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Operations Article | Managing the Global Supply Chain

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Managing the Global Supply Chain: A Risk Measurement Perspective

- by Krishnakanth K. K. & Pankaj Ghai *

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Page - 23

The innovation and learning part corresponds ot the risk identification across the chain as has been suggested earlier and its continuous mitigation strategies. This will help improve the productivity of the chain as a whole (on the assumption that the risks of different types delay or stop the output in a given time frame). The customer perception of better service levels is what allows the company to charge higher gross margins.

Experience has revealed that balanced scorecard is most effective when driving the process of change, as it can help bring focus to a set of strategies. It can help bring focus to the company's mission, strategy and key performance measures. This new approach to performance measurement is consistent with the initiatives under way in many companies: cross-functional integration, customer- supplier partnerships, global scale, continuous improvement, and team rather than individual accountability. It will lead to discussions and consensus building which increases the chances of successful implementation and acceptability.

Some Mathematical Beginnings16

Some mathematical techniques are also being proposed to analyze Supply Chain risk, with the emphasis on capturing the risk due to interlinkages. To analyze any risk, we need to know:

  • Possible modes of damage to the assets

  • Probability associated with each mode

    Damage can be caused by various events and often an event of disruption triggers a set of events as in a chain reaction. Thus, a complete causal tree structure and an inferencing engine is required to determine the most probable path and the relative probabilities of occurrence for any chain of events. Inferencing can be done using three techniques-

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    16 Roshan R. Pai, Venkata R. Kallepalli, Reggie J. Caudill and MengChu Zhou, "Methods Toward Supply Chain Risk Analysis", IEEE, 2003.


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    * Contributed by -
    Krishnakanth K. K. & Pankaj Ghai,
    PGP Students.
    IIM Lucknow.


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