Most of our thinking around Supply Chain Risk is influenced by the following 2 papers as well as as some of our own work in Supply Chain development that is related to New Product Introduction, Component Engineering and Sustaining Engineering.
- Managing Risk to Avoid Supply Chain Breakdown – Sunil Chopra and ManMohan S Sodhi
- Supplier Risk Assessment and Monitoring for the Automotive Industry – Jennifer Blackhurst, Kevin P. Scheibe, Danny J. Johnson
Dr. Chopra and Dr. Sodhi suggest that supply chain leaders understand the universe of risk categories as well as events and conditions that drive them. An example of such categorization from the paper is given below.
Our recommendation is that each supply chain is unique and the risk categorization as well as drivers/events are unique for different product supply chains and should be dealt accordingly.
Supplier risk assessment is based on the categories of risk that are independent of specific part/component that the supplier provides. Generally categories of risk that are applicable for the Supplier as an organization may include financial stability, responsiveness and flexibility offered by the supplier, product and process innovation, any other that are relevant.
Supplier Part Risk
Suppliers often provide different parts and services and the risk profile of these supplier parts can vary depending upon the internal sourcing strategy (Single-sourced vs. Multi-sourced), part complexity and value to the finished good.
Supply Chain Network Risk
Many of the network elements that are part of the supply chain network also represent different types of risk depending on their function.
Product Supply Chain Risk Management using FMEA
You can also review some of our work on Product Supply Chain Risk Management using Failure Mode and Effects Analysis.