Just recently I took a closer look at some aspects of supply chain risk management in the automotive supply chain. Within limits insights gained from this industry could also be transferred to other examples.
Today I review an early work focussing on another manufacturing industry: the UK aerospace manufacturers.
When it comes to supply chain management some positions within the network have better chances of fighting supply chain risks, due to structural and negotiating-power-related issues.
In this case the focus is on a supplier of a automotive OEM. Natural hedging, as defined below, is the core strategy analyzed in this study.
Natural hedging
The author utilizes a literature review to found his conceptual approach.
A supply chain risk management framework should help to define the cornerstones of risk related supply chain problems and give hints on how to take actions to mitigate impending disruptions.
Today’s full paper has been published in 2004 and in it the authors (Gaonkar and Viswanadham) deal with this problem.
Core definitions
At the core of their framework the authors define the risk/supply chain related terms.
First, risks can be seen from an organizational-, supply chain- or industry-level.
Probably most companies source at least some parts for their products from global sources. This could be the steel from Australia, electronics from Taiwan or cloth from India. The reasons for international sourcing usually include cost and quality, which might be superior compared to local sources.
On the other hand longer shipment ways and less direct access and control may also increase the risks of quality failures, delays or even disruptions.
I have read several articles by Mark Daskin (also reviewed another one here). So with him on the author list of today’s paper I think one can expect a clearcut research question, some kind of mathematical model, a fitting solution method and a definite answer to the underling problem. Well, let’s have a look!
This article considers the design of robust supply chains from the viewpoint of exception handling. Disruptions of the supply chain happen all the time. Smaller disruptions like quality issues are part of the daily business; but a look at the recent ten years shows that large disruptions, happen more often as well (think of terrorist attacks or earthquakes). “Thus, exception management is an important issue in global supply chain networks.”
The demand of many products is connected to the weather patterns during and before the selling season. Ice cream can be best sold during warm summers, of course. But also other food products or clothes exhibit weather dependent demand pattern.
as a good overview of supply chain risk management literature.
