Managing Risk to Avoid Supply-Chain Breakdown Harvard Case Solution & Analysis

Acts of God, labor disputes, terrorism, and the more mundane risks can seriously disrupt or slow the flow of material, information and cash through the supply chain organization. The authors argue that how well the company fares against such threats depends on the level of training and the type of violation. Each risk is supply chain - Weather, information systems, intellectual property, procurement, inventory and power - has its own drivers and effective mitigation strategies. To avoid lost sales, increased costs, or both, leaders must adapt proven strategies to reduce the risk to their organizations. Risk management of the supply chain is difficult, however. Dell, Toyota, Motorola and other leading manufacturers excel in identifying and managing risks through a delicate balance of supply: storage of inventory, capacity and related materials at appropriate levels throughout the supply chain in a rapidly changing environment. Organizations can prepare for or avoid delays on "smart-sized" their capacity and inventory. Manager acts as a sort of financial portfolio manager, striving to achieve the highest possible profit (reward) for different levels of supply chain risk. The authors recommend the powerful "What if?" Team exercise is called "stress tests" to identify potential weak links in the supply chain. Armed with this general understanding, companies can select the best mitigation strategy. "Hide
by Sunil Chopra, Manmohan S. Sodhi Source: MIT Sloan Management Review 11 pages. Publication Date: 01 Oct 2004. Prod. #: SMR154-PDF-ENG

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