Article 6: Managing Risk to Avoid Supply-Chain BreakdownAmol A Nayak1. Key takeaways:- All companies have to manage risk, SCM risk is the key risk that needs attention due to various ways it can affect: Supply Disruption (Natural, man made), Supply Delay, System breakdowns, forecast errors, IP issues, procurement pricing issues, accounts receivables, Inventory uncertainty and capacity management.- All these risks must be taken into consideration while initial design and implementation of a supply chain system. These various mitigation strategies must be considered while designing any Supply chain system.- Various Mitigation Strategies: Adding Capacity, Adding Inventory, Maintaining redundant suppliers, higher responsiveness, Increase flexibility, pool demand, higher capability, and higher number of customer.- Each Mitigation Strategy has an impact on the SCM risk. These need to be managed by the supply chain managers, e.g. higher inventory will reduce Supply disruptions and /or delay but it will tie up higher working capital.
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