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

2. 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

3. 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

4. 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.