Effective external risk management is a complex task involving a combination of operational strategy and mitigation techniques. Rene Buck, CEO of Netherlands based management consultancy, BCI Global, tells us more about business disruption risks and methods of coping with them.
Since external risks, by definition, fall outside the control of any organisation, they can be particularly difficult to predict and deal with effectively. Economic and political factors such as trade tariffs between the US and China, a key supplier suddenly facing bankruptcy, lab our market challenges together with natural disasters like earthquakes, flooding, hurricanes, etc, pose threats which can easily take the most risk conscious Project Manager or CEO by surprise.
However, a certain level of risk is crucial to growth and development. In today’s fast paced world there’s a balance to strike between minimising threats whilst also maximising opportunities and potential. Risk is inherent across all business functions, it evolves rapidly and its impact is suitably diverse. Therefore, effective risk management involves understanding, analysing and addressing likely risk to ensure objectives are achieved and long term success is maintained.
Founded in 1985, Netherlands based BCI Global is an ambitious consulting organisation dedicated to supporting corporations with manufacturing, footprint optimization, supply chain design and location search support for production plants, warehouses, software development centers and back offices to make informed strategic choices. With satellite offices operating from Europe’s thriving business cities and networking offices in Atlanta, Silicon Valley and Los Angeles in the US, and Singapore and Shanghai in Asia, BCI Global provides independent, unbiased research and implements project management across six interlinked business areas.
Earlier this year BCI Global was recognised by the prestigious Forbes Magazine as one of America’s Best Consulting firms. In this article, Rene Buck, President and CEO of this forward thinking international management consultancy offers a fascinating behind the scenes glimpse into BCI’s areas of expertise and services provided.
Firstly, to give us a sense of the scope of BCI Global’s offering within the management consultancy arena, could you outline the main areas of business you concentrate on?
BCI Global is a worldwide operating specialised consulting firm. We advise companies in all geographies of the world on their manufacturing and distribution strategies. Additionally, we help companies in finding the best locations for new or consolidated operations. Our methodologies are tailored to specific projects, whether it is a new plant or distribution centre or a more office type of project like a headquarters location, a software development hub or a shared service centres.
Are the organisations you work with confined to a particular industry sector or geographical location?
Not at all. We’ve assisted more than 900 clients situated across more than 50 countries worldwide. It’s a truly diverse provision which encompasses multiple industry sectors, including ICT, automotive, pharmaceuticals and medical technology, food and beverage, fashion, business services and logistics. We’ve supported prestigious global corporates and brands such as Amgen, Barclays, Cisco, Hewlett Packard, Ikea, Johnson & Johnson, Microsoft, Nike, Pfizer, Samsung, Unilever, UPS and Yamaha to make realistic and well-researched strategic choices.
BCI Global clearly plays a significant role in shaping the future success of established market players. Delving deeper into the disciplines you focus on, could you tell us more about the strategy behind site selection and company location?
In assisting companies to find the right location for new operations we focus on three different categories of location factors: costs, quality of the business environment and risks. Cost factors consist of all investment cost and annual operating cost you have to make to run the new operations for the next year. If you want for example to set-up a new production plant in China or South East Asia think about the costs for buying land and building the plant, but also recurring costs like labour costs, distribution costs, taxes, utilities, etc.
The second category of location factors we take into account addresses the quality of the business environment. Examples are the availability of talent, international accessibility, reliability of utilities and telecom, ease of doing business etc. in all the locations under review.
The third category of factors to include in a location comparison are external business disruption risk factors like hyperinflation, currency convertibility, legal risks, patent infringement risks and natural disaster risks.
We have a proven methodology to incorporate all these factors in a well-based decision support model if a company want to compare the pros and cons of locations in Europe, the US, China or Asia.
Talent markets are obviously a key driver for nearly all types of new operations. Labour costs, availability, market competition, employment incentives will vary across states, regions, and capital cities, creating attractive investment opportunities in specific locations. BCI Global carries out specialist research analysing talent pools and labour markets within a context of integrating business environment factors and risks. For example, would a new manufacturing production plant rely heavily on automation, thus requiring a limited number of highly skilled operatives, or would it favour a more labour intensive approach with a need to recruit hundreds of lower skilled employees? Also in back offices like shared services centres or customer support centres, the required skills are shifting. More and more technical skills are required to support the success of the centre.
Studying economic trends in conjunction with market insights into real estate must also feature heavily in your role when considering the impacts of long term investments. Can you give us an overview of BCI’s involvement in this business area?
Investing in corporate real estate does require a long-term strategic view. We need to base the recommended investment strategy on a thorough and comprehensive analysis of economic trends, performance and dynamic insights of the real estate and capital markets, as well as up to date understanding of industry specific and regional developments.
BCI Global, in analysing a potential fit between an organisation’s real estate portfolio and its overall business strategy, validates the level of risk acceptance and the minimally required yield. We can then provide investors, developers and end users with a factual recommendation for promising locations for offices and logistics which match their specific requirements.
Certain external factors and risks must surely pose extremely complicated threats, and for the most part are probably unpredictable and difficult to mitigate against. Can you give any current examples of situations where long term trading impacts may be difficult to assess?
Brexit is, of course, a perfect example. Such a significant, unprecedented event will undoubtedly result in major economic impact, especially within British organisations which rely on highly integrated UK-EU supply chains, operate within specialist areas – automotive or pharma, for instance – or benefit from EU research and development grants. However, rumour, personal opinion and speculation are widespread, and it’s crucial to be able to recognise the fear factor when differentiating between fact and fiction. In this regard, BCI Global works with clients to understand uncertainty, gaining clarity to plan a range of mitigation scenarios based around potential risk and opportunities around individual requirements such as supply chain solutions, tariffs, regulations and contracts, VAT implications, staffing needs, etc.
Also in Asia we are looking for the best combinations of benefitting from the huge markets in China and Asia as well as mitigating the impact of the current trade war between the US and China. China and lower cost Asian nations – Malaysia, India, Thailand, Vietnam, etc – are both interesting manufacturing bases and sources of labour market supply. Again, our deep expertise gained by a wealth of industry experience is geared towards enabling our clients to make informed business strategy and locational decisions.
You mentioned earlier that BCI Global is an ambitious consulting management organisation. What are your future aims and objectives?
BCI Global intends to increase its reach as a specialized global consulting management organisation of choice, and to be ‘best in class.’ Our ambition is to continue to collaborate with and support companies in their strategic, tactical and operational decisions, offering independent, unbiased advice based on thorough understanding of individual sectors and market developments. BCI Global is proud to be seen by its clients as a consulting firm which gives ready-to-implement advice.
Where can our readers find out more about BCI Global?
Our website – https://bciglobal.com/en – contains comprehensive information relating to the key areas we focus on, our aims, objectives, up to date industry news and links to interesting publications.