SCRC Articles Library: SCM SC Risk
SCM SC Risk Articles
The Relationship between Disruption Amplifiers and Risk Reduction Mechanisms: A Managerial Framework
The Relationship between Disruption Amplifiers and Risk Reduction Mechanisms Clearly, some of these actions (improved planning and collaboration) can be adopted with a minimal level of investment, and may provide significant benefits. Other strategies such as new systems to improve visibility require significant investments to deploy. All of these alternatives require time, money, and resources to roll out. Although the short-term fix being adopted by most companies is a quick fix of using additional inventory or premium freight, this approach has significant limitations. Complexity Drives Use of Excess Resources The companies we interviewed were adopting different approaches to risk reduction.
Risk Reduction Mechanisms: A Managerial Framework for Reducing the Impact of Disruptions to the Supply Chain
Risk Reduction Mechanisms To manage the amplifiers of supply chain disruptions with their roots in supply chain globalization and product/process complexity, firms have deployed a variety of different Risk Reduction mechanisms. The full list of risk reduction mechanisms is shown in Table 3. These mechanisms were also coded and classified into three distinct categories of risk reduction activities, which correspond to the three elements of disruption discover, recovery, and supply chain redesign. Figure 4 illustrates this concept. The risk reducers have the following impacts: 1) Improved information visibility reduces the time between the disruption and its discovery, 2) Excess resources reduces the time
Methodology To benchmark risk planning and mitigation practices, we conducted a series of focused interviews and captured various insights into the area of supply chain disruptions. We interviewed executives from a pharmaceutical company, two international logistics providers, three large retailers, the head of a US Department of Defense military branch and a nuclear power company. The executives had various job titles such as Chief Operating Officer, Chief Logistics Officer, Vice President of International Supply Chain and Senior Manager of Import Operations. We also performed an in-depth study of an automotive supply chain, which included interactions with various executives at the
Introduction Recently the topic of Enterprise Risk Management appears at the top of many corporate agendas. Although most discussions on risk management are confined to financial reporting and internal controls risks associated with the likes of Sarbanes-Oxley, an often overlooked risk is the probability of an undesirable event occurring that causes extensive supply chain disruption. When organizations discuss the concept of Enterprise Risk Management (ERM), the discussion often revolves around financial and strategic risk (see Figure 1 for examples). In reality, however, the total set of risks to an organization is much broader, and also includes Hazard Risks and Operational Risks.
Executive Summary: A Managerial Framework for Reducing the Impact of Disruptions to the Supply Chain
Executive Summary Low-cost sourcing has now become a staple of competitive strategy in many retail and manufacturing sectors. As organizations source a greater proportion of manufactured products from China, India, and other low-cost countries the hidden perils of these approaches are often not considered, especially within the context of enterprise risk management (ERM). Global sourcing affords many benefits in the form of lower price and expanded market access. Only recently have senior executives begun to recognize the increased risk attributed to the higher probability of product and service flow disruptions in global sourcing networks. A major disruption in the offshore
Amplifiers of Supply Chain Disruptions: A Managerial Framework for Reducing the Impact of Disruption to the Supply Chain
Amplifiers of Supply Chain Disruptions Certain attributes of a company’s global supply chain environment may amplify or mitigate the impact of disruptions. In the case of Nokia and Ericsson, one company acted quickly because of their supply chain design: they were able to monitor the supply of critical parts, detect the problem early, rely on its deep relationships with its core suppliers and knowledge of supply markets to allow it to recover; the other lost major market share due to its slow response. Within each company we studied in this research, we first sought to understand the elements in
How Do Supply Chain Risks Occur?: A Managerial Framework for Reducing the Impact of Disruptions to the Supply Chain
How Do Supply Chain Risks Occur? Supply chain risk management systems comprise the set of systems and processes used to manage supply chain disruptions. Disruptions are defined as major breakdowns in the production or distribution nodes that comprise a supply chain. These may include events such as a fire, a machine breakdown, an unexpected surge in capacity that creates a bottleneck, quality problems, natural disasters, customs delays, or any other number of different problems. We first developed a common framework for discussing global supply chain disruptions, as shown in Figures 2 and 3. Figure 2 illustrates the three critical components to a risk