Location of risk in the supply chain PROCESS RISK DEMAND RISK NETWORK/ CONTROL RISK Environmental Risk

The supply chain risk management process Understand the supply chain Improve the supply chain Identify the critical paths (nodes and links) Manage the critical paths Improve network visibility Establish a supply chain continuity team Work with suppliers and customers to improve Supply chain risk management procedures

Six sigma? 0.00034% 4.56% probability of probability of defect defect Lower Lower Upper Upper Lower Lower Upper Upper Specification Specification Specification Specification Specification Specification Specification Specification Limit Limit Limit Limit Limit Limit Limit Limit 2s 2s 2s 2s 6s 6s 6s 6s Two Sigma Six Sigma

Cause and Effect Analysis Cause and effect analysis (also known as Root Cause Analysis) is used to gain an understanding of the real underlying causes of a problem. Typically it makes use of a sequential question and answer procedure often referred to as ‘Asking ‘why’ – five times’. The idea is not to accept the immediate answer but to drill down as far as possible. For example, if the problem to be analysed is poor on-time delivery performance the questioning might go along the following lines: 1 Q Why was this shipment delayed? A There was no stock available. 2 Q Why was there no stock available? A We failed to achieve the production plan. 3 Q Why did we fail to achieve the production plan? A There was a shortage of components. 4 Q Why was there a shortage? A There is a bottleneck in in-bound inspection. 5 Q Why is there a bottleneck? A We only have limited testing facilities. Now the real problem is revealed and appropriate action can be taken.