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Managing Investment Risk Between You and Your Supplier

ISM's 90th Annual International Supply Management Conference

San Antonio, Texas
May 2005


Jill Schildhouse

Lisa Cooley, MBA
Associate Director Global Purchases Training & Development
Proctor & Gamble

Stephen C. Rogers, MSIA
Senior Consultant
Cincinnati Consulting Consortium

With a motto stating you must take calculated risks to win, Stephen Rogers and Lisa Cooley set out to provide an understanding of what supplier investment risk is and why it should be managed. Risk, as they explained, is as much about management as it is about actually choosing to take the risk. Rogers explained that there are six types of risk and briefly explained one example for each:

  • time — staffing
  • technical — licenses
  • financial — feedstock escalation/de-escalation
  • supply/operational — complexity of line
  • regulatory — trade regulations
  • business market — competing technologies response time

Cooley then went on to discuss project management risk and the five steps involved: penetrate and understand the types of risk; plan for risk with physical and technical contingency plans; syndicate the risk by asking the supplier to share the risk as a price of entry; own the risk by managing supplier investment as if it were your money and; portfolio management of all products and with all suppliers.

By Jill Schildhouse, writer for Inside Supply Management®

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