The document discusses strategies to mitigate risks in global supply chains affected by disruptions, emphasizing the importance of understanding demand and supply risk exposure. It outlines three key initiatives: identifying high-risk drivers, testing assumptions, and developing flexible supply chain scenarios to prepare for various situations. Recommendations include coordinating with suppliers, considering dual sourcing, and analyzing demand shifts to maintain operations and minimize losses.

1. 1

2. 3
Global supply chains are being shocked
1 March 2020 17 March 2020 27 March 2020 27 March 202011 February2020

3. 5
Let us focus on three initiatives to help understand risk and act
to reduce the impact related to the supply chain disruptions
Understand the
demand and supply
risk exposure
Test assumptions, track
changes and consider
possible actions to
mitigate risk
Identify high-risk drivers,
define possible scenarios
and potential risk
mitigation
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4. “The probability of occurrenceof an undesired event caused by
external or internal vulnerabilities that could be avoided by using
preventive measures or actions”.
6
RISK DECOMPOSED
in a supply chain context
Risk Impact Duration Likelihood
X X

5. CUSTOMER DC FACTORY VENDOR
Understand the risk
exposure you are facing
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• Contracts
• Internal resources
• Geographic region
• Situation
• Supplierflexibility
• Workforce
• Raw materials
• Inventory
• Storage capacity
• Handling resources
• Inventory
• IT systems
• Transport capacity
• Customs and cross-border
regulations
• Customercontracts
• Shifts in demand are
happening
• Regulations and political
effects
1

6. CUSTOMER DC FACTORY VENDOR
8
• Co-ordinate with supplier
• Options for dual sourcing?
• Could we switch between
locations ofthe same vendor?
• Task force for monitoring the
situation
• Could we move around between plants?
• Could we re-allocate capacity within plants?
Do we have a clear setof priority rules?
• Could we produce semi-finished instead
of finished goods to reduce NWC?
• Could we chop up shifts to reduce the number
of people? (To complywith regulation)
• Do we need more inventory space?
Could we collaborate? Subcontract?
• Could we rent out excess storage space?
• Could we store semi-finished instead
of finished goods to reduce NWC?
• Could we chop up shifts to reduce the number
of people? (To complywith regulation)
• Could we use other transportlanes?
• Could we use different modes of
transport? Train,boat, truck, plane etc.
• Could we optimise the utilisation of
transportcapacity?
• Could we subcontractthe transportthird
parties?
• Analyse your demand patterns and identifyany shifts that you can play into
• Are there any regulations thatprevent us from selling through normal
channels?
• Is there anything that prevents our customers from buying our goods?
Should we change our accessibility(online)?
• In case of lack of supply, understand who should be prioritised or try to find
a substitute productfor it
• Do our customers have enough buying power in the current situation?
Could we change the paymentterms?
• Could we do a temporaryVMI agreement?
• Are there new business opportunities or channels?
Test assumptions, track changes and
consider possible actions to mitigate risk2 – and reduce the negative effect on supply chain nodes

7. 9
Test assumptions, track changes and
consider possible actions to mitigate risk2 – and reduce the negative effect on supply chain nodes
CUSTOMER DC FACTORY VENDOR
• Co-ordinate with supplier
• Options for dual sourcing?
• Can we switch between locations
of the same vendor?
• Task force for monitoring the situation

8. 10
Worst case
Sales history
Understand the risk
exposure you are facing3
Our three supply scenarios

9. Identify high-risk drivers, define possible scenarios and
potential risk mitigation
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Worst caseAverage caseBest case
Option 1 • Lost sales (Z million in lost revenue)
• Liquidity at risk
• High-cost equipment not in use
• Customers find alternatives
• Lost sales (Y million in lost
revenue)
• Lost sales (X million in lost
revenue)
Option 2 • Lost sales
(50% Z million in lost revenue)
• Production cost increase of 10%
• Customers find alternatives
• Lost sales
(50% Y million in lost revenue)
• Production cost increase of 10%
• Lost sales
(50% X million in lost revenue)
• Production cost increase of 10%
Option 3 • Normal supply after 5 months
• Purchase cost increase
• Cost of helping supplier: 15 million
• Normal supply after 3 months
• Purchase cost increase
• Cost of helping supplier: 5 million
• Normal supply after 3 months
• Purchase cost increase
• Cost of helping supplier: 5 million
50% reduction in the next month
followed by an incline to reach 25%
after month 3. Normal supply from
month 5.
50% reduction in the next 4
months with a slow incline
back to normal by month 7.
100% loss of supply in the following 5
months with no signs of change
during this period.
Dual sourcing, re-allocate the
existing production capacity and
shorten the duration by helping the
supplier.
Do nothing.
Find a substitute component and
produce a variant of the original
product. (50% of customers are OK
with a variant).
SCENARIOS
OPTIONS
Potential other options

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Three initiatives to help understand risk and act to reduce the
impact related to the supply chain disruptions
Understand the
demand and supply
risk exposure
Test assumptions, track
changes and consider
possible actions to
mitigate risk
Identify high-risk drivers,
define possible scenarios
and potential risk
mitigation
1 2 3

11. CREATE A
FLEXIBLE AND
RESILIENT
SUPPLY CHAIN
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12. Further sources
14
Build a resilient
supply chain
Scenario
planning in sales
& operations
planning
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