Understanding Supply Chain Risk

Abstract

The primary role of supply chain management is to ensure the timely delivery of quality goods and services to the market. However, the use of inferior raw materials, manufacturing imperfections or software programming errors can all result in quality defects, which cost time and money to resolve. It is the risk manager's responsibility to gain a clear understanding of the supply chain process, its key exposures and values, and to develop a plan to minimize the adverse effects of the identified exposures on the organization. The first step in this mission is to identify the cost of risk attributable to the supply chain, including the values at risk within the chain at specific locations and times. As the risk manager carries out this analysis, factors such as vendor and customer information, contracts and agreements, ownership and sub-contracting issues, shipping routes and values will also need to be researched in order to understand the overall exposure.