Risk Management Protects Your Bottom Line
I tried a new rotisserie chicken restaurant last week. The venue was clean, the food looked fresh and it never crossed my mind to worry if I would get food poisoning. Generally speaking, we trust that the restaurants we frequent are feeding meals that won’t make us sick. Which in turn, means we trust that their suppliers are selling them healthy produce.
GMK Holdings is a production and processing business operating the largest and most advanced copper smelters and the largest and most modern chain of chicken raising and processing plants in China. GMK supplies chicken to KFC and McDonald’s in China and Southeast Asia. Companies like GMK need to be on top of quality so that people like you and I can continue to feel safe in feeding our children and exploring new places to eat.
Zero Margin of Error
In a recent Harvard Business Review article, preventable risks are categorized as internal which are emerging from within the organization as controllable and should be eliminated or avoided.
These could be risks associated with breakdowns in routine operational processes, like chilling and packaging, for example. A tolerance zone could be established for glitches that would not be severely damaging to the organization or the consumer.
The article continues, “But in general, companies should seek to eliminate these risks since they get no strategic benefits from taking them on.”
In some industries, like food for example, there is very little, if any, margin of error for some of the risks that fall into this category. Given this, you can understand why GMK takes risk management very seriously.
How low can you go?
The smaller the margin of error, the higher the need for precision. Quality is often a matter of precision. Think of a specific melting point for metals, or accurate produce expiry date, or required food storage or cooking temperature.
GMK’s high standards meant there was room for improvement in their risk management system. Its architecture and database needed more real-time risk management and related Key Performance Indicators. Also essential was a reliable single source of truth for their reporting, highly standardized business processes, and unification of their business operations and financial systems. More precision required a reduction in control efforts and compliance risk and an increase in cost control.
Risk and the Bottom Line
“We run a complex business in which minimizing risk is crucial to success. With our risk control system powered by SAP HANA, we have the visibility and real-time data we need to monitor pot
ential risk efficiently and make business decisions that protect both consumers and our bottom line.”- Dan Luo, IT Director, GMK Holdings Co. Ltd.For GMK, running live means that they leverage the power of SAP HANA to take the guesswork out of regulatory compliance and maximize their risk mitigation potential. The organization manages preventable risks with implemented technical Key Performance Indicators. Since go-live, risk control reports have improved by 45% and GMK has reduced manual efforts by 30%.
The organization runs the first ever risk control system powered by SAP HANA in the commodity trading industry of China, taking the guess work out of mitigating risk for customers and consumers.
Restaurant-goers in China and Southeast Asia can feast at ease knowing companies like GMK are helping the world run better by making safety a priority.
You can read more about SAP HANA and the success of GMK Holdings in this SAP Business Transformation Study.