Risks Associated with Supply Chain Management
Companies face a myriad of risks throughout their supply chain. To properly manage these risks, companies must be able to clearly identify them in order to accurately manage and mitigate their impact. Broadly defined, risks can be divided into two general categories: general risks, which are faced by most companies regardless
of the nature of the industry in which they operate or the nature of the goods or products they offer on the market, and industry-specific risks, which vary according to the industry in which a company operates. The following is a survey of the types of risks that can be classified within these two broad categories and some methods by which companies can help mitigate or avoid such risks. Lastly, an analysis of both types of risks will be applied to a real-world case scenario.
II. General Risks
The general risk category can further sub-divided into several sub-categories. There are operational risks, risks associated with balancing supply with demand, transportation risks, communication and information risks, supply chain integration risks, and external risks.
A. Operational Risks
One of the primary operational risks is the degree of contingency planning exposure. An essential part of operations management is the existence of contingency plans, well-developed strategies and initiatives that are in place to handle disruptions in the supply chain. Such plans must adequately identify the risks and have proper measures in place to mitigate and manage the impact of such risks. One excellent strategy that is often used is to maintain relationships with a plethora of alternat ...
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This paper will cover an in-depth look and analysis of Classic Airlines, a twenty five-year-old passenger airline. Classic Airlines commands a fleet of more 375 jets that serve 240 cities with more than 2300 daily flights making it the fifth largest airline in the world (University of Phoenix, 2007). Classic has grown to an organization of 32,000 employees, and last year, it earned $10 million on $8.7 billion in sales (University of Phoenix, 2007).
The paper will give the reader background information concerning the current situation the company faces, determine the key issues in the situation, opportunities the company has to address, who this will affect, and the desired end-state goals of the company.
Situation Background : "Increased uncertainty about flying has affected industry stock prices across the board, and Classic has seen a 10% decrease in share prices in the past year. With a concerned investment community on the watch, the airline industry operates under a microscope, subject to scrutiny from all sectors. Not surprisingly, the negativity from Wall Street to the media to the public has affected employee morale, which is the lowest its ever been. Consumer confidence also appears to be waning. By January 2005, Classic's declining Classic Rewards program measured a 19 percent decrease in the number of Classic Rewards members, and 21 percent decrease in flights per remaining member. Clearly, loyal customers were jumping ship and the ones still aboard seemed to be flying less frequently -- or at least less frequently with Classic Airlines....
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