Risk is the possibility of losing something valuable which creates uncertainty while making investment decisions. It is going to impact negatively in future. Risk management is that process of developing a system which identifies risks and manage them with different tools. Every risk should have contingency and mitigation plan. Risk management is applied when a company gets an uncertainty difficulty in financial market which threat project failures in design or production phase. The process of making a new product with the help of different raw materials and supplying them to customers is supply chain. Supply chain risk management can be viewed as a strategic management activity in firm. For example: the supply chain of Gap Inc. (Collier.D, & Evans.J, 2012, p.180) begins at the farm where they grow cotton as raw material and then transfer to textile mills where T-shirt and jeans are made. The factories cut and sew the fabric into finished goods, and send them to retail stores for sale.
The writers discuss four important point on supply chain risk management, which are: i) value focused process engineering, ii) labour managing and global supply chain risk, iii) planning for catastrophic events in supply chains and iv) supply chain agility and risk mitigation. The article mainly focuses on outsourcing of supply chain and the difficulty in labour management, where different business organizations use the outsourcing method to control risk in the business. Outsourcing is the cost saving strategy, where they reduce the cost by transferring the work to outside suppliers rather than completing it internally. Firm outsourcing is done with various reason- cost reduction, innovation, and new strategy and rapidly changing customer demand....
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... of the products should be tested in different stages of distribution. One of the major issues the article failed to address is the labor safety who are directly and indirectly involved in production and distribution phase. Labor sees the risks and threats first so they should be trained properly so that they can handle the risks in their workplace and proper mechanism should be made to handle reoccurring risks. Supply chains involve decision makers, labours, board of directors and management authorities hence holistic approach is necessary to manage risks.
The article is very useful to understand the
Conclusion:
The articles mainly talks about the theoretical contribution to the area of risk management in supply chain. How to minimize the risk in supply chain by the use of its four methods. Proper planning should be done in the business to avoid the risks factor.
...lothing and equipments in the industry. These will greatly ensure the safety of the employees and hence minimize the injuries. Use of the administrative control and work practices will also lead to the production of quality products safe for consumption (OSHA Quick take, 2010).
In the last several decades, supply chain management has evolved to be a very interesting field of research. This field has recognized that the business processes are made of different entities and decentralized players where the strategic operational decision of one player leaves the impact on other player. If one player in the supply chain chooses his strategy then it changes the individual profits of other player as well as the total channel profit. So, here the concept of game theory comes into the picture when the economic variable selected by one player leaves impact on the economic variable of other player.
Outsourcing has been around for many years. In this paper, I will discuss some of the history of outsourcing, the good things about outsourcing, and the bad things about outsourcing. Outsourcing is important because many companies rely on it in order to get many different products and services to their facility on time and in good shape. Outsourcing is a huge part of the business industry today. Any business can be affected by outsourcing.
Rao, K., and Young, R. R. (1994) Global supply chains: Factors influencing outsourcing of logistics functions. International journal of physical distribution and logistics management. Vol. 24. No. 6.
It is suggested for any organization to review, reassess any existing supply chain management or any delivery techniques, before developing a new supply chain method so that any exposure to high risk of failure is reduced. Somerset as a company taken advantage of outsourcing and transferred it product manufacturing to China leveraging low cost labor and raw material. The labor cost and other cheap material reduce Somerset overhead cost, but there is always the risk of not delivering product on time due to the foreign country political climate, change in tax and tariff and local
Supply chain management is basically refers to the fundamental supply chain analysis of the organization which predominantly describes functionalities from source to the delivery point. In this process of delivery, supply chain management framework divides in four categories: In Planning the products and suppliers evaluated and selected, Sourcing pull the information process including contracting, ordering and expediting, Moving is a physical process from suppliers to end user and Paying is the financial process including payment and performance measurement.
The successful supply-chain management focus solely on the consumer demand rather than imposing a product into the market which may or may not succeed. The companies are adopting to speed ways of market techniques to gain a good cons...
No firm can be a success without some form of risk management. Risk are the uncertainty in investments requiring an assessment. Risk assessment is a structured and systematic procedure, which is dependent upon the correct identification of hazards and an appropriate assessment of risks arising from them, with a view to making inter-risk comparisons for purposes of their control and avoidance (Nikolić and Ružić-Dimitrijevi, 2009). ERM is a practice that firms implement to manage risks and provide opportunities. ERM is a framework of identifying, evaluating, responding, and monitoring risks that hinder a firm’s objectives. The following paper is a comparison and evaluation to recommended practices for risk manage using article “Risk Leverage
Supply Chain Risk Management in Healthcare How in healthcare Supply Chain Risk Management Plays key role in Decision Making: Being from a Healthcare background, I am exploring in health care supply chain risk management currently facing the challenges in the real world. I have been broadly focused in Risk Management in Healthcare. The supply chain generally refers to the assets needed to deliver products or services to a consumer or to patients.
This article adds value to the class by going into detail and providing examples of every pitfall the supply chain management can encounter, by doing so, it makes it easier to understand and visually how the supply chain management works. The supply chain management has various parts to it, and it can be hard to understand, but after reading this article and having so many different examples of situations, I see all the opportunities that come from pitfalls and I am aware of all the problems that can happen in order to avoid making them.
Obviously at the intersection of high frequency and high severity, I will avoid the risk. If it is possible, everyone will seek to avoid any situation falling in that intersection. However, we cannot always avoid risks.
19. Sodhi, Sunil Chopra and ManMohan S. Managing Risk to Avoid Supply Chain Breakdown. MITSloan Management Review. [Online] October 15, 2004. [Cited: February 25, 2010.] http://sloanreview.mit.edu/the-magazine/articles/2004/fall/46109/managing-risk-to-avoid-supplychain-breakdown/.
Over the past two decades there has been a rapid growth and need for individuals who specialize in Supply Chain Management (SCM). SCM is the central planning of all industrial work and is the logistical motor that keeps the manufacturing world running efficiently; keeping a company's goods and services in constant supply to their customers: “A fundamental element of any business strategy is the supply chain process or strategy to deliver goods and services to the consumer” (Thomas, 2010). SCM requires a disciplined understanding and the use of fields such as economics, computer systems information and marketing. There is a great difference between a company that has an efficient SCM system with one company that has an inefficient supply chain affecting a company's entire resources from labor productivity to consumer loyalty. According to Rhonda R. Lummus (1990) "Interest in supply chain management has steadily increased since the 1980s when firms saw the benefits of collaborative relationships within and beyond their own organization" (p.11). Supply chain management is the brain-trust of any business strategy and when an effective model is put in place the benefits are shared by consumer and producer alike.
Risk Management allows us to identify the problems which are unknown during the start of the project but may occurs later. Implementing an efficient risk management plan will ensure the better outcome of the project in terms of cost and time.
Outsourcing is the final option for logistics management. When this happens, transportation firms concentrate on logistics, and the company can concentrate on it’s production. There are many cost savings using this type of program, however that lack of control can negatively effect many companies.