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07.09.10 Supply Chain Risk - What It Is About  By Thomas CraigEvery company has risk, both real and perceptual, in its operations. Each has a portfolio comprised of potential events, likelihoods and impacts or consequences. The risk collection includes both identified and unidentified possibilities. Supply chain risk has gained significant traction as an issue. In reality, risk has always been an inherent part of supply chain management. The topic began to take on increased significance as companies evolved from vertical integration into having outside suppliers and customers. Greater market choices coupled with shorter product life cycles brought additional risk. Globalization of sourcing, manufacturing and customers compounded the threat. Sarbanes-Oxley has also contributed to recognition of supply chain risk and consequence. These, coupled with terrorism, economic and political uncertainties, transport strikes and other real-world events have raised supply chain risk to a C-level concern. The risk issue is not about transport liability and the Rotterdam rules or other type concerns. Risk focuses primarily on potential disruption in the business and its operation. It is not unique to supply chain management. Production, information technology and other areas have disruption possibilities. Redundancy is sometimes used as a risk hedge. But that approach is more difficult with complex and geographically-dispersed supply chains. Some actions can contribute to and increase risk. Key ones include: •Contradictory expectations by company management. Management can be a source of risk creation. They may not fully understand how supply chains operate. As a result, they may place requirements on the supply chain group that... Continue Reading This Article About the Author: LTD provides logistics consulting for strategic and tactical needs. The scope of capabilities is broad--supply chain management, outsourcing, transportation, warehousing, inventory management, and more for both domestic and international needs. Clients include retailers, wholesalers/distributors, manufacturers, logistics service providers and 3PLs. |
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