Supply Chain Management

Supply chain management (SCM) is crucial to the success of any business and is also required for customer happiness, which leads to increased sales. Supply chain management involves keeping an eye on the flow of data, resources, and money from the supplier to the wholesaler, retailer, and ultimately the consumer. SCM entails streamlining organizational processes to increase productivity and responsiveness. Customers like quick service, but it can occasionally backfire. Many risks are present in most business activities, and it is up to the corporation to be innovative, creative and think critical on the possible risks as well as the methods necessary to tackle the risks when they occur. This paper includes the summary of the case study provided, evaluation of whether good decisions were made, the decisions which should have been made and how to approach risk management in a corporation.

Summary of the Case Study

The case study analyses the differences between the rare and frequent risks for a supply chain disruption, as well as proposing new and improved risks measurement. The case study also prioritises the methods which can be used to account for the characteristics of the extraordinary risks. Supply chain disruptions act as stumbling blocks for a smooth flow of goods, delaying the products from reaching the customer as revenue loss for the affected company. Disruptions can be either major like plant fires or minor in nature like machine breakdown. Supply chain disruptions have increased lately due to an increase in global supply chains hence increasing the vulnerability of companies to risks across the globe. When catastrophic events occur, the units of production schedule reduce significantly. Occasional but disastrous disruptions differ from a small one and thus should be accordingly.

The steps included in managing catastrophic chain supply risks are identification and measurement of the risk, risk prioritisation for mitigation, evaluation of mitigation tactics employed and finally instigating the mitigation strategies. However, despite the process suggested, some of the rare catastrophic risks cannot be foreseen, hence impact probability disruptions and tribulations become subject to estimation. For effective risk identification, the use of risk assessment hierarchy method can be utilised since it focuses more on potential risk to the supply chain rather than analysing all the probable disruptive events of individual levels. Once the disruptive events probably in the supply chain have been identified, the risks are then measured and prioritised. Prevailing measures of risks used include probability and impact. Thus the prioritisation used becomes the failure modes and effects analysis (FMEA) variant which is specialised for risk management in supply chain. Business managers can be well positioned in dealing with the unforeseen when they consider rare risks along with frequent risks.

Evaluation of The Decisions Made and The Input to Be Made

The decisions reached in the above case study are practical, but much emphasis has been focused on the detection of the detection of the sources of the disruption. Supply chains are in a state of continuous flux, and with that constant change within a short duration, it becomes hard to sustain current predictions of the specific risks which are likely to occur. Thus, it is more practical to focus on understanding the impacts of the disruptions to the company, regardless its source. Instead of an emphasis on the probable disruptions and their causes, the impacts the disruptions will have on the company’s operations should be the core concern. With the relevant information on the implications of the disruptions, more conversant decisions can thus be made on where to focus the limited risk-assessment resources. After all, companies employ practically similar mitigation actions in supply chain disruptions regardless the cause of the interruption.

Approach to Risk Management in A Corporation

An appropriate approach to risk management in an organisation is by first preserving the enterprise value of the company that took a long time to build. Corporation management should ensure that it is committed to a maintaining a healthy tension between value protection and creation. A corporation should have a risk management plan with clearly defined processes such as the key steps to take when a threat is detected. The plan engineered should be accomplished within the cost of the risk management resources, derived within time and achieve its goals and objectives. The steps risk approach plan includes risk identification, assessment of the impacts of the risk tracking of the risks, prioritisation and analysis of the risks and lastly mitigation plan of the risks, implementation, and also continuous monitoring of the risks. In a corporation, risk management should be a leadership precedence throughout the company management levels, and the risk management authority should only be delegated to staffs with authority.

Conclusion

Risks in chain supply, whether major, minor, rare or frequently can be disruptive not only to the corporation but also to the customers. Disruptive threats cause a delay in the supply chain, and the ultimate result is a delay to when the goods reach clients and also loses to the company affected. However, the rare but catastrophic disruption risks tend to have more adverse effected to the parties involved. Identification of the risks early enough as well as having a proper understanding of the degree of the impacts to the corporation serves as useful tools to reduce the damages caused by the risks. Strategic thinking, innovation as well as creativity are essential in the process of identifying and handling the supply chain risks.