Supply Risk Assessment

Process

The Supply Risk Model

CAUSES

DISRUPTION
EVENTS

(Categories of
Predictive Measures)
Relationship

Misalignment of
Interests

Quality, Delivery,
Service Problems

Supplier Attributes

Performance

Situational
Factors

Human Resources

Supplier Union Strike,

Ownership Change,
Workforce Disruption

Supply Chain
Disruption

Supplier Locked
Tier II Stoppage

Financial Health

Supplier Bankruptcy
(or financial distress)

Environmental

Disasters (Weather,
Earthquake, Terrorists)

CONSEQUENCES
(Impacts)
Sudden Loss of
Supplier
Finished Goods
Shipments Stopped

Recall for
Quality Issues
Locate and Ramp Up
Back up Supplier
Emergency Buy
and Shipments
Emergency Rework
and
Rushed FG Shipments

Reputation
Market Share Loss

Copyright 2007 DRK Research and Consulting LLC

EFFECTS
Revenue
Losses
and
Recovery
Expenses

OTHER
IMPACTS
Foregone
Income

Supply Risk Assessment - Units of Analysis

Supply Chain Network/Commodity Category
Interactions and Relationship

Performance
Performance
Relationship
Relationship

The customers reputation

with suppliers is also a
critical factor.

s
Supplier Environment

SC
Network
Organizer

s
s

Environmental

Geographic, market,
transportation, etc.

s
s

Supplier Attributes
Human
Human Resources
Resources
Supply
Supply Chain
Chain
Disruption
Disruption
Financial
Financial Health
Health

Copyright 2007 Supply Chain Redesign, LLC

Supply Chain Risk Assessment

Process
Week 0

Week 1-2

Week 3-4 Week 5-6

Week 7

Week 8

Week 7

1.0 Kick off

Note:
Cycle Time 6-8 weeks
1 Category = 30 suppliers

2.0 Preparation
Supplier Information Set Up
Internal Information Set Up

Assessment Team

Follow up

- Manual Process
- IT Enabled
Process

3.0 Data Collection

- Combination

Set up Survey
Internal Data

Survey
Data
Collection
4.0
Analyze

5.0 Report

Review Team

Validate

Provide Set up
information
Category Manager
and Suppliers

Kick Off

Review/
Validate
Preliminary
Data

Survey Review
& Event
Probability
Subject Matter Experts
and Suppliers

Preparation

Data
Collection

Report

ID and Begin
Mitigation

Category Manager
and Risk Manager

Analyze

6.0
Mitigate

Report

Category Manager
and Risk Manager

Mitigate

Risk Wheel

Diagnostic

Analytical

Supplier Risk Wheel: Supplier Example

Union Strike Risk
1 Highly unionized production
facilities

Disaster Risk
1 Transportation mode and
route may cause disruption

Service Risk
1 Low number of engineers
assigned to company parts

Delivery Risks
1 Planned capacity decrease
2 Relatively low number of
production employees assigned
to company parts
3 Inventory status information is
not shared with company
4 Medium to low ability to satisfy
demand fluctuations with 5 week
notice

Quality Risk
1 Relatively low number of
production employees in the
process for company
2 Six month supplier rating is
medium
3 Medium likelihood of quality
problems affecting company

Exercise Teams

Commodity Teams
Risk Management
Supplier Improvement
Strategic Sourcing

www.neuratool.com
User: freightliner
Password: freightliner

Supplier Teams
Supplier 1
Supplier 2
Supplier 3
Supplier 4
Supplier 5
Supplier 6
Supplier 7
www.neurasurvey.com
User: supplier 1
Password: freightliner

Finished Product

Portfolio View

Agenda