New index helps forecast US supply chain risks

Lehigh University College of Business has launched the

Lehigh Business Supply Chain Risk Management Index

. The LRMI will report quarterly on how supply chain managers rank 10 broad areas of supply chain risk. A unique aspect of the LRMI is that the quarterly reports include a sampling of candid comments from supply chain managers about each risk category that goes beyond the numbers. The next report comes out Sept. 15, 2020.

The LRMI was developed by the

Center for Supply Chain Research

at Lehigh University and the

Council of Supply Chain Management Professionals

to help distinguish critical risks from standard risks. “This new tool originated in one of our six centers where students and faculty collaborate on real world, relevant business issues,” said Georgette Phillips, the Kevin L. and Lisa A. Clayton Dean of Lehigh’s College of Business. “This is what distinguishes Lehigh Business as both a learning and research facility.”

“Managers tend to be focused on issues that are immediately pressing,” said

Zach Zacharia

, Ph.D., associate professor of Supply Chain Management and director of the Center for Supply Chain Research at Lehigh. “They don’t have time to check with their peers and get a sense of the bigger picture. Now, LRMI does that for you.”

The total LRMI rating for each quarter is the average level of risk, as seen by the supply chain managers, on a scale of 0-100, across 10 categories. The categories are:

• Customer Risk
• Cyber Security Risk
• Economic Risk
• Environmental Risk
• Government Intervention Risk
• Operational Risk
• Quality Risk
• Supplier Risk
• Technological Risk
• Transportation Risk

A number above 50 suggests there is a higher level of risk. Based on the ranking of risk factors, supply chain managers can determine how the risks apply to them and decide what particular areas they need to concentrate on. The LRMI number for the 3rd quarter of 2020 is 69.49.

“A number near 70 is extremely high risk,” Zacharia said. “With the high amount of disruption and uncertainty associated with the pandemic it is easy for managers to believe that everything is high risk, but the LRMI assesses what particular set of risks stand out as especially problematic.”

For the 3rd quarter of 2020 these are the top four areas, according to supply chain managers, when compared head-to-head:

• Economic Risk
• Supplier Risk
• Customer Risk
• Transportation Disruption Risk

Zacharia said as they collect more historical data they will be able to report on trends and further increase the understanding of supply chain risks. LRMI reports will be available every quarter on Sept. 15, Dec. 15, March 15 and June 15.

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To get the latest report for free and to find out how supply chain managers can take the LRMI survey for the next quarter go to:

business.lehigh.edu/LRMI

.

About the Center for Supply Chain Research at Lehigh

CSCRL bridges theory and practice to promote a collaborative exchange of ideas on critical issues affecting supply chain management. By leveraging Lehigh’s faculty, students, alumni and industry partners, the Center brings the latest developments in research and best practices together to generate new ideas for education and future knowledge in the field of supply chain management. Learn

more

.

About the Council of Supply Chain Management Professionals

CSCMP’s mission is to connect, educate and develop the world’s supply chain management professionals throughout their careers. No matter where you are in your career development, CSCMP has the resources and network to help you achieve your goals.

Learn more

.