Risk Management : A Global Supply Chain

Supply chain management is not just about acquiring goods and services at the best possible price, but it is also about identifying possible disruptions to the supply chain and taking steps to mitigate them. SCRM is the management of supply chain risks achieved through coordination/collaboration of supply chain partners to ensure profitability and continuity (Christopher,

IBM, (2008). Supply Chain Risk Management: Management A Delicate Balancing Act - IBM Global Business Services A multi-faceted view on managing risk in a global

resource-based perspective of supply chain resilience and robustness. Journal of Supply Chain Management, 50(3), 55-73. Retrieved from Business Source Complete Database.

 Include the specific element of supply chain risk (2 points) to be covered in your

(Handfield, 2007) Code C should cultivate supply chain strategies that plainly deliberate two parameters that “intensify” the negative influence of interruptions on customer and brand performance: globalization and product/process complexity. Second, Code C should plan strategies with countermeasures that diminish the impact of these things, that is: better visibility to strategic supply chain nodes that can rapidly identify disruptions. They should also have well-positioned resources that allow rapid short-range retrieval plans. They need to have in place long-range cooperative methods to remove disruptions in the future. Research also recommends that companies with a great exposure to global supply chain risk invest more in improved inventory and capacity visibility

Supply chain management is a complex undertaking that must involve more than one organization’s efforts to succeed. A tremendous amount of skill, time, and money must be present to build and develop relationships, discover and implement a strategy, and use the capabilities of the chain to build quality at an efficient financial rate. Allowing for these requirements, it leaves one to wonder whether supply chain management is a viable option. The answer is yes, because an organization needs a strong supply chain to compete and be profitable in the marketplace. The key points for supply chain management should be to meet customer demand, produce excellent customer value, enhance responsiveness to change, build a network that can resist risk, and develop financial success.

The business environment is constantly changing; it is unpredictable, extremely volatile and complex. This makes businesses exposed to risk because of the nature of the environment. It is therefore important for businesses to make strategic decisions on how to either reduce or make the effect of the risk less severe as much as possible. Businesses have to identify and manage their risks to ensure their success and continuation. According to the Committee of Sponsoring Organizations of the Treadway Commission (COSO), “Uncertainties present both risks and opportunities, with potential to erode or enhance value. Risk management is an increasingly important business driver and stakeholders have become much more concerned about risk. The 2008–2009 global financial crisis and the rapidly deteriorating global economy has created a context in which companies now face risks that are more complex, more interconnected, and potentially more devastating than ever before. Failure to adequately acknowledge and effectively manage risks associated with decisions being made throughout the organization can and often do lead to potentially catastrophic results. Risk may be a driver of strategic decisions, it may be a cause of uncertainty in the organization or it may simply be embedded in the activities of the organization. A good Risk Management program means that the company is able, first of all to identify, then to measure risks, to project, to set limits and to keep losses

Technology industry supply chains face risks that are coming from both, internal and external factors, many of which were mentioned previously. These include capacity constraints, fulfilling customers’ demand expectations, political disruptions, regulatory laws, increasing economic uncertainty, rapid technological changes, the effects of globalization, and natural disasters.

Today Government, global business partners, industries have recently become aware to the predicament of their supply chains to an ever-increasing range of security breaches and damage that affect global supply chains. Since the terrorist attack on September 9th 2011 security has been the top

Too much risk can result in critical failure of the business and too little risk can reduce competitiveness. Risk is the effect of uncertainty on objectives which have both positive and negative effects. According to the ISO/IEC Guide 73, risks are the combination of the probability of an event and its consequences which have the potential for benefits (upside) if managed effectively, or the threat of success (downside) as a result of poor assessment and management. Risks are a central part of any organisation’s strategic management; it is suggested that the greater the risk involved, the higher the return. However, this can only be managed by effective identification and treatment of all perceivable risks. Risk management is a process that is supported by a set of principles and structures that are appropriate to the organisation and its external environment and requires a balance between the level of the risk in relation to the size, nature and complexity of the organisation.

In a global supply chain for example, risk management entails accounting and bridging cultural, language, organizational values and behaviors differences. As opposed to capital markets, a supply chain tends to be less dynamic and complex (Lindquist, 2012).

Supply chain network apparently confronts a more noteworthy measure of danger over different territories of a specific association for its worldwide nature and direct effect on the association's monetary execution. Whether a firm is managing quality and security difficulties, supply deficiencies, legitimate issues, security issues, arrangement or natural agreeability some component of danger is constantly present. Therefore, the corporation should always be ready to face any situation and deal with risk and threat mitigation.

Attempts to clearly describe supply chain risk management since the literature is replete with buzzwords that address elements or stages of this new management philosophy.

One well accepted description of risk management is the following: risk management is a systematic approach to setting the best course of action under uncertainty by identifying, assessing, understanding, acting on and communicating risk issues. In order to apply risk management effectively, it is vital that a risk management culture be developed. The risk management culture supports the overall vision, mission and objectives of an organization. Limits and boundaries are established and communicated concerning what are acceptable risk practices and outcomes. Since risk management is directed at uncertainty related to future events and outcomes, it is

vulnerable in the supply chain—a problem that only seems to be growing. The US-based Center for