Managing risk in an international shoe business with M_o_R 4
August 5, 2022 |
8 min read
Until recently, Tom Macgregor managed the supply of shoe samples for iconic international shoe manufacturer and retailer, Clarks, founded in England in 1825.
He recently trained and certified in the latest edition of Management of Risk (M_o_R 4) best practice. Here he describes the risks in his role and how M_o_R 4 guidance has helped him address them.
Risk management training has made me think about our attitude to risk in the company.
It’s changed the wayI work, for example thinking more consciously about planning before taking a decision, based on its likely impact and possible pros and cons. And rather than having an immediate aversion to risk, it should be seen as a potentially positive thing too.
Shoe samples – used for new product development, wear tests, fitting and photoshoots – are expensive items. Each new season is a project in itself, which can cost up to £2m. For context, shipping one pair of shoes costs 20 dollars and we’re shipping up to 40,000. So, we’re trying to balance cost while meeting the needs of the business.
Also, developing a new shoe is a long process: for Autumn/Winter 2023, we’re starting now. Risk is ever-present because the timings are so finely balanced, with interdependent processes for every step of the journey. That includes new design specifications sent to factories, waiting for samples and capturing data on shoe dimensions.
Then, in the sales process, buyers come from around the world to view the new samples. Having a full range relies on factories shipping them correctly, clearing customers and going to the right address. External risks, such as China’s Zero Covid policy affecting workplaces, mean that shipments can be delayed by up to two weeks.
Other delays can affect bulk delivery of finished products, when shoes fail to arrive on time for launch dates.
Applying learnings from M_o_R 4 best practice in reality
One of the benefits from studying M_o_R 4 is the visual representation of tolerable and intolerable risks – and this has helped me to address an existing set of risks relating to purchase orders (POs) in my role.
The previous process for generating POs for “goods not for resale” had multiple risks such as spotting repeat invoices, raising POs for small amounts and the extensive and costly administration involving multiple colleagues and suppliers – and I was raising the most POs in the whole of Clarks.
By mapping the tolerable and intolerable risks visually, it was possible to convince stakeholders – CFO, COO, managers – that the process needed to change and that we were taking a mature attitude to risk by demonstrating what could go either right or wrong.
Therefore, the changes implemented to the process – which included raising one PO per supplier every six months rather than repeatedly – has led to a more agile and fit-for-purpose approach to POs and paying for samples. This has brought greater clarity to the budget and improved the overall samples delivery process.
The way we’ve managed risk in this instance has made a huge impact, with less administration, greater efficiency and cost savings.
Part of this – as outlined in the M_o_R 4 guidance – is ensuring we hold retrospectives: looking back over previous mistakes to prevent repeating them in the future.And as we learn more from risk management best practice, I think it could be embedded in teams to tackle projects that need fixing by using M_o_R 4 principles on a wider level.