1.3 Risk Analysis
By having the processes mapped, a number of vulnerabilities are identified and properly registered, as discussed in the previous section. These vulnerabilities must be classified and prioritized. These dynamics may occur through three different mechanisms:
- Reactive (focused) approach
- Proactive (comprehensive) approach
- Intermediate (business-driven) approach
The reactive approach to process vulnerability understanding (risk analysis) begins with a known issue. For example, a warehousing operation (SNAR 01.02.02) that registers a low picking productivity. This scenario calls for a focused process mapping to understand the activities, controls, and mechanisms mainly associated with picking operations.
Figure 1.31 Risk analysis, reactive approach
As the specific processes are mapped and the vulnerabilities are understood, process revisions may occur. It is important to remember that process mapping necessarily includes the three pillars: interviewing people, observing the process, and analyzing data. The difference between actual process and future processes defines the transformation effort.
The proactive approach to risk analysis occurs in two situations:
- Several diffuse issues have disabled the reactive (focused) approach.
- It is a planning initiative, prior to the identification of any significant issues, and expects to give visibility to unknown inefficiencies.
The proactive approach begins with a comprehensive process mapping, covering several knowledge areas; it is suggested to follow the SNAR Model for defining the process mapping scope.
Figure 1.32 Risk analysis proactive approach
After the processes are mapped, innumerable vulnerabilities are exposed that demand prioritization. As the risks associated with vulnerabilities are ranked, it is possible to define the implementation strategy. Depending on the extent of the process mapping, it is possible to build a Supply Network Master Plan (SNMP) as a reference for the transformation process.
Figure 1.33 Risk analysis, intermediate approach
In addition, the implementation strategy may enable the elaboration of a Supply Network Continuity Plan (SNCP). The intermediate risk analysis approach involves the contribution of experts in the operations to be mapped.
The experts panel selectively reduces the number of processes to be mapped, instead of a comprehensive process mapping a number of selected processes go through the risk analysis.