Supply Chain Risk Management - 6330 Words

IBM Global Business Services White Paper Supply Chain Risk Management: A Delicate Balancing Act A multi-faceted view on managing risk in a globally integrated enterprise Risk Management IBM Global Business Services Page  Table of Contents Risk and Consequence: Tales from the Industry Supply Chain Risk Categories Disruptive Events, Uncertainty and Impact Models and Methods for Supply Chain Risk Management Example of Risk Management for IBM’s Product Supply Chains An Approach for Measuring the Impact of Identified Supply Chain Risks Key Lessons from IBM’s Supply Chain Risk Management Approach The Landscape: Supply Chain Risk Management Supply Chain Risk Management: Getting Started In Summary Authors Footnotes 4 6 7 9†¦show more content†¦Volume risk would be particularly high during product launches and phase-outs. Although during product launches inventory cost can IBM Global Business Services Page  be remedied, during the phase-outs, manufacturers face significant component obsolescence risks. The dilemma is that high customer service targets might require prohibitively high levels of safety stock during these periods. Figure 2: Profit Loss due to Supply Disruptions 23% 22% 21% 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 0 1 2 3 4 5 6 7 Safety Stock (days of supply) Fixed Cost = 25% Fixed Cost = 50% Fixed Cost = 75% Profit Loss 8 9 10 Next, consider a manufacturer that keeps safety stock for a product it makes. In many commodity products, profit margins are low. Suppose profit margin is 10%. The chart above shows the impact of a 10 day supply disruption on profits. Since safety stock can cover for some of the supply disruption, the higher the safety stock the lower the profit loss. For instance, if safety stock is 8 days, only 2 days of revenue is lost and hence the profit loss is for 2 days of sales only. The corresponding profit loss varies from 2% to 4% depending on how high the fixed costs are. Figure 2 (above) shows that a manufacturer with 75% fixed costs (in some manufacturing industries such as semiconductors, fixed costs can be very high) can lose more than twice as much as a manufacturer withShow MoreRelatedThe Risks Of Supply Chain Management1354 Words   |  6 PagesIntroduction When it comes to supply chain management all business must be aware of the risk and best practices to prevent problems with their product. Neither the seller or buyer is immune to the risks of bad supply chain management. When it comes to cybersecurity, companies must be sure that their products do not have vulnerabilities that they are unaware of. This can lead to reduced sales, damaged reputation, and cost a significant amount of money in remediation. Supply Chain Risks As with all other industriesRead MoreSupply Chain Risk Management3278 Words   |  14 PagesMGT 650 Term Paper Risks Associated with Supply Chain Management I. Introduction Companies face a myriad of risks throughout their supply chain. To properly manage these risks, companies must be able to clearly identify them in order to accurately manage and mitigate their impact. Broadly defined, risks can be divided into two general categories: general risks, which are faced by most companies regardless of the nature of the industry in which they operate or the nature of the goods orRead MoreSupply Chain Risk Management Analysis1521 Words   |  7 Pages Uta Jà ¼ttner, (2005),Supply chain risk management, The International Journal of Logistics Management, Vol. 16 Iss 1 pp. 120 - 141. Supply chain risk management is an intersection of supply chain management and risk management. For this we need to understand the benefits and as well as the limitations of both the concepts. 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However, being prepared, doneRead MoreAn Empirical Analysis Of Supply Chain Risk Management1692 Words   |  7 PagesHoenig in the paper titled â€Å"An empirical analysis of supply chain risk management in the German automotive industry† applied the practices of supply chain risk management by surveying sixty-seven manufacturing plants in German automotive industry. The need of real empirical research in supply chain risk management to help analyzing supply chain risk and test the previous research proposed instruments that can be applied for supply chain risk management was the motivation of this work. In this paper, theRead MoreRisk Management of Mass Customization in Supply Chain Management4280 Words   |  18 PagesRisk management of Mass customization in Supply Chain Management Ching-Hua Huang, Cai Wei, Lam Shan Kong, Ching-Hsin Lee, Po-Chun Chen, Faculty of Business, Economics amp; Law, University of Queensland, Australia Key words: Risk management, Supply chain, Mass customization Abstract Companies nowadays have faced critical issues on managing the supply chain system and how to make it work smoothly is the main goal that is willing to pursue. This article is going to identify the risks