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Supply Chain Risks, Mitigation, & Prevention. Tara Barnes Kevin Haselwander Kaylee Pfennig Trever Shaishrikoff June 5 th , 2006. Agenda. Types of Risks Internal and External Risk Mitigation Why is this important? Prevention How companies can reduce risks?. Types of Risk.
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Supply Chain Risks, Mitigation, & Prevention Tara Barnes Kevin Haselwander Kaylee Pfennig Trever Shaishrikoff June 5th, 2006
Agenda Types of Risks Internal and External Risk Mitigation Why is this important? Prevention How companies can reduce risks?
Types of Risk Internal ~Strategy –Having the wrong strategy ~ Demand –Buying to much or too little ~ Market –miss expectations ~ Implementation –new supplier downtime ~ Performance –post implementation expectation
Types of Risks External Natural Disasters Earthquakes -Japan (1995) Hurricane Katrina (2005) Human/Technology Nike ( 2001) Cisco Systems (2001) Terrorism Closing of shipping docks
Global Supply Chain Risks The impact of global supply chain disruptions is increased when any of the following increases: Location of Supplier Number of Brokers Long Lead Times Concentration of Suppliers Workforce Issues Demand for Product
Product/Process Risks The impact of supply chain disruptions is increased when any of the following increases: Product Complexity Proprietary Technology Value of Product Quality Requirements Uniqueness of Parts
How do we Reduce these Risks? With Risk Mitigation Continuous monitoring and analyzing risk associated with the system Evaluate alternate safeguards associated with each threat/asset pair Suggesting the most effective safeguard, which would mitigate the threat consequences and occurrences.
Risk Mitigation Company wide managers must think Strategically Broaden Cooperation Consider the tradeoffs Don’t ignore a risk just because you can’t quantify it
Supply Chain Disruptions Set up Supply Chain Risk Management Systems : 1. Discover a disruption 2. Effectively recovery 3. Supply chain design for resilience
Nokia March 2000- Nokia’s semiconductor plant in NM caught on fire. Disruption Discovery 4 million headsets, 5% of production Disruption Recovery Alternate part sources, work with Philips Supply Chain Redesign Visible tracking system, Risk management assessment for suppliers, Business continuity plans, and Insurance programs
Preventing Disruption Research through Data and Analysis Review entire supply chain to see where problems might arise Improve forecasting and planning Align company with other suppliers that adhere to same safety standards and policies Example- Supplier Certification Identify, track, and quickly respond to problems
Lesson’s Learned Major lesson to be learned from Supply Chain Disruptions is: Speed of Company’s response is critical Establish Contingency plans Visibility Solutions Buffer Stock Mitigate Impact of Disruptions
Sources • Bosman, Ruud. "Risk Management in a Global Economy." FMGlobal. Apr. 2006. 30 May 2006 <http://www.fmglobal.com/pdfs/ChainSupply.pdf>. • Clouse, Mark, and Jason Busch. "How to Identify and Manage Supply Chain Risk Part 1." Harvard Business School. Oct. 2003. Harvard University. 22 May 2006 <http://www.supplychainplanet.com/e_article000188823.cfm>. • Clouse, Mark, and Jason Busch. "How to Identify and Manage Supply Chain Risk Part 2." Supply Chain Planet. Nov. 2003. 30 May 2006 <supplychainplanet.com/e_article000203546.cfm>. • Handfield, Robert B. "A Managerial Framework for Reducing the Impact of Disruptions to the Supply Chain." Supply Chain Resource Consrtium. North Carolina State University. 31 June 2006)<http://scm.ncsu.edu/public/risk/risk3.html>. (Also all photo credits from this cite) • Stauffer, David. "Supply Chain Risk: Deal with It." Harvard Business School. 28 Apr. 2003. Harvard University. 30 May 2006 <hbswk.hbs.edu/pubitem.jhtml?id=3442&t=operations>.
