Lora & David's Risk Management Webinar Presentation
 

Lora & David's Risk Management Webinar Presentation

on

  • 1,027 views

 

Statistics

Views

Total Views
1,027
Views on SlideShare
1,000
Embed Views
27

Actions

Likes
1
Downloads
31
Comments
0

3 Embeds 27

https://twitter.com 24
https://www.linkedin.com 2
http://www.linkedin.com 1

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Lora & David's Risk Management Webinar Presentation Lora & David's Risk Management Webinar Presentation Document Transcript

  • 4/11/2014 1 Supply Chain Insights LLC Copyright © 2014, p. 1 Supply Chain Risk Management Supply Chain Insights LLC Copyright © 2014, p. 2 Speakers Lora Cecere Founder Supply Chain Insights lcecere@supplychaininsights.com David Simchi-Levi MIT Professor Founder Ops Rules dslevi@MIT.EDU
  • 4/11/2014 2 Supply Chain Insights LLC Copyright © 2014, p. 3 Definition Given to Respondents Supply Chain Insights LLC Copyright © 2014, p. 4 Study Overview
  • 4/11/2014 3 Supply Chain Insights LLC Copyright © 2014, p. 5 Reporting Relationship Supply Chain Insights LLC Copyright © 2014, p. 6 • The What • The So What • Recommendations • Wrap-up Agenda
  • 4/11/2014 4 Supply Chain Insights LLC Copyright © 2014, p. 7 Current State Supply Chain Insights LLC Copyright © 2014, p. 8 Risk Management Low on the List
  • 4/11/2014 5 Supply Chain Insights LLC Copyright © 2014, p. 9 But, Should it Be? Gap Analysis Supply Chain Insights LLC Copyright © 2014, p. 10 Major Supply Chain Disruptions
  • 4/11/2014 6 Supply Chain Insights LLC Copyright © 2014, p. 11 An Issue Supply Chain Insights LLC Copyright © 2014, p. 12 Top Two Supply Chain Disruptions in 5 Years: 2011’s Tsunami in Japan and 2012’s Hurricane Sandy
  • 4/11/2014 7 Supply Chain Insights LLC Copyright © 2014, p. 13 Importance to Supply Chain Strategy Supply Chain Insights LLC Copyright © 2014, p. 14 • The What • The So What • Recommendations • Wrap-up Agenda
  • 4/11/2014 8 Supply Chain Insights LLC Copyright © 2014, p. 15 Current Assessment Supply Chain Insights LLC Copyright © 2014, p. 16 Demand Volatility Is Only Top 3 Driver in Past, Present and Future
  • 4/11/2014 9 Supply Chain Insights LLC Copyright © 2014, p. 17 • The What • The So What • Recommendations • Work from MIT • Wrap-up Agenda Supply Chain Insights LLC Copyright © 2014, p. 18 Disruption: Current Visibility
  • 4/11/2014 10 Supply Chain Insights LLC Copyright © 2014, p. 19 Financial Health: Monitoring Supply Chain Insights LLC Copyright © 2014, p. 20 Most Important Risk Management Techniques
  • 4/11/2014 11 onquergSqplyeaasklo:NSqltSƐŬ͗ lErǁl aagnNĐ:lƚnlyeaaskltSƐŬ David Simchi-Levi E-mail: dslevi@mit.edu 21 W hatW e’llCover… • Introduction TheRiskExposureIndex • SupplierSegmentation Implementation atFord • W rap-up 22
  • 4/11/2014 12 ManySourcesofRisks • Naturaldisasters • Geopoliticalrisks • Epidemics • Terroristattacks • Environmentalrisks • Volatilefuelprices • RisingLaborcosts • Currencyfluctuations • Counterfeitpartsandproducts • Portdelays • Marketchanges • Suppliers’performance • Forecastingaccuracy • Executionproblems Unknown-Unknown Known-Unknown Uncontrollable Controllable 23 ManySourcesofRisks • Naturaldisasters • Geopoliticalrisks • Epidemics • Terroristattacks • Environmentalrisks • Volatilefuelprices • RisingLaborcosts • Currencyfluctuations • Counterfeitpartsandproducts • Portdelays • Marketchanges • Suppliers’performance • Forecastingaccuracy • Executionproblems Unknown-Unknown Known-Unknown Uncontrollable Controllable 24
  • 4/11/2014 13 ManySourcesofRisks • Naturaldisasters • Geopoliticalrisks • Epidemics • Terroristattacks • Environmentalrisks • Volatilefuelprices • RisingLaborcosts • Currencyfluctuations • Counterfeitpartsandproducts • Portdelays • Marketchanges • Suppliers’performance • Forecastingaccuracy • Executionproblems Unknown-Unknown Known-Unknown Uncontrollable Controllable 25 Epidemics Fuel Prices Geopolitical Problems Currency Fluctuations Commodity Prices Port Delays Product Design Problems Forecast Accuracy Suppliers‘ Performance The Risk Framework Expected Impact Ability to ControlLOW Unknown-Unknown HIGH HIGH Known-Unknown LOW Counterfeits Government Regulations Natural Disasters Environmental Risks 26
  • 4/11/2014 14 Managing SupplyChain Risk:TheChallenge • Verydifficulttopredictmanysourcesofrisk,especially theunknown-unknown • Impactofdisruptioncan bedevastating • Largeinvestmentinidentifying everypossibleriskinthe supplychain • Existing toolsandtechniqueshavebeen inadequate Mostlyad-hoc,intuition,gutfeeling Exposuretoriskmayresideinunlikelyplaces Mayleadtothewrongactionsandwasteresources Noabilitytoprioritizemitigationinvestment 27 CaseStudy1:TheRiskExposureIndex • High techmanufacturing company • ContractmanufacturersinAsia • AssemblyplantsinNorthAmerica • Manysuppliersallovertheworld • Sellsitsproductsdirectlyandthroughdistributors 28©Copyright2014D.Simchi-Levi
  • 4/11/2014 15 CaseStudy1:TheRiskExposureIndex Tier+1Tier+2U SP+otrA smmeblya+oynCAm smmeblya uLmAtberm TD DTD cimArilLAtrm utCArnMA+ fnCLpnMALrerm SP+PLddyierm oriCAeB+uirMLiA+ htnrB uRidmeA+ fnCLpnMALrer wnW+fnAeriny++ PLddyierm 29 PAtrem cimArilLAtrm •Time-To-Recovery (TTR): The time it takes to recover to full functionality after a disruption cimArilLAitC ©Copyright2014D.Simchi-Levi CaseStudy1:TheRiskExposureIndex cimArilLAitCTier+1Tier+2U SP+otrA smmeblya+oynCAm smmeblya uLmAtberm TD DTD cimArilLAtrm utCArnMA+ fnCLpnMALrerm SP+PLddyierm oriCAeB+uirMLiA+ htnrB uRidmeA+ fnCLpnMALrer wnW+fnAeriny++ PLddyierm 30 PAtrem cimArilLAtrm •Time-To-Recovery (TTR): The time it takes to recover to full functionality after a disruption 2 Weeks 1 Week 2 Weeks 2 Weeks 2 Weeks TTR =2 Weeks 2 Weeks ©Copyright2014D.Simchi-Levi
  • 4/11/2014 16 CaseStudy1:TheRiskExposureIndex cimArilLAitCTier+1Tier+2U SP+otrA smmeblya+oynCAm smmeblya uLmAtberm TD DTD cimArilLAtrm utCArnMA+ fnCLpnMALrerm SP+PLddyierm oriCAeB+uirMLiA+ htnrB uRidmeA+ fnCLpnMALrer wnW+fnAeriny++ PLddyierm 31 PAtrem cimArilLAtrm •Time-To-Recovery (TTR): The time it takes to recover to full functionality after a disruption • Financial Impact (FI): Lost sales during TTR 2 Weeks 1 Week 2 Weeks 2 Weeks 2 Weeks TTR =2 Weeks 2 Weeks ©Copyright2014D.Simchi-Levi CaseStudy1:TheRiskExposureIndex cimArilLAitCTier+1Tier+2U SP+otrA smmeblya+oynCAm smmeblya uLmAtberm TD DTD cimArilLAtrm utCArnMA+ fnCLpnMALrerm SP+PLddyierm oriCAeB+uirMLiA+ htnrB uRidmeA+ fnCLpnMALrer wnW+fnAeriny++ PLddyierm 32 PAtrem cimArilLAtrm •Time-To-Recovery (TTR): The time it takes to recover to full functionality after a disruption • Financial Impact (FI): Lost sales during TTR 2 Weeks $400M 1 Week $100M 2 Weeks $1.5B 2 Weeks $100M 2 Weeks $2.5B TTR =2 Weeks FI = $400M 2 Weeks $300M ©Copyright2014D.Simchi-Levi
  • 4/11/2014 17 CaseStudy1:TheRiskExposureIndex cimArilLAitCTier+1Tier+2U SP+otrA smmeblya+oynCAm smmeblya uLmAtberm TD DTD cimArilLAtrm utCArnMA+ fnCLpnMALrerm SP+PLddyierm oriCAeB+uirMLiA+ htnrB uRidmeA+ fnCLpnMALrer wnW+fnAeriny++ PLddyierm 33 PAtrem cimArilLAtrm •Time-To-Recovery (TTR): The time it takes to recover to full functionality after a disruption • Financial Impact (FI): Lost sales during TTR •The Risk Exposure Index (REI) is the maximum FI over all nodes in the supply chain 2 Weeks $400M 1 Week $100M 2 Weeks $1.5B 2 Weeks $100M 2 Weeks $2.5B TTR =2 Weeks FI = $400M 2 Weeks $300M ©Copyright2014D.Simchi-Levi CaseStudy1:TheRiskExposureIndex cimArilLAitCTier+1Tier+2U SP+otrA smmeblya+oynCAm smmeblya uLmAtberm TD DTD cimArilLAtrm utCArnMA+ fnCLpnMALrerm SP+PLddyierm oriCAeB+uirMLiA+ htnrB uRidmeA+ fnCLpnMALrer wnW+fnAeriny++ PLddyierm 34 PAtrem cimArilLAtrm •Time-To-Recovery (TTR): The time it takes to recover to full functionality after a disruption • Financial Impact (FI): Lost sales during TTR •The Risk Exposure Index (REI) is the maximum FI over all nodes in the supply chain 2 Weeks $400M 1 Week $100M 2 Weeks $1.5B 2 Weeks $100M 2 Weeks $2.5B TTR =2 Weeks FI = $400M 2 Weeks $300M ©Copyright2014D.Simchi-Levi
  • 4/11/2014 18 ThebenefitsofusingtheRiskExposureIndex • Itprovidesa$measureofrisk--itestimatethecostofrisk; • Itisbased ontheentirenetworkrather; • Itavoidstheneed toforecasttheunknown-unknown; • Itforcesadiscussion tounderstand whyTTR forsimilar facilitiesorsuppliersisdifferent; • ItforcesaprocesstoreduceTTR invariousstagesofthe supplychain; • Itmakessureyou haveagoodunderstanding ofsupplychain dependencies. 35 ©Copyright2014D.Simchi-Levi W hatW e’llCover… • Introduction TheRiskExposureIndex • SupplierSegmentation Implementation atFord • W rap-up 36
  • 4/11/2014 19 CaseStudy2:FordMotorCompany • Global automotive industry leader based in Dearborn, MI. • Manufactures and distributes automobiles in 200 markets across six continents. 37 ©Copyright 2014 D. Simchi-Levi FordBrands 38 ©Copyright 2014 D. Simchi-Levi
  • 4/11/2014 20 FordSupplyChain Tier+1Tier+2Tier+3U EemA+utnmA NnmA+utnmA ktrAR+sberiMnC+ smmeblya+oynCAm smmeblya cenyerm TrLMg TrniC ktrAR+sberiMnC+ NCFiCe+oynCAm TrnCmbimmitC+ oynCAm PAnbdiCF+oynCAm sos+PLddyierm NS+PLddyierm ks+PLddyierm VtrFiCF+oynCAm unmAiCF+oynCAm sos+PLddyierm NS+PLddyierm ks+PLddyierm ks+PReeA+PAeey+ PLddyierm sos+PLddyierm ks+PAeey+hnr+ PLddyierm NS+PLddyierm ks+PLddyierm edca- fbc~4 1f5–da  c5‹…ƒa—’’~›a dƒ‹ - —~–‹Ǧe‹c5a1c–™f5 f‰acƒba–‹ c•aˆ5f a•f ca•—’’~‹c5• f ’~cša - a•–5—…–—5c f ’fc–•aƒ5ca•dƒ5cbaƒ…5f••a —~–‹’~ca ƒ••c „~‹c• ̱Ͷae‹c5aͳa•—’’~‹c5•a•‹–c• ̱ͷͷab‹ˆˆc5c–a’ƒ5–•a efacd;’‡•caˆceec‹ˆa” ƒd‹aǣc‡c‹cfŠ‹…ŠcdŠ‡c•—’’Ž‹‡”ǯ•c’”a†—…d‹acˆƒ…‹Ž‹d;c‹•c Ža•dǢc•‡…a†cƒ••a…‹ƒd‡†cf‹dŠc•—’’Ž‹‡”ǯ•cˆƒ…‹Ž‹d;cƒ†cdaaŽ‹‰cƒ”‡cŽa•dǤ Tier2 Tier1 AssemblyPlants Dealers 40
  • 4/11/2014 21 821 465 129 252 94 0 100 200 300 400 500 600 700 800 900 Hera+DtW DtW feB ,iFR Hera+,iFR FinancialImpactofDifferentSupplier’sSites Number of Sites Financial Impact Another 2K+ sites with negligible Impact 41 20000 40000 60000 80000 100000 120000 140000 o stImprasnI10ImSuuumleaaůŝĞnmlŝIĞ Disruption ImpactandTotalSpendbySupplierFacility (Number of Vehicles Effected) TotalSpendbySupplierSite Disclaimer: Data shown here is for demonstration only . It does not represent realnumbers used in analysis 42
  • 4/11/2014 22 Disruption ImpactandTotalSpendbySupplierFacility Financial Impact (Profit) 8192 58192 108192 158192 208192 258192 308192 o stImprasnI10ImSuuumleaaůŝĞnmlŝIĞtTotalSpendbySupplierSite Disclaimer: Data shown here is for demonstration only . It does not represent realnumbers used in analysis 43 SupplierSegmentation Financial Impact (Profit) 8192 58192 108192 158192 208192 258192 308192 o stImprasnI10ImSuuumleaaůŝĞnmlŝIĞt TotalSpendbySupplierSite Disclaimer: Data shown here is for demonstration only . It does not represent realnumbers used in analysis 44
  • 4/11/2014 23 SupplierSegmentation Financial Impact (Profit) 8192 58192 108192 158192 208192 258192 308192 o stImprasnI10ImSuuumleaaůŝĞnmlŝIĞtTotalSpendbySupplierSite • Long Term Contracts • Track Inventory • Partnership • Risk Sharing Contracts • Track Performance • Require Multiple Sites • Inventory • Dual Sourcing • New Product Design Disclaimer: Data shown here is for demonstration only . It does not represent realnumbers used in analysis 45 SupplierSegmentation Financial Impact (Profit) 8192 58192 108192 158192 208192 258192 308192 o stImprasnI10ImSuuumleaaůŝĞnmlŝIĞt TotalSpendbySupplierSite • Long Term Contracts • Track Inventory • Partnership • Risk Sharing Contracts • Track Performance • Require Multiple Sites • Inventory • Dual Sourcing • New Product Design Disclaimer: Data shown here is for demonstration only . It does not represent realnumbers used in analysis 46
  • 4/11/2014 24 ImpactonAutomotiveManufacturer • Optimization modelidentified at-risksuppliers Identifiedthehiddenriskofhighvolume-low margin components • Segmentsuppliers Somesuppliersarerequiredtohavealternateplantsindifferent regions Implementnew productdesignstrategytoconsolidatesimilar parts& providesupplierswitheconomiesofscaletosetupa secondplant Trackdailyinventorylevelsforsomesuppliers 47 W hatW e’llCover… • Introduction TheRiskExposureIndex • SupplierSegmentation AutomotiveManufacturer • W rap-up 48
  • 4/11/2014 25 49 KeyObservations • InvestNow orPayLater FirmsneedtoinvestinRiskMitigationStrategiesortheywill paythepricelater. • Managing SupplyChain Risks DealingwiththeUnknown-Unknown MeasuringtheRiskExposureIndex Implementing SupplyChainFlexibility Implementing SupplierSegmentation YourTurn! How to contact me: David Simchi-Levi dslevi@mit.edu 50
  • 4/11/2014 26 Supply Chain Insights LLC Copyright © 2014, p. 51 Questions? Supply Chain Insights LLC Copyright © 2014, p. 52 Public Training www.supplychaininsights.com/services/training • Chicago, IL – June 18-19, 2014 • Philadelphia, PA – August 6-7, 2014 • Dallas, TX – November 5-6, 2014
  • 4/11/2014 27 Supply Chain Insights LLC Copyright © 2014, p. 53 Complimentary Webinars www.supplychaininsights.com/upcoming-webinarswww.supplychaininsights.com/upcoming-webinars UPCOMING WEBINARS April 10, 2014: Risk Management April 24, 2014: Supply Chain Resiliency May 8, 2014: Our Research Difference May 15, 2014: Metrics That Matter Book June 12, 2014: Digital Supply Chain PAST WEBINARS: ON DEMAND From Mar. 6, 2014: Voice of the Supply Chain From Nov. 14, 2013: Healthcare Value Chain From Nov. 13, 2013: The Shaman’s Circle From Oct. 10, 2013: Metrics That Matter From Aug. 30, 2013: Supply Chain Matters Supply Chain Insights LLC Copyright © 2014, p. 54 Annual Event September 2014
  • 4/11/2014 28 Supply Chain Insights LLC Copyright © 2014, p. 55 Who is Lora? • Founder of Supply Chain Insights • Partner at Altimeter Group (leader in open research) • 7 years of Management Experience leading Analyst Teams at Gartner and AMR Research • 8 years Experience in Marketing and Selling Supply Chain Software at Descartes Systems Group and Manugistics (now JDA) • 15 Years Leading teams in Manufacturing and Distribution operations for Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble. Supply Chain Insights LLC Copyright © 2014, p. 56 Where Do You Find Lora? Contact Information: lora.cecere@supplychaininsights.com Blog: 100 Posts/Year www.supplychainshaman.com (10000 pageviews/month) Forbes: Write 2X/Month http://www.forbes.com/search/?q=lora+cecere Twitter: lcecere 4800 followers. LinkedIn: linkedin.com/pub/lora- cecere/0/196/573 (Linkedin Influencer over 6000 followers in the network)
  • 4/11/2014 29 Supply Chain Insights LLC Copyright © 2014, p. 57 Two in Five Report the Head of the Supply Chain Is Responsible for Supply Chain Risk Management