Global And Fast Pace Market

1456 Words6 Pages
In today’s highly competitive, global and fast pace market there is little room for error even when it comes to unforeseeable events. Companies are subjugated to not only growing the business but also sustaining it. By identifying, prioritizing and assessing the various risks that a company can face, uncertainty is reduced and a company can therefore lessen or control the impact when tragedy does strike. As the speed of businesses continue to increase, the risks and possibility of interruption also increases. Catastrophes and natural disasters can certainly disrupt the logistics of a business and hence when it comes to assessing supply chain disruptive risk, we need to ask the right questions. By asking the right questions we are able to…show more content…
The true problem identified by Matsuo was that all the first tier suppliers had purchases the same MCUs from Rensas Electronics which was further aggravated by the fact that they were all made from a single factor of the Naka plant which was damaged by the earthquake (Matsuo, 2015). This leads us to understand the discussion of single and multiple sourcing in supply chain management. While the number and probability of potential risks for single sourcing is less the damage is highly impactful as there are no alternate sources available for a short term basis (Matsuo, 2015). While in principle, Toyota avoid single sourcing, their multi layered structure works closely with the first layer suppliers who supply key sub assembled components. While Matsuo does discuss the claims to single and multiple sourcing, we first need to look at the decisions a company needs to make in order to determine their sourcing strategy. According to Burke and Vakharia, there are three key decisions that characterize a company’s sourcing strategy. They include a) criteria for establishing a supplier base; (b) criteria for selecting suppliers (a subset of the base) who will receive an order from the firm and (c) the quantity of goods to order from each supplier selected (Burke and Vakharia, 2004). In the case of Toyota, their Just-In-Time inventory initiatives encourage supplier alliances and hence require for partnerships between
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