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Supply Risk Assessment Process. Day 2 and 3: Auditing Supply Chain Risks: The DRK Method This will be a day long workshop on Supply Chain Risk Management.

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Presentation on theme: "Supply Risk Assessment Process. Day 2 and 3: Auditing Supply Chain Risks: The DRK Method This will be a day long workshop on Supply Chain Risk Management."— Presentation transcript:

1 Supply Risk Assessment Process

2 Day 2 and 3: Auditing Supply Chain Risks: The DRK Method This will be a day long workshop on Supply Chain Risk Management Audit Principles/Practices using Risk Simulator Software led by Dr. Kevin McCormack, CEO & founder of DRK and Supply Chain Council Black Belt In Risk Management Read: Handfield & McCormack, pp 1-118

3 Performance CAUSES (Categories of Predictive Measures) DISRUPTION EVENTS CONSEQUENCES (Impacts) Human Resources Supply Chain Disruption Supply Chain Disruption Financial Health Environmental Relationship Quality, Delivery, Service Problems Quality, Delivery, Service Problems Supplier Union Strike, Ownership Change, Workforce Disruption Supplier Union Strike, Ownership Change, Workforce Disruption Supplier Locked Tier II Stoppage Supplier Locked Tier II Stoppage Supplier Bankruptcy (or financial distress) Supplier Bankruptcy (or financial distress) Disasters (Weather, Earthquake, Terrorists) Disasters (Weather, Earthquake, Terrorists) Misalignment of Interests Misalignment of Interests Finished Goods Shipments Stopped Finished Goods Shipments Stopped Locate and Ramp Up Back up Supplier Locate and Ramp Up Back up Supplier Emergency Buy and Shipments Emergency Buy and Shipments Reputation Market Share Loss EFFECTS Revenue Losses and Recovery Expenses OTHER IMPACTS Foregone Income Emergency Rework and Rushed FG Shipments Emergency Rework and Rushed FG Shipments Recall for Quality Issues Recall for Quality Issues Sudden Loss of Supplier Sudden Loss of Supplier Copyright© 2007 DRK Research and Consulting LLC Supplier Attributes Situational Factors The Supply Risk Model

4 s s s s s s s SC Network Organizer Interactions and Relationship Supplier Attributes Supplier Environment Supply Chain Network/Commodity Category Supply Risk Assessment - Units of Analysis Copyright© 2007 Supply Chain Redesign, LLC Performance Human Resources Supply Chain Disruption Supply Chain Disruption Financial Health Relationship Environmental The customer’s reputation with suppliers is also a critical factor. Geographic, market, transportation, etc.

5 Week 0Week 1-2Week 3-4 Week 5-6 Week 7 Week 8 Data Collection Follow up Preparation Analyze Mitigate Report 4.0 Analyze Survey Data Collection Validate 6.0 Mitigate Supplier Information Set Up Internal Information Set Up Report Note: Cycle Time – 6-8 weeks 1 Category = 30 suppliers - Manual Process - IT Enabled Process - Combination Assessment Team 1.0 Kick off 2.0 Preparation 5.0 Report Kick Off Review Team Provide Set up information Category Manager and Suppliers Set up Survey Internal Data 3.0 Data Collection Survey Review & Event Probability Subject Matter Experts and Suppliers Review/ Validate Preliminary Data Category Manager and Risk Manager ID and Begin Mitigation Category Manager and Risk Manager Supply Chain Risk Assessment Process

6 Risk Wheel Structure Behaviors

7

8 Exercise Teams Commodity Teams Risk Management Supplier Improvement Strategic Sourcing Supplier Teams Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Supplier 6 Supplier 7 User: supplier 1 Password: freightliner User: simulator Password: results

9 Finished Product

10 Portfolio View

11 Agenda

12


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