Risk and Uncertainty

 Is risk a synonym for uncertainty? The thesaurus in Microsoft Word suggests that it is and a Google search confirms it however, when thinking about managing supply chains, there are a different set of actions for risk than those taken to address uncertainty.  The primary supply chain actions to reduce risk involve alternate sourcing, inventory and supplier selection criteria whereas actions to remove uncertainty involve data.  If they really are the same, the risk reduction approach should be the same. Paraphrasing...

 Supplier Customer Diversity Sensitivity and Resilience

In my last blog, Supply Chain Crash Test, I asked if your supply chain could withstand a tsunami like event that might wipe out many component suppliers who serve supply chains of the OEM or EMS companies that would cause it. I asked you to postulate what would happen if Apple had experienced the Samsung battery problem; this would be a tsunami … do you know the impact it would have on your supply chain? In the blog, I stated...

Predicting Supplier Failure

The problem of identifying suppliers with a high risk of failure is becoming more serious as talks of interest rate hikes and free trade agreement dissolution become more common. While this blog considers suppliers in an electronics supply chain, the risks and mitigations described apply more broadly. Most companies have strategies and indicators for dealing with short term supply disruptions related to manufacturing issues but the prediction of catastrophic supplier failure is a less safeguarded space. How does one...

Catastrophic Risk Prevention

Analyze financial health to prevent catastrophic risk in your supply chain With increasing occurrences of disturbing events, such as companies going bankrupt, how to predict and prevent the catastrophic risk becomes one of the most important considerations of executives and managers. Such events could adversely impact production and order fulfillment, resulting in financial loss as well as brand damage. Considering data collectability, accuracy and comparability, data from financial statements is applied to evaluate and predict the catastrophic risk. Financial Risk Evaluation Measures...

Supply Chain Accounting 101

Most supply chain professionals would benefit from some training in accounting. I am surprised by the number of times I encounter people holding positions of responsibility who just don't understand the numbers well enough. I must admit that accountants don't make it particularly easy. Take cashflow calculations as an example. There are two ways of doing it: the accounting way and the way that makes sense, which is how everybody else does it. Everybody else looks at the cash in...