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Supply Chain Risk - Supply Chain Risk Supply Chain Risk...

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Unformatted text preview: Supply Chain Risk Supply Chain Risk Schedule THIS WEEK: NEXT WEEK: – 2:10 Class – 3:40 Class – Supply Chain Risk – Int’l Logistics and Wrap­up FINAL EXAM: Thursday, Dec 18, 12pm – 2pm Monday, Dec 14, 2:15pm – 4:15pm 2 Risk Risk Supply Chain Risk …refers to uncertainty or unpredictable events affecting one or more of the parties within the SC, which can negatively influence the achievement of business objectives. SC Risk describes a company’s vulnerability to SC disruptions. 4 Supply Chain Risk Management …is a structured and synergetic process throughout the supply chain which seeks to control, monitor, and evaluate supply chain risk. SC Risk Management should safeguard continuity and maximize profitability. 5 Why Vulnerability Now? Complex Supply Chains… “seed of vulnerability” Integration and outsourcing Short product life cycles and greater product variety Connected World Tight Price Competition Reduced inventory Single suppliers and single buyers 6 What is Vulnerability Vulnerability –likelihood & severity Dimensions of Vulnerability High Disruption Probability Low Light Severity Severe 7 Types of Disruptions Natural Disasters Capacity Constraints Air Traffic System Delays Terrorist Attacks Supplier Failures Labor Actions Clearance Delays Knowledgeable Workers Country Requirements Equipment Undeveloped or Aged Infrastructure Volatility in Prices Civil Unrest Trading Blocks 8 Types of Disruptions 1. 2. 3. – “Near misses” Random phenomenon Accidents Intentional – Worst place and time 9 Reducing Vulnerability Security Supply chain security management is the application of policies, procedures, and technology to protect supply chain assets (product, facilities, equipment, information, and personnel) from theft, damage, or terrorism, and to prevent the introduction of unauthorized contraband, people, or weapons of mass destruction/effect into the supply chain. 10 Reducing Vulnerability Using Security Layered defenses, “near misses”, confluence of cause, threat vs. baseline 1. Basic – cameras, personnel security, cyber, continuity plan, freight protections 2. Second tier – continuation plans, C­TPAT compliance, analysis of supply base, supply continuity plan, limited training 4 Levels of Security 11 Reducing Vulnerability Using Security 1. Proactive – director or chief of security, ex­fed or military personnel, structured risk assessment, advanced cyber security, end to end business continuity plans 4. Advanced – customer/supplier collaboration, learning from past disruptions, security strategy, drills and simulations, cost benefit analysis, ROI… 4 Levels of Security (cont) 12 Reducing Vulnerability Resilience The ability of a company to bounce back or recover from a disruption The speed at which a company returns to normal performance levels 13 Reducing Vulnerability Through Resiliency Redundancy Flexibility – Inventory, low capacity utilization, many suppliers – Prohibits efficiency – Standard processes, concurrent processes, postponement, procurement strategy – Encourages efficiency – Communication, distributed power, passion, conditioning – Encourages efficiency Corporate Culture 14 Reducing Likelihood of Disruptions (collaboration) TAPA – cargo security in high­tech CMC – semiconductor supply chain PPPs – public­private partnerships – – – – – – – – – Critical Material Council C­TPAT – Customs­Trade Partnership against Terrorism PIP – Partners in Protection (Canada) BASC – Business Anti Smuggling Coalition (Mexico) CSI – Container Security Initiative FAST – Free and Secure Trade OSC – Operation Safe Commerce (containers) SST – Smart and Secure Trade Lanes Initiative (visibility) 15 WCO – World Customs Organization – Technology Asset Protection Agency Detecting Disruptions Statistical Process Control (SPC) Using the SPC Warnings? Alarms – US Center for Disease Control 16 Justifying Defense & Resilience Investments Defense – – Insurance Cost avoidance Benchmarking Resilience – International speed – Often the same as quality investments – “The same advanced supply chain designs… … help them react to disruptions.” – Making lemonade from lemons… Six Sigma, TQM, Demand Management 17 From Motorola Executive Supply Chain Security can be a competitive advantage – security improves efficiencies to ensure uninterrupted supply Working in silos is costly and inefficient – globalization requires a high level of cooperation and communication Partnering with key supplier is advantageous in terms of securing capacity and collaborating on solutions that minimize supply chain disruptions It is important to have contingency plans in place that address capacity concerns, supply issues, and transportation routing issues Global Logistics is “driving” for a resilient supply chain 18 ...
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