‘Risk’ is a term which has varied attributes and significance depending upon which industry/business we are talking about. Often, there is ambiguity on what constitutes a risk and hence the risk perceived by a LoB (Line of Business) Manager is often not in sync with the other managers. Even if risks are properly identified and defined in an organization, in most cases individual LoB managers end up managing their own risks, often not interconnected with other risks. This lack of holistic approach of risk management and mitigation finally results in incoherent reporting to Senior Management, which could seldom form real basis for any prompt decision-making and mitigation actions.
Through this blog, I would like to focus on Risks in Manufacturing Industry. Based on my understanding, risks are broadly classified under below 3 categories.
In manufacturing industry, CFOs (Chief Financial Officer) and hence CIOs often focus too much on risk # 1 & 2 above while ignoring or perceiving risk #3 being relatively less significant. Consequently, a CEO’s mind and vision also gets largely influenced by this, till the time a COO (Chief Operating Officer) or CRO (Chief Risk officer; an evolving role in Industry) convinces him/her for the focus and investment in mitigating the operational risks, which is equally significant, if not less.
As I described in my earlier blog below, why in today’s world of highly competitive businesses, it is more than ever important to focus on reducing your ‘unrealized costs’ to stay ahead in the curve. The core of this idea can be substantiated only through concepts of holistic Risk Management.
http://scn.sap.com/community/ehs-management/blog/2015/12/03/time-to-think-of-digital-ehs-management
An approach of PSM (Process Safety Management) suggest that you should deploy IT systems such that processes don’t sit in silos; fulfilling only the purpose of a LoB manager. They should rather talk to each other, leverage each other’s data for better and real-time insights. Following prominent processes comes to my mind, which if deployed with holistic view, would go long way in achieving Operational Excellence. SAP as a leading ERP player, already has very robust solutions for these processes and a smart System Integrator/Consultant would also architect the IT-OT (Information Technology- Operational Technology) Integration concepts around these, to pull required data from other Manufacturing systems and make it even more effective.
Imagine, Senior Management's Dashboard is getting updated daily morning with real-time visibility of all above attributes of operational risks alongside other enterprise risks. Won’t he/she be better equipped to take right decisions in an efficient manner?
So, are you as Consultant/System Integrator creating value for your clients by proposing risk mitigation with holistic approach? Or, are you as manufacturer’s IT team asking your IT/ERP partners for how to help your business in achieving operational excellence by mitigating risks through best-in-class deployment of IT/ERP systems? THINK over it……. :smile:
As always, your comments and feedback are welcome. I look forward to it.
Regards,
Pavan
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