Manuj-Mentzer Flashcards
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Categories of risk
Supply risk
Operations risk
Demand risk
Security risk
Supply risk
inability to meet customer demand within anticipated costs
includes: reliability of suppliers single vs. multiple sourcing make/buy decisions centralized vs. decentralized sourcing
Operations risk
inability to produce goods & services, quality & timeliness or overall profitability caused by event in focal firm
includes:
breakdown in core operations
inadequate manufacturing
high level of process variations
change in technology that makes current facilities obsolete
change in operating exposure (exchange rates)
Demand risk
associated with outbound flows that may affect likelihood of customers placing orders
variance in volume/assortment desired by customer
includes:
movement of goods
delayed/inappropriate product introductions
variations in demand
chaos in system (overreactions downstream)
more risky with innovative products
Security risk
threat from unknown third party whose motivation is to steal data or knowledge and/or destroy operations
includes: individuals leaking information system hackers weak security/firewalls at members of SC infrastructure security risks (transport) freight breaches
Risk mgmt. strategies
avoidance postponement speculation hedging control transferring/sharing risk security
Avoidance
when risks associated with operating in given market or with particular product is considered unacceptable
managers are aware of trade-offs
Postponement
delaying commitment of resources to maintain flexibility and delay incurring of costs
Form postponement:
- labeling
- packaging
- assembly
- manufacturing
Time postponement:
-movement of goods only after orders are received
Speculation
assumption/selective risk taking
opposite of postponement
decisions made on anticipated customer demand
SC resources directed to products with highest competitive advantage
Hedging
globally dispersed portfolio of suppliers, customers, and facilities such that single event doesn’t affect all entities at the same time
dual sourcing
Control
Vertical integration
reduce risk of supply/demand failures
changes variable costs into fixed costs
Transferring/sharing risk
outsourcing, offshoring, contracting
international factoring –> form of offshoring treasury services
portfolio of contracts to induce retailers with different levels of risk aversion, to select unique contracts
Security
Technological development i.e. sensors
Container Security Initiative
Customer Trade Partnership Against Terrorism
