Jin Leong and Caro Cook of the IMF worked together to devise a supply chain risk management approach that was ahead of its time.

Throughout the past month, we've talked a lot about managing supply chain risk. Late last month, Secretary of Homeland Security Janet Napolitano announced the "National Strategy for Global Supply Chain Security" on behalf of the Obama administration at the World Economic Forum (WEF). The strategy called for more stringent preventative procedures when addressing issues along the supply chain, rather than a reactionary approach.

That same day, the WEF released an agenda called "New Models for Addressing Supply Chain and Transport Risk," which showed that 93 percent of the respondent businesses said that improving their supply chain risk management has become a greater priority in the last five years. The WEF's document suggested approaches to managing supply chain risk, which also seemed to be heavily leaned towards preventing rather than responding.

Just over one year ago, Jin Leong and Caro Cook of the International Monetary Fund (IMF) worked together and devised an approach to supply chain risk management that was ahead of its time and is reflective of the current visions of the WEF and the U.S. government. In an article for the Institute for Supply Management's Inside Supply Management publication, Leong explained that by using traditional risk indicators like historical finances in conjunction with current real-time supplier data, distributors and manufacturers will have a more accurate augmentation of the risk each supplier carries.

In order to do this, they created a program that is based around a "supplier observation database" that is the center of a network of supply chain managers. With this main database, managers can enter information such as changes in performance levels or leadership adjustments regarding individual suppliers so that the industry as a whole can have a better idea of sources to avoid.

With the success of websites like Yelp, the supplier observation database shows promise if managers get on board and could be a great complement to widespread label compliance. If everyone's working with the same data, the whole ship sails smoother.