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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 *

Previous

Page - 9

Risk Categories and Risk Drivers9

Systems
  • Information infrastructure breakdown

  • System integration or extensive systems networking

  • E-commerce

  • Forecast
  • Inaccurate forecasts due to long lead times, seasonality, product variety, short life cycles, small customer base

  • "Bullwhip effect" or information distortion due to sales promotions, incentives, lack of supply-chain visibility and exaggeration of demand in times of product shortage

  • Intellectual Property
  • Vertical integration of supply chain

  • Global outsourcing and markets

  • Procurement
  • Exchange rate risk

  • Percentage of a key component or raw material procured from a single source

  • Industry wide capacity utilization

  • Long-term versus short-term contracts

  • Receivables
  • Number of customers

  • Financial strength of customers

  • Inventory
  • Rate of product obsolescence

  • Inventory holding cost

  • Product value

  • Demand and supply uncertainty

  • Capacity
  • Cost of capacity

  • Capacity flexibility

  • Information Technology (IT)
  • Damage to telecommunications software

  • Errors or attacks on the reliability, integrity, or availability of the system that are carried out through the supply chain itself

  • Politico-Legal
  • Changes in govt., leading to changes in policies

  • Changes in laws making them less beneficial

  • Criminal
  • Theft or Damage

  • Next

    9 Sunil Chopra and Manmohan Sodhi, "Managing Risk To Avoid Supply Chain Breakdown", MIT Sloan Management Review, Fall 2004.
    Identifying Risks and Building Trust in Global Supply Chains, Bonnie W. Morris.


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


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