Krannert’s Global Supply Chain Business Continuity Planning Discussion

Gary Henriott, Chairman Henriott Group, Inc. Lafayette, Indiana 1972 graduate from Krannert School of Management 44 years in Insurance & Risk Management CPCU Designation

What’s your organization’s position in the supply chain? Incoming Their goods, service & expertise Outgoing Your goods, services & expertise *Both positions entail risk *Both positions must be managed

“So….what could POSSIBLY go wrong?” “Just about ANYTHING imaginable…..”

Our Risk Management Process in the Supply Chain Step #1 Profile your supply base through review of capacity, providers, trade etc… Step #2 Assess your vulnerability Step #3 Evaluate your Risk Management options Step #4 Decide and Implement Step #5 Monitor Results Step #6 Obtain Management Support

Looks like a lot of work. So why is this import? Time... Resources… Talent... So why is this import?

Possible Negative Impacts of Poor Supply Chain Risk Management Loss of Business Poor Quality (expensive field fixes or service) Impact on Workforce Morale Financial Impact of Non-Performance Reputational Impact

STEP #1: Profiling Your Organizations Supply Chain Identify Relationships Map or Flow Chart Processes Determine Where Raw Materials, Components or External Services Come From?

STEP #1: Profile and Assess Sources & Suppliers Profiling Considerations: External Factors Geographic limitations Transportation channels involved in distributing your product Providers available to source your raw materials and supplies Internal Factors Using the “just in time” manufacturing process Inventoried product / raw materials Employee skill availability Capacity to manufacture with disruption

STEP #2: Assess Vulnerabilities & Dependence Upon Others Use an analytical tool to map your exposure to loss, based upon frequency & severity.

STEP #2: Transfer Risk

STEP #2: Supplier Evaluation Criteria History Quality Capacity Dependability Financial Strength Workforce Location Their R/M Program

STEP #3: Evaluate Risk Management Options Step #1 is really important – you can only manage the exposures you’ve identified Retain Mitigate or Control Multiple Sources Sample/Test Every Batch Transfer the Risk Contractual Insurance Other Financial Arrangements

STEP 4: Decide and Implement For each exposure, what’s the best option? Who will implement? You must have their buy-in. Justify cost/benefit Organizational criteria or constraints

STEP #5: Monitor Results & Effectiveness Continuous process Change is constant Communication between departments (i.e. purchasing, engineering, logistics, etc.)

STEP #6: Obtain Management Support How do you make supply chain risk management tangible? A priority? How will the effort be funded & sustained?

Insurance Resources Property Business Interruption & Disaster Planning Dependent/Contingent Business Data Transportation Liability Coverages Design & Errors and Omissions Exposures Product Recall Expense Cyber & Privacy Coverages Intellectual Property Directors & Officers Crime

Gary Henriott, Chairman Henriott Group, Inc. 765.838.8601 ghenriott@henriott.com