Prof.

Shikha Aggarwal
 SESSION 7
SUPPLY CHAIN DRIVERS

04-08-2020
MANAGING SUPPLY CHAINS
THE RIGHT SUPPLY CHAIN

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MANAGING SUPPLY CHAINS
THE RIGHT MATCH

Nature of demand
Functional products Innovative products
Predictable Unpredictable
Few changes Many changes
Low variety High variety
Price stable Price markdowns
Long lead-times Short lead-times
Low margin High margin
Minimum inventory
Low-cost suppliers
Efficient
Supply chain objectives

Lean
Mismatch
Low cost

supply chain
management
Low throughput times
Deployed inventory
Flexible suppliers
Responsive

Agile
Mismatch supply chain
management

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MANAGING SUPPLY CHAINS
DRIVERS

Competitive Strategy

Supply Chain Strategy

Efficiency Responsiveness
Supply Chain Structure

Facilities Inventory Transportation Information Sourcing Pricing

Cross functional “drivers”

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 SESSION 8
RISK MANAGEMENT IN SUPPLY CHAIN

04-08-2020
MANAGING SUPPLY CHAINS
RISK MANAGEMENT

For managers, risk is a threat that something might happen

to disrupt normal activities or stop things happening as
planned.

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MANAGING SUPPLY CHAINS
RISK IN SUPPLY CHAIN

Risks can appear at any point in a supply chain

from initial suppliers through to final customers

▪ interrupt the supply of materials or the demand for

products
▪ cause sudden peaks in demand or collapses
▪ range in scope from a minor delay through to a
natural disaster

And different risks can be linked!

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MANAGING SUPPLY CHAINS
RISK IN SUPPLY CHAIN (contd.)

Internal risks

▪ Less dramatic, but more widespread in their effects.

• Risks to operations that managers can control
• For instance, risks from suppliers can be avoided by multiple sourcing,
• Risks to the flow of materials are reduced by holding stocks

External risks
• Outside managers’ control.
• Managers can design operations that work as efficiently as possible
within a risky environment.
• For instance, there is a continuing risk of hurricanes at some places

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MANAGING SUPPLY CHAINS
RISK IN SUPPLY CHAIN: SOURCES

❑ Strategic – arising from strategic decisions made within organizations that directly
increase the risk

❑ Natural – arising from unforeseen natural events such as extreme weather, lightning,
earthquakes, flood, landslides or outbreaks of diseases

❑ Political – such as government instability, new legislation, regulations, policies, permits,

treaties, customs barriers, conflicts or wars

❑ Economic – from the broad economic environment, including interest rates, inflation,
currency exchange rates, taxes and growth

❑ Physical – risks to buildings and facilities, such as traffic accidents, equipment failure,
congestion or limited capacity

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MANAGING SUPPLY CHAINS
RISK IN SUPPLY CHAIN: SOURCES (Contd.)

❑ Supply – all issues with the movement of materials into an organization,

including sources, supply market conditions, constraints, limited availability,
supplier reliability, lead times, material costs, delays, etc.

❑ Market – all aspects of customer demand, such as level of demand, variability,

alternative products, competition and patterns of change

❑ Transport – for all movements of materials, including risks to the infrastructure,

vehicles, facilities and loads

❑ Products – risks arising from product features, including technology used,

innovation, product mix, range, volumes, materials used

❑ Operations – arising from the nature of activities in the organization, type of

process, complexity, technology, special conditions, after-sales service, etc.

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MANAGING SUPPLY CHAINS
RISK IN SUPPLY CHAIN: SOURCES (Contd.)

❑ Financial – all money transactions, including payments, prices, costs, sourcing of

funds, profit and general financial performance;

❑ Information – including the availability of data, data transfer, accuracy, reliability,

security of systems, etc;

❑ Organization – arising from the way the organization works, including its
structure, disputes, types of interactions, subcontractors, communication
flows, culture, etc;

❑ Planning – risks from the design and execution of plans for operations, including
mismatch between supply and demand, inadequate detail, missed constraints,
poor forecasting, lack of synchronization, etc.

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MANAGING SUPPLY CHAINS
RISK IN SUPPLY CHAIN: SOURCES (Contd.)

❑ Technical – and new technology in processes, communications, new products,

process designs and reliability;

❑ Criminal – arising from all illegal activities, such as theft, fraud, bribery,
vandalism and terrorism;

❑ Safety – to people and facilities, including accidents, hazardous substances

and fire;

❑ Human – from all the complex interactions between people, including working
requirements, aims, culture, human errors and industrial action;

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MANAGING SUPPLY CHAINS
RISK IN SUPPLY CHAIN- CONSEQUENCES

The main risk to a supply chain is disruption to the flow of materials.

A dominant feature of supply chains is that all members are linked together,
and a risk to one is automatically transferred to all other members.

What should managers do ?

Should not wait to see what damaging events occur and then start thinking about
their response.
Be proactive, identifying potential risks and planning their responses in advance.

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MANAGING SUPPLY CHAINS
RISK MANAGEMENT IN SUPPLY CHAIN

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MANAGING SUPPLY CHAINS
SUPPLY CHAIN RESILIENCE

The ability of an organization to bounce back quickly from

supply chain disruption

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MANAGING SUPPLY CHAINS
SUPPLY CHAIN RESILIENCE: FRAMEWORK

▪ Supply Chain Understanding

Supply Chain Re-engineering ▪ Supply Chain Design Principles
▪ Supply Base Strategy

▪ Collaborative Planning
Supply Chain Collaboration
▪ Supply Chain Intelligence

Agility ▪ Visibility
▪ Velocity and Acceleration

▪ Supply Chain Continuity Teams

Risk Management Culture ▪ Broad-level Responsibility
▪ Factor Risk Considerations into Decision-making

Source: Christopher & Peck, 2004

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