Back in November, I commented on an article that appeared in the Financial Times about companies providing financial support to their suppliers (see “Financing: A New Twist on Supply Chain Collaboration“).   My key takeaway was that supply chain risk management-especially with regards to avoiding supply disruptions-will become even more important in this economic environment.  Some recent news appears to validate my thinking.

According to an article in this Sunday’s Financial Times (“Recession forces risk management rethink“-subscription required), interest in enterprise risk management has increased over the past two years, based on a survey of 450 companies (including most of the FTSE 100 companies) conducted by The Association of Insurance and Risk Managers (Airmic) in the UK.  The following excerpt from the article is worth noting:  ”Outside the financial sector, supply chain risk management has become one of the biggest areas of concern in the downturn, Airmic said. The globalization of production lines and the tendency to source from an ever-wider array of trading partners has left larger companies particularly exposed.”

Here in the U.S., General Motors is in talks to take back portions of Delphi, the parts supplier it spun off almost a decade ago.  According to the Wall Street Journal, GM is specifically interested in taking over up to five Delphi plants that produce exclusive parts for some of its models, such as the Cadillac CTS and Chevrolet Silverado.  In contrast, the folks at Ford are not taking any action to aid Visteon, another ailing parts supplier that used to be part of Ford.  According to an article in The Detroit News, “Ford officials said the decision not to aid Visteon is not driven by a need to conserve cash but reflects the fact that the two companies are not as closely tied. Ford is now using other suppliers to provide many of the parts it used to get from Visteon.”  Based solely on these news reports, it appears to me that Ford has done a better job than GM in minimizing its supply risk, at least for certain critical parts.

Last week, Mattel reported its fourth quarter results, and during the call with analysts, the management team was asked if they saw any risk with any of their manufacturing partners in 2009.  Here’s what Robert A. Eckert, Chairman and Chief Executive Officer of Mattel, said in response:

“As it relates to your question on vendors, we were impacted in 2008.  About 40 vendors or thereabouts make up probably 80% of our vendor capacity. We did have issues with I’m going to say five to ten vendors that were somehow impacted by the global crisis. They tend not to be our significant big vendors, but some of the smaller vendors. That was an issue for the industry in 2008. It was an issue for us in 2008. We’re working closely with our vendors in our manufacturing plans for 2009. So this is one of the areas that we are focused on,both our vendors and our retail customers.  We have some anxiety on both sides of our supply chain, so we’re working very closely with our partners on both sides of the supply chain [emphasis mine].”

Is supply chain risk management well practiced at your company?  Any chance you’ll be blindsided by a key supplier or customer going out of business this year?  What actions are you taking to mitigate these risks?  As I said in a recent posting, there’s no better time than right now to put into practice all that talk about “supply chain collaboration” and how competition is now between supply chains, not individual companies.