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Supply Chain Risk

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

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  1. Supply Chain Risk David Josleyn Matt Revelle

  2. Forms of Risk • Industrial Plant Fires • Loss of Intellectual Property • Work Slowdowns or Stoppages • Natural Disasters • Payment/Credit/Insolvency • Geopolitical Issues • Demand Changes • ETC…

  3. 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???

  4. 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

  5. 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

  6. 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

  7. Fragile Chains/Networks • Over-Concentration • Amplification of Risk Events Impact Examples: Land Rover Chassis’ Longshoreman Strike Toyota Fire

  8. What To Do About Risk Ignore/Acknowledge Mitigate Transfer Accept

  9. Consulting Firms • 6 Steps to Managing Risk • 18 Ways to Guard Against Disruption • Core Risks 4 Next Steps • Software Solves All • Analytical Risk Mitigation

  10. Academic Thought • Accurate Information/Accessibility • Visibility • Flexibility (Lean vs. Agile) • Contingency Plans • Diversify Supply Chain Portfolio Supplier Relationships Are Key

  11. Misinterpretation • Holding Excessive Inventory • Inflated Production Times • Parkinson’s Law • Increasing Delivery Time for Customers • Low-Quality Domestic Suppliers

  12. Risk Spiral

  13. Risk Summary • Risk is Everywhere • Cost Reduction Increases Risks Probability • Reduction of Risk is Relationship Dependant

  14. 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

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