply chain 5 June 2017

This is the first time the health service has released an official estimate of the cost of fraud to the NHS. The total figure is roughly 1% of the NHS budget.

Last year 51 new prosecutions were started under the Modern Slavery Act, more than four times the number in the previous year. This brings the total number of prosecutions brought by the Department of Justice since the act came into force to 63. In its first year, 2015, only 12 prosecutions were started under the law.

Leading global excellence in procurement and supply

CIPS Dun & Bradstreet Risk Index

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Global supply chain risk index reaches 24 year high at 82.6/100 Uncertainty from significant U.S trade and policy changes Europe contributing to rise – Depressed £ adding to high cost of UK imports – Uncertainty with outcome of Brexit negotiations – High rates immigration Leading global excellence in procurement and supply

Main causes for higher risks • Offshoring making it increasingly difficult for firms to monitor supply chains adequately • Increasing complexity of supply chains meaning companies were often unaware of who their suppliers were subcontracting to • Cost pressures which could lead to compromise on quality and ethics • Geographic clustering making manufacturers vulnerable to a localised disaster such as the Japanese tsunami of 2011 • Modern communications which can quickly damage reputations • Just-in-time production methods which have reduced the time to recover from supply chain failure Leading global excellence in procurement and supply

The 2016 Supply Chain Resilience Survey • 70% experienced at least one supply chain incident that caused significant disruption – 41% caused by tier 1 suppliers

• 1 in 3 companies report losses over €1 million • Top causes of supply chain disruption were – – – – –

Unplanned IT/telecom outages Loss of talent/skills Outsource service failure Transport network disruption Cyber attack/data breach Conducted by the Business Continuity Institute (BCI) on behalf of Zurich Insurance Group


CIPS 2016 Risk Survey


Business Impact • The top consequences of supply chain disruption remained the same for the sixth year: – – – – –

Loss of productivity was the biggest hit (58%) Increased cost of working (47%) Loss of revenue (45%) Customer complaints (41%) Service outcome impairment (38%)

• Nearly one-quarter of respondents reported negative external social media discussions arising from a supply chain disruption. Based on research of 800 publicly announced supply chain incidents between 1989 and 2000 by Vinod Singhal, professor of operations management at Georgia Tech College of Management in collaboration with Kevin Hendricks, associate professor of operations management at the University of Western Ontario.


Long Term Consequences • Firms continue to operate for at least two years at a lower performance level after experiencing a disruption • In the year following the disruption, firms on average experience – – – –

Operating income decreases by 107% Sales growth reduces by 7% Costs increase by 11% Share-price volatility rises by 13%

Based on research of 800 publicly announced supply chain incidents between 1989 and 2000 by Vinod Singhal, professor of operations management at Georgia Tech College of Management in collaboration with Kevin Hendricks, associate professor of operations management at the University of Western Ontario.


A Call to Action for CIPS and the Profession • Supply Chain risk is in our ‘sweet spot’ of raising professional standards and our public good agenda • Frequent and highly publicised failures pose a long term reputational threat to our profession – General public and Corporate perceptions

• CIPS has experience of developing organisational assessment standards and conducting over 300 organisational assessments • Defensive strategy – We need to move before others provide solutions – Accountants and auditors active in assurance services


CIPS Response • Good Practice Guideline launch Q1 2017 – Supported by on-line Q&A to identify key areas of risk launched in April

• Development of Supply Chain Resilience platform – Highly scalable solution for whole supply base – Risk assessment completed on-line by selected suppliers – Provides risk reports to suppliers and dashboard capability for buyers to manage key suppliers/supply chains


Supply Assurance and Compliance

LEGAL TECHNICAL GOVERNMENAL

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Supply Assurance and Compliance Risk and Resilience Assessment Tool

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Dear Grant, Thank you for using the CIPS Risk and Resilience tool. Please find your results below.

Legal Risk From your answers, you have indicated possible vulnerability by being insufficiently rigorous with your approach to legislative compliance, and/or procedures regarding bribery and corruption. Did you answer 'Unsure' a lot? A common failing is to assume that another department is responsible for mitigating and managing legal risks. Even if you have a Legal, or Contracts department, check who is monitoring non-compliance in the supply chain. Interested in finding out more about mitigating legal risk? Find out more

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Governmental Risk

Leading global From your answers, you have indicated possible vulnerability by having a supply chain in a medium- or high-risk region, and not sufficiently monitoring the political

excellence in procurement and supply


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