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Supply Chain Risk. David Josleyn Matt Revelle. Forms of Risk. Industrial Plant Fires Loss of Intellectual Property Work Slowdowns or Stoppages Natural Disasters Payment/Credit/Insolvency Geopolitical Issues Demand Changes ETC…. Recent Events. 1995 Kobe Japan Earthquake

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supply chain risk

Supply Chain Risk

David Josleyn

Matt Revelle

forms of risk
Forms of Risk
  • Industrial Plant Fires
  • Loss of Intellectual Property
  • Work Slowdowns or Stoppages
  • Natural Disasters
  • Payment/Credit/Insolvency
  • Geopolitical Issues
  • Demand Changes
  • ETC…
recent events
Recent Events
  • 1995 Kobe Japan Earthquake
  • West Coast Longshoreman Strike
  • Poor Software Implementation
  • Nike’s Child Labor Issue
  • Land Rover’s Supplier Leverage
  • Hurricane Katrina

Why Important Now???

cost minimization approach
Supplier Certification

Social Responsibility

The Role of Ports in USA Trade

Third Party Logistics

RFID

BPO to India

The Virtual Chain

How Many Suppliers do You Need

Creating a Diverse Supply Base

Cost Minimization Approach
cost realities
Cost Realities
  • Cost Minimization Can Lead to Over-Concentration of Resources
    • JIT, Lean Global Dispersion, Single Source Suppliers
  • Similar to an Undiversified Portfolio
    • Successful When Status Quo Remains
    • Very Sensitive to Changes or Exceptions
network dependencies
Network Dependencies
  • Limited Vertical Integration
    • Slave to Internal Networks
  • Supply Chains  Supply Networks
    • Linear  Complex
  • Search for Competitive Advantage has led to More Aggressive Business Trends
    • JIT, Customization, Low Cost Advantage
    • Thinking Globally, E-Commerce
fragile chains networks
Fragile Chains/Networks
  • Over-Concentration
    • Amplification of Risk Events Impact

Examples:

Land Rover Chassis’

Longshoreman Strike

Toyota Fire

what to do about risk
What To Do About Risk

Ignore/Acknowledge

Mitigate

Transfer

Accept

consulting firms
Consulting Firms
  • 6 Steps to Managing Risk
  • 18 Ways to Guard Against Disruption
  • Core Risks 4 Next Steps
  • Software Solves All
  • Analytical Risk Mitigation
academic thought
Academic Thought
  • Accurate Information/Accessibility
  • Visibility
  • Flexibility (Lean vs. Agile)
  • Contingency Plans
  • Diversify Supply Chain Portfolio

Supplier Relationships Are Key

misinterpretation
Misinterpretation
  • Holding Excessive Inventory
  • Inflated Production Times
    • Parkinson’s Law
  • Increasing Delivery Time for Customers
  • Low-Quality Domestic Suppliers
risk summary
Risk Summary
  • Risk is Everywhere
  • Cost Reduction Increases Risks Probability
  • Reduction of Risk is Relationship Dependant
sources
Sources
  • Supply Chain Risk: Deal With It - Harvard Business School Working Knowledge, April 28, 2003
  • Risk and Reward in Supply Chain Management - Harvard Business School Working Knowledge, August 29, 2005
  • Supply Chain Confidence – Martin Christopher and Hau L. Lee, November 6, 2001
  • How to Identify and manage Supply Risk (Part 1 and 2) - www.supplychainplanet.com, (Part 1)October 2003 (Part 2)November 2003