Supply Chain Design and Risk

The focus of the six chapters in this first section concern the stages in the SCRM approach incorporating differing perspectives or models associated with the 

Bjorn Asbjornslett tackles the issues associated with analyzing the potential vulnerabihty of supply chains, enabling a more proactive approach to SCRM. Having introduced the concepts of vulnerability and resilience in the context of the supply chain, the author examines the contributory factors influencing both vulnerabihty and resilience. The chapter concludes with the exposition of a detailed approach to assessing the vulnerability of the supply ch providing practical iUustrations, guidance and advice on associated tools that may be employed to support the analysis and assessment. 

Barbara Gaudenzi contends that managers need to address and manage risks at the project and process level if they are to respond effectively to the competitive and dynamic environment. Linking projects and processes, the author examines the key drivers for success and imaginatively demonstrates the parallels between these and the link to risk assessment. The chapter evolves around a series of four propositions which are used to identify the appropriate risk assessment method. The chapter concludes with an approach to risk assessment for projects and processes that spans both internal and external stakeholders. 

The three chapters in the second section. Supply Chain Design and Risk, focus on how organizations can shape their supply chains to address the risks inherent in all supply chains or those risks more coimnonly associated with their specific supply chain 

The third chapter (Chap. 10) in this section, authored by Professors Christopher Tang and Brian Tomlin, examines the contention that strategies designed to enhance supply chain flexibility will mitigate supply chain risks. The authors provide a comprehensive analysis of different categories of risk and the impact that flexibility might have on these in terms of likelihood and consequences. 

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Habermann M, Blackhurst J, Metcalf AY (2015) Keep your friends close Supply chain design and disruption risk. Decis Sci 46 491-526... 

Guill6n G., Mele F., Bagajewicz M., Espuna A. and Puigjaner L. 2003b. Management of financial and consumer satisfaction risks in supply chain design. Proceedings of ESCAPE 13. Lappeenranta, Finland, 1-4 June 2003. 

Design to reduce risk. Reduce the likelihood of high-impact, highly probable supply chain events and manage to eliminate periodic incidents and supply chain surprises. 

Quality Function Deployment (QFD) is a technique to translate requirements — defined by customers — into specifications for a product or service. The tool is promoted as part of total quality and Six Sigma improvement efforts. QFD captures the voice of the customer and has application for supply chain processes, including physical flow, needed flexibility, extended product features, and new product introduction. QFD forces supply chain designers to consider customer needs important in design. This lowers the risk of leaving something out. 

Next, we discuss efficiency and responsiveness in more detail, and we also introduce supply chain risk as an additional criterion to consider in designing the supply chain network and its associated operating policies. 

Next, we discuss an important aspect of supply chain network design, called Risk Pooling. Risk pooling refers to the use of a more consolidated distribution network with fewer facilities, each serving a large allocation of customer demand. A consolidated distribution system reduces supply chain costs—inventory holding cost (IHC), order costs, and facilities cost. However, customer service suffers, as time to fulfill customer demand increases. We will study the tradeoff between supply chain cost and customer service under risk pooling. 

This section presents a detailed discussion of the supply chain design criteria used in the case study (Figure 8.4) and the procedure to determine the criteria weights and preferences. Assessment of risk and of strategic factors is also discussed. 

Management of Financial and Consumer Satisfaction Risks in Supply Chain Design... 

The remainder of this chapter is organized as follows Section 7.2 gives a review of fhe liferature on risk assessment approaches. Section 7.3 provides a summary of fhe disruption risk assessment method. Section 7.4 provides a multi-criteria mathematical model for a supply chain design considering disruption risk and discusses solution methods. Section 7.5 outlines a numerical example. Section 7.6 presents conclusions and directions for future work. 

Chapter 7 incorporates disruption risk in a supply chain network design model. Supply chain network design decisions that determine the number and location of facilities and the selection of transportation modes have a significant impact on competitive performance. However, facilities and transportation links are susceptible to disruptions. In addition, they have different capacities to cope with those disruptions, which contribute to supply chain resilience. This chapter provides a framework to quantify the risk level of supply chain nodes and links. Then, a multiple objective optimization model is presented for designing a resilient supply chain network, with an emphasis on balancing the cost, responsiveness, and risk of the supply chain. 

Global supply chain design decisions should be evaluated as a sequence of cash flows over the duration of time they will be in place. This requires the evaluation of future cash flows accounting for risks and uncertainties likely to arise in the global supply chain. In this section, we discuss the basics of analysis to evaluate future cash flows before introducing uncertainty in the next section. 

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