Reducing Your Company’s Supply Chain Risk
With little slack inventory or slack time available across the supply chain overall performance of the supply chain depends on highly reliable performance being achieved from all the tiers of suppliers in the entire chain.
Everyone seems to be aware of supply chain risks now in the aftermath of last year’s tsunami in Japan followed just six months later by heavy flooding in Thailand.
The two natural disasters had a combined cost to global industries of nearly $230 billion. Worldwide, natural disasters cost $310 billion according to the insurer, Munich Re.
The purpose of this brief white paper is to:
- Define the challenges companies face managing supply chain risk
- Suggest the mix of techniques required to succeed
The extensive use of lean practices to increase the efficiency of supply chains with respect to cycle-times and inventory investments has also made supply chains less resilient.
With little slack inventory or slack time available across the supply chain overall performance of the supply chain depends on highly reliable performance being achieved from all the tiers of suppliers in the entire chain.
Essentially, the drive for efficiency will drive purchase decisions towards lower-cost suppliers without consideration for the increased risks their low-cost operating model may bring to the overall supply chain.
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