Supply Chain Risk

Supply Chain Risk Management Analyze the risks Probability Impact Manage the risks Prevention (avoidance) Mitigation of the effects (impact reduction) Aligned with strategy Assess vulnerability Vulnerability Matrix (exercise?) Value at Risk (VAR)

Risk types in TFC Supply risks Process risks Demand risks Hurricane, earthquake, fruit disease, piracy, truck driver strike, price changes, 2nd tier disruption Analyze probability and its effects (risk map) Actions: Supplier location, supplier relation affecting TTR (supplier development, contract duration, dual sourcing), lot sizes, inventory, portfolio changes Process risks Warehouse strikes because of (too) high workload Actions: more FTEs, increase intake time, labor pool, outsource whse Inventory getting lost because of warehouse overflow Actions res: increase whse size, decrease lot sizes Mixing error (recall) Actions: Lotsize, Quarantine after production, Tracking and Tracing Demand risks Research on Vit C health effects Actions: increase vit C inventory, smal(ler) batches, portfolio changes, forced relaunch (+ horizon)

Probability of occurrence Assessing risks high Possible actions Prevention Mitigation Probability of occurrence low low Impact high

Probability of occurrence Vulnerability matrix high Possible actions Priorities Trade offs Probability of occurrence low low Value at risk high Source: Krajljic

Assessing your suppliers high Leverage Strategic Strategic importance Routine Bottleneck low low Supply risk high Source: Krajljic

Suppliers assessing you high Exploitable Core Relative value of business Nuisance Development low low Account attractiveness high Source: Kraljic

Strategy into action Levels in version 2013 Theme Sales SCM Operations Purchasing Level 1 Reliability Service level Order deadline Shortage rule Safety stocks # Shifts # Pallet locations # FTE Delivery window Delivery reliability Level 2 Batches and frequencies Shelf life Trade unit Lotsizing in production and purchasing SMED Increase speed Level 3 Speed and quality Payment terms Frozen period Intake time Preventive maintenance Solve breakdowns training Raw materials inspection Supplier selection Quality Transport mode

Extensions in version 2013 Theme Sales SCM Operations Purchasing Extension a S&OP Promotional pressure Category management Forecasting Production interval tool Resource selection Dual sourcing Extension b External collaboration Promotion horizon VMI Outsourcing warehouse (MCC) Inflate PET Supplier development Extension c CO2 footprint Sustainabilty CO2 sla Decrease of water usage Decrease of energy usage Decrease of start up productivity loss Extension d KPIs and targets KPI selection Extension e Supply chain risk management Risk events Relaunch (horizon) Scenarioplanner Tracking & tracing Quarantine Pooling warehouse FTE Contract duration