Unlocking the ROI of Supply Chain Resilience

Supply chain disruptions are a daily reality. While the importance of managing supply chain risk is widely acknowledged, many organizations struggle to translate their risk management efforts into tangible value.  

How do you build a business case for investing in supply chain risk management (SCRM)? What does a successful program look like, and how can you measure its return on investment? 

To answer these critical questions, we’ve distilled the key insights from a recent webinar, “How to Realize the Value of Investing in Supply Chain Risk Management Solutions,” hosted by Everstream Analytics in partnership with the Supply Chain Risk Management Consortium.  

This Q&A-style blog post features insights from a panel of seasoned experts: 

• David Shillingford, Co-founder of Everstream Analytics 
• Greg Schlegel, Founder of the Supply Chain Risk Management Consortium 
• Jim de Vries, Chief Strategy Officer at the Supply Chain Risk Management Consortium 

Here’s what they had to say about turning risk into a competitive advantage. 

Understanding Supply Chain Risk Management Value 

What is the biggest challenge companies face when trying to get value from their SCRM efforts? 

David notes that the primary challenge is bridging the gap between the daily discussions about supply chain disruptions and the internal conversations with CFOs about investment.  

He explains:  

“On one hand every day there are examples, discussions about supply chain risk and supply chain disruptions and the importance of managing risk and supply chains. But then there is a gap between that and the discussion within a company with the CFO or whoever it is that’s signing off on an investment.”  

While everyone sees the need for resilience, the key is to move beyond the what and how of SCRM and focus on the why – the tangible value it delivers 

Building Visibility and Maturity 

What is the first step to building a successful SCRM program? 

The consensus is clear: visibility.  

Jim explains that most companies are at a low level of supply chain maturity, meaning they can barely see what’s happening in their own network.  

He describes a common “one, two, three step” pattern where companies advance to a stage 3 of maturity (referencing Gartner’s 5-stage model) and then regresses because leadership doesn’t see the return when attempting move from stage 3 to 4.   

Greg reinforces this, stating, “What you don’t know about your supply chain can and will hurt you.”  

Visibility is the foundational second stage in the Consortium’s five-stage maturity model, providing the insight needed to act proactively. 

Do you need to have a fully mature supply chain to get value from SCRM? 

No. David debunks this myth, stating that you can gain value from SCRM from day one, even with limited visibility.  

He argues that companies should not wait to perfect their supply chain processes before investing in risk management. The two should evolve together, with SCRM providing immediate benefits by leveraging the visibility you have today. 

“I think a mistake that I often hear is the assumption that – ‘I’ve got to get to a certain level of supply chain maturity before I can reap a return around supply chain risk management.’ And that’s incorrect. The two should evolve in parallel.” 

Developing Agility and Resilience 

How does resilience create value, and isn’t it just about costly redundancy? 

This is a critical misconception. David clarifies that while redundancy (e.g., extra inventory, more suppliers) is a part of resilience, it is not the whole story. A more powerful and value-creating component of resilience is agility.  

“The easiest way to think about agility is speed versus competition. If you can move faster than the competition to get that capacity, not only is your time to recover going to be faster, you will gain market share or you have the opportunity to gain market share.” 

As Jim puts it, “Resiliency isn’t about surviving disruptions. It’s about converting disruptions into differentiation. You’re going to move from the mindset of surviving disruptions into thriving through disruptions.”  

What role does trust play in building an agile and resilient supply chain? 

Trust is a massive, often overlooked, accelerator.   

Greg notes that trust translates to a significant strategic advantage.  

“When trust is present between you and your partners, activities between the entities are accelerated and costs decrease.” 

Building trust with both customers and suppliers, even to the point of being transparent about challenges, can lead to collaborative problem-solving and a more resilient network.  

This fosters a dynamic where you can become both the “preferred customer” and the “preferred supplier”. 

Moving from Risk Identification to Action 

Many companies are good at identifying risks but struggle to act on them. How can they bridge this gap? 

Value is only created through action.   

Greg outlines a four-step framework: Identify → Assess → Mitigate → Manage. He stresses that the first two steps are merely an “academic exercise.”  

“The value add to us and the ROI in an SCRM journey is it comes out in the mitigation process.”  

The mitigation phase involves taking concrete actions to reduce the likelihood or impact of a risk.   

David offers a guiding principle: “Start with action: What outcome do I want? Therefore, what actions must I take?”  

By working backward from the desired outcome, companies can ensure their risk management efforts are always tied to value creation. 

What are some tangible benefits that come from a mature risk mitigation process? 

A robust SCRM program delivers value in several ways: 

• Cost reduction: A company with a mature SCRM program can see a 10% or more reduction in insurance premiums. Automating workflows also lowers the operational cost of the program itself. 
• Cost avoidance: By effectively detecting and mitigating risks, companies avoid the high costs associated with disruptions, such as production stoppages and lost revenue. 
• Financial benefits: Exemplar companies even bring their Chief Risk Officers on sales calls to articulate their resilience as a competitive advantage, directly attributing new sales to their SCRM program. This allows for hard ROI calculations. 

Greg notes that supply chain risk management is a differentiator.  

“We’ve had clients take their CROs, chief risk officers on sales calls [to] make the case that their company is less of a risk and more responsive to the customer’s needs than their nearest competitor.” 

Figure 1: It is not enough to know your supply chain risks, you must also understand the outcome you want and take action to ensure you are properly managing your risks

Leveraging Data and Analytics 

How can data and analytics transform supply chain risk management? 

Data and analytics are the engine of modern SCRM.   

David explains that the same analytics used to identify downside risk can be used to find upside opportunities. He uses a retail analogy: the analytics used to find shoplifters is the same one used to find your best customers.  

In the supply chain, this means looking for areas where you have not just too much risk, but also not enough.  

As Greg puts it, “Risk management is a two-sided coin. One side is the potential negative impact; the other side is what we call risk opportunity. One company’s risk event can be another company’s risk opportunity.” 

What is a common pitfall when using predictive analytics?  

Jim tells us that a major pitfall is having an “ivory tower” analytics team that is disconnected from the day-to-day operations. He describes a scenario he’s seen frequently: a strategic team forecasts demand and orders materials that end up overflowing a warehouse, while the operational team is simultaneously short on the actual materials needed to fulfill customer orders. The key is to connect predictive analytics across the strategic, tactical, and operational levels of the organization to ensure that insights are translated into effective action. 

“A lot of folks have a bunch of people sitting up in an ivory tower doing predictive analytics, but they’re not attached to the business… it doesn’t connect to the S&OP that’s going down on the factory floor.” 

Measuring and Communicating Value 

What is the best way to communicate the value of SCRM internally? 

To combat what Greg calls “executive convenient amnesia,” proactive and continuous communication is essential.   

He recommends creating an internal website or collaboration room that serves as a central hub for the SCRM program. This site should be updated daily with identified risks, mitigation plans, and, most importantly, the results.   

By documenting wins, such as beating a remediation timeline and calculating the associated cost avoidance, the team can make the value of their work visible and tangible to the entire organization. Over time, this repository becomes a searchable knowledge base, allowing teams across the globe to learn from past events and responses. 

What are the most important KPIs to track to show the value of SCRM? 

The panel highlighted several KPIs that directly reflect the impact of a strong SCRM program: 

• Cash conversion cycle: Greg champions this metric because it encompasses inventory, receivables, and payables. As an SCRM program matures and reduces costs, it directly improves the cash conversion cycle, a KPI that resonates strongly with the CFO. 
• On-Time In-Full (OTIF): Jim adds this as a direct measure of customer satisfaction and operational execution, which are both enhanced by a resilient supply chain. 
• Decision velocity: Jim also introduces this concept to measure how quickly the organization can make critical decisions. A good SCRM program provides the clarity and confidence needed to act swiftly, which is a significant competitive advantage. 

Key Takeaways for Your Business 

Start Now, Not Later 

You don’t need a perfectly mature supply chain to get value from SCRM. Start with the visibility you have and evolve your program over time. 

Think Agility, Not Just Redundancy 

Resilience is more than just costly buffers. Focus on building agility to outmaneuver competitors during disruptions. 

Action Creates Value 

Don’t get stuck in analysis. The ROI of SCRM comes from mitigating risks, not just identifying them. Work backward from the actions you can take. 

Embrace the Two-Sided Coin 

Use the same data and analytics that identify risks to uncover opportunities for efficiency, cost savings, and competitive advantage. 

Communicate and Quantify 

Make your value visible. Track KPIs like the cash conversion cycle and OTIF and create a central repository to document your wins and share knowledge across the organization. 

Conclusion 

Realizing the value of supply chain risk management is not a one-time project; it’s about building a continuous, dynamic capability. By focusing on visibility, fostering agility, taking decisive action, and effectively communicating value, organizations can move beyond a defensive posture. They can transform their supply chain from a source of potential risk into a powerful engine for competitive advantage, customer trust, and sustainable growth. 

To see how Everstream could help your organization mitigate risks across your supply chain, schedule a demo with our team.