1. Supply Chain Risk David Josleyn Matt Revelle

2. Forms of Risk Industrial Plant Fires Industrial Plant Fires Loss of Intellectual Property Loss of Intellectual Property Work Slowdowns or Stoppages Work Slowdowns or Stoppages Natural Disasters Natural Disasters Payment/Credit/Insolvency Payment/Credit/Insolvency Geopolitical Issues Geopolitical Issues Demand Changes Demand Changes ETC… ETC…

3. Recent Events 1995 Kobe Japan Earthquake 1995 Kobe Japan Earthquake West Coast Longshoreman Strike West Coast Longshoreman Strike Poor Software Implementation Poor Software Implementation Nike’s Child Labor Issue Nike’s Child Labor Issue Land Rover’s Supplier Leverage Land Rover’s Supplier Leverage Hurricane Katrina Hurricane Katrina Why Important Now???

4. Cost Minimization Approach 1. Supplier Certification 2. Social Responsibility 3. The Role of Ports in USA Trade 4. Third Party Logistics 5. RFID 6. BPO to India 7. The Virtual Chain 8. How Many Suppliers do You Need 9. Creating a Diverse Supply Base

5. Cost Realities Cost Minimization Can Lead to Over- Concentration of Resources Cost Minimization Can Lead to Over- Concentration of Resources JIT, Lean Global Dispersion, Single Source Suppliers JIT, Lean Global Dispersion, Single Source Suppliers Similar to an Undiversified Portfolio Similar to an Undiversified Portfolio Successful When Status Quo Remains Successful When Status Quo Remains Very Sensitive to Changes or Exceptions Very Sensitive to Changes or Exceptions

6. Network Dependencies Limited Vertical Integration Limited Vertical Integration Slave to Internal Networks Slave to Internal Networks Supply Chains  Supply Networks Supply Chains  Supply Networks Linear  Complex Linear  Complex Search for Competitive Advantage has led to More Aggressive Business Trends Search for Competitive Advantage has led to More Aggressive Business Trends JIT, Customization, Low Cost Advantage JIT, Customization, Low Cost Advantage Thinking Globally, E-Commerce Thinking Globally, E-Commerce

7. Fragile Chains/Networks Over-Concentration Over-Concentration Amplification of Risk Events Impact Amplification of Risk Events ImpactExamples: Land Rover Chassis’ Longshoreman Strike Toyota Fire

8. What To Do About Risk Ignore/AcknowledgeMitigateTransferAccept

9. Consulting Firms 6 Steps to Managing Risk 6 Steps to Managing Risk 18 Ways to Guard Against Disruption 18 Ways to Guard Against Disruption Core Risks 4 Next Steps Core Risks 4 Next Steps Software Solves All Software Solves All Analytical Risk Mitigation Analytical Risk Mitigation

10. Academic Thought Accurate Information/Accessibility Accurate Information/Accessibility Visibility Visibility Flexibility (Lean vs. Agile) Flexibility (Lean vs. Agile) Contingency Plans Contingency Plans Diversify Supply Chain Portfolio Diversify Supply Chain Portfolio Supplier Relationships Are Key

11. Misinterpretation Holding Excessive Inventory Holding Excessive Inventory Inflated Production Times Inflated Production Times Parkinson’s Law Parkinson’s Law Increasing Delivery Time for Customers Increasing Delivery Time for Customers Low-Quality Domestic Suppliers Low-Quality Domestic Suppliers

12. Risk Spiral

13. Risk Summary Risk is Everywhere Risk is Everywhere Cost Reduction Increases Risks Probability Cost Reduction Increases Risks Probability Reduction of Risk is Relationship Dependant Reduction of Risk is Relationship Dependant

14. Sources Supply Chain Risk: Deal With It - Harvard Business School Working Knowledge, April 28, 2003 Supply Chain Risk: Deal With It - Harvard Business School Working Knowledge, April 28, 2003 Risk and Reward in Supply Chain Management - Harvard Business School Working Knowledge, August 29, 2005 Risk and Reward in Supply Chain Management - Harvard Business School Working Knowledge, August 29, 2005 Supply Chain Confidence – Martin Christopher and Hau L. Lee, November 6, 2001 Supply Chain Confidence – Martin Christopher and Hau L. Lee, November 6, 2001 How to Identify and manage Supply Risk (Part 1 and 2) - www.supplychainplanet.com, (Part 1)October 2003 (Part 2)November 2003 How to Identify and manage Supply Risk (Part 1 and 2) - www.supplychainplanet.com, (Part 1)October 2003 (Part 2)November 2003 www.supplychainplanet.com