Week 2

Vocabulary flashcards covering key terms, risk categories, total cost factors, and network flexibility concepts from the Risk Management in Global Supply Chains lecture.

New Product Flexibility

The ability to introduce new products into the market at a rapid rate.

Mix Flexibility

The ability to produce a variety of products within a short period of time.

Volume Flexibility

The ability to operate profitably at different levels of output.

Two Reasons Offshoring Fails

1. Focusing exclusively on unit cost rather than total cost. 2. Ignoring critical risk factors.

Key Elements of Total Cost in Offshoring

Includes supplier price, terms, delivery costs, inventory and warehousing, cost of quality, customer duties/taxes/incentives, cost of risk/staff/broker fees/infrastructure/tooling, and exchange rate trends.

Disruptions (Risk Category)

Supply chain risks driven by natural disaster, war, terrorism, labor disputes, and supplier bankruptcy.

Delays (Risk Category)

Supply chain risks driven by high capacity utilization at supply source, inflexibility of supply source, and poor quality or yield at supply source.

Systems Risk

Supply chain risks driven by information infrastructure breakdown and system integration or the extent of systems being networked.

Forecast Risk

Supply chain risks driven by inaccurate forecasts due to long lead times, seasonality, product variety, short life cycles, small customer base, and information distortion.

Intellectual Property Risk

Supply chain risks driven by vertical integration of supply chain and global outsourcing and markets.

Procurement Risk

Supply chain risks driven by exchange-rate risk, price of inputs, fraction purchased from a single source, and industry-wide capacity utilization.

Receivables Risk

Supply chain risks driven by the number of customers and the financial strength of customers.

Inventory Risk

Supply chain risks driven by rate of product obsolescence, inventory holding cost, product value, and demand and supply uncertainty.

Capacity Risk

Supply chain risks driven by the cost of capacity and capacity flexibility.

Performance of Supply Chain Partners Risk Factor

The risk factor impacting the highest percentage of supply chains at 38%, according to Table 6-1.

Network Flexibility Configurations

Supply chain network structures including Dedicated Network, Fully Flexible Network, Chained Network with One Long Chain, and Chained Network with Two Short Chains.

Limitations of Flexibility and Chaining

Flexibility and chaining are effective when dealing with demand fluctuation, but less effective when dealing with supply disruption.