Essay on New Risk Mitigation Strategies and Resilient Supply Chain
Organization must be confident in the capabilities and resiliency of their supply chains. The lessons learned over the past several years from natural and human-caused disruptions demonstrate that supply chains cannot be taken for granted and that old approaches to risk mitigation and risk transfer require an upgrade to meet today’s challenges.
Identify and describe the new risk mitigation strategies and how corporations continuously improve their supply chain resiliency.
In today’s volatile and turbulent markets, supply chain vulnerability has become an issue of significance for many organizations. Supply chain become extensive and more complex as a result of global sourcing, continued trend to lean manufacturing, globally distributed operations, supply chains risk increases. The present challenge to corporation is to manage and mitigate risk through creating more resilient supply chains. Demonstration of unforeseen past disrupting events in the global supply chain industry were the flooding in Thailand in late 2011—and Thailand being the second largest producing country of hard drives—product availability was down almost 30%, severely impacting the availability of computing products. In early 2011, the earthquake, tsunami and nuclear crisis in Japan virtually stopped the production of automobiles but also affected many parts used in the electronics industry. In early 2010, it was the volcano eruption in Iceland that blocked nearly 100,000 flights, disrupting travel and the shipment of high value material to and from Europe. The reality is that in a global supply chain, companies are significantly more exposed to geopolitical crises and natural disasters. Disruptions in a supply chain are inevitable. Analysis of the risk associated with a supply chain should not reside on whether or not hostile event will occur; rather, the emphasis should be on developing and managing a supply chain that is able to respond effectively to that shock when it occurs. This study provides a brief overview of supply chain risk, risk management and risk mitigation strategies, Business Continuity Management and Business Continuity Planning, and Resilience. The purpose of this study is to identify and describe the new risk mitigation strategies and how corporations continuously improve their supply chain resiliency. In order to do that some example of the global companies will be cited on their practice of risk mitigation strategies in their organization. Brief Overview of Supply Chain Risk
Supply chain risk as defined by Deloitte is any event that may occur within the macro, extended value chain, operations, or functional areas that directly affect the ability of a corporation to meet customer demand or that has the capability for negatively affecting the reputation of the company. Risks can be categorized into four primary groups which are macro-environmental risks that have potential effects across the supply chain, extended value chain risks that originate in upstream and downstream supply chain partners, operational risks that relate to internal process risks and lastly functional risks that exist among functions that support supply chain processes. Supply Chain Risk Management and Risk Mitigation Strategies Supply chain risk management is a critical discipline within business continuity management that many companies, particularly manufacturing firms, fail to perform well. Risk management define as a creative process that involves identifying, evaluating, and mitigating the impact of the risk event. The ultimate purpose of risk identification and analysis is to prepare for risk mitigation. There are four types of risk mitigation strategies these are risk avoidance, risk sharing, risk reduce and risk transfer. Risk avoidance is the most effective risk management strategy in that, by avoiding an activity or risk, any chance of a loss is...
References: Martin Christopher, Helen Peck, (2004) "Building the Resilient Supply Chain", The International Journal of Logistics Management, Vol. 15 Iss: 2, pp.1 – 14
Glickman, T.S., & White, S.C
Kurnia Sofia Rosyada, (2012) Creating Competitive Advantages through Resilient Supply Chain – Case Study: Samsung Electronics, Department of Design, Manufacture and Engineering Management
University of Strathclyde, Glasgow, United Kingdom
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