Sunday, October 5, 2008

Risks in Supply chain

Dear All,

Some days back I read one article in McKinsey which I thought will be of worth to sharing with you all. The article was “Understanding Supply Chain Risk”. In this article they have mentioned number of factors (with the data) which are the Risk Elements for the Supply Chain of any business. They have shown the variance in the risk associated with different industries and companies with the relevant data given by the executives.

Here is a brief of the entire article-

2 out of 3 executives said that they feel risk associated with the Ability to supply their customers with Goods and Services Cost Effectively.

Lack of Well Trained Labour.

The lack of Confidence in the Companies to handle the Risks.

General availability, cost, quality of labor was the problem maiking 43% contribution in the risk

Regulatory concerns-36%

Reliabilty of Suppliers-33%

Commodities shortages/price fluctuations-29%

Fluctuations in foreign –exchange rates-23%

Intellectual properties theft-22%

Obsolescence of product inventory or technology-21%

War, terrorism, other geological concerns-15%

Problems with Supply Chain Infrastructure-11%

Plant breakdowns/mechanical failures-10%

Natural disasters-10%

Others-4%

So, friends, here goes the opportunities for the people who want to go in the part of the Supply Chain in any sort of business. Actually being a MBA one can look over these all above mentioned issues which are the problem or the risks for the SC of business and can build the competency level in him/her so as to serve the Gap required.

The other problems mentioned in the article was regarding the TOO MANY RISKS, TOO LITTLE TIME

To minimize this risk the companies go for the Performance Contract with the suppliers… and there were a lot more measures what a company takes.

In the further part of the article the Sarbanes-Oxley Act of 2002 has been mentioned and talked about its effect on the company’s ability to focus on and mitigate risks related to the SC.

The article also gives some of the helping tactics to the companies facing Risk in their SC.

So readers, this is a fantastic article by Mckinsey

Here goes the link for that- Understanding Supply Chain Risk

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