An Embry-Riddle Aeronautical University webinar presented march 8, 2018. ERAU Professor Dr. Aman Gupta looks at Supply Chain Risk: Barriers and Drivers.

1. Welcome!

2. Today’s Agenda
• Welcome/Introduction —Sandra Williams
• Presentation – Dr. Aman Gupta
• Questions & Answers
• Upcoming Webinars
• Certificate of Participation/eBadge
• Optional SurveySandra Williams
Director Business Development
ERAU– Europe
Berlin, Germany

3. Poll:

4. A few session pointers
• We will answer questions at the conclusion of the presentation.
At any time you can post a question and we will answer as
many as we can
• Slides are available for download at any time
• The recording link will be emailed to you
• A participation certificate is available by request for both Live
Session and On Demand viewers
• We encourage you to complete our optional survey at the end

5. Dr. Aman Gupta
• Associate Professor, College of
Business, ERAU-Worldwide
• Chair of Department of Decision
Sciences
• Researcher/author on Supply Chain
and Logistics Risk Management
• Ph.D. in Industrial Engineering
(Louisville)
• M.S. in Industrial Engineering (SUNY-
Buffalo

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SUPPLY CHAIN RISK MANAGEMENT
Aman Gupta
03/08/2018

7. 7
Risk = Probability of an event * Consequences

8. 8
Source: CNN

9. 9
Supply Chain Risk Management
Identification, assessment, and quantification of potential supply chain
disruptions with the objective to control exposure to risk or reduce its
negative impact on supply chain performance.
Potential disruptions can either occur within the supply chain or outside the
supply chain.

10. 10
Supply Chain Risk Management (4 Constructs)
Source: Juttner, Peck, and Christopher (2003).

11. 11
Supply Chain Risk Management
Source: Juttner, Peck, and Christopher (2003).
• Environmental
• Network Related
• Organizational
• Financial
• Reputational
• Health and
Safety
• Globalization
• Efficiency over Effectiveness
• Centralized Mfg. and/or Dist.
• Focused factories
• Sole Supplier
• Demand Postponement
• Collaborative Planning

12. 12
“Risk Events" and Their Impact (Material)
• Boeing 787 Dreamliner got delayed in the deliveries by over 3
years and up to $3 billion over the budget.
• In 2008, supply chain disruptions from small suppliers of
lavatories, galleys, and business class seats resulted in a 19 percent
drop in Boeing’s operating income and affected 8 percent of
Airbus’s wide body aircraft.
• A fire at Ericsson’s sole supplier (Philips) of memory chips led to an
estimated loss of $400 million to Ericsson.
• Within few days of the September 11, 2001 terrorist attacks, Ford
had to discontinue production for weeks due to import delays at
the Canadian and Mexican borders.

13. 13
"Risk Events" and Their Impact (Financial)
• PWC study of stock values of 14 A&D companies - Disruption-
experiencing firms dropped 4.5 percent below the unaffected
benchmark group during the two days when the disruption was
announced, after a year 9 percent below than the latter.
• Due to the weak dollar Volvo cars reported 28% reduction of
overall sales in 2008, with the SUV hit the hardest with 50%
reduction in sales.
• In a study of 519 publicly announced disruptions, that
shareholders lost 10% of the stock’s value over a two-day period.
• Counterfeit parts cost the U.S semiconductor industry more than
$7.5 billion in revenue annually. DLA found one suspected part

14. 14
"Risk Events" and Their Impact (Informational)
• A glitch in Nike’s demand planning software in 2000 caused a
supply disruption for Air Jordan and cost the company $100
million dollar in losses.
• The 2006 earthquake in Taiwan adversely impacted the internet
due to breaks in the undersea cables which led to extended delays
for the containers sitting in Shanghai’s seaport.

15. 15
• Supply Management
• Demand Management
• Product Management
• Information Management
Approaches to manage risk

16. 16
Supply Management
• Main issues - Network design, supplier selection processes,
supplier relationships, supplier order allocation, and supply
contracts.
• Firm should ‘collaborate’ with its upstream partners to ensure the
efficient flow of materials.
• Managing exchange rate fluctuations in multiple countries with
multiple suppliers can help a company reduce costs and operate
more efficiently.
• Revenue sharing contracts can also make supply chains more
efficient and resilient as partners share information about
demand and potential financial risks.

17. 17
Demand Management
• Firm should collaborate with downstream partners to influence
demand in a beneficial manner. It can shift demand across time,
markets, and products.
• Demand postponement gives a partner the capability to shift some
of the demands to a later period helps the partner manage both
operational and disruption risks.

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Product Management
• Product substitution and Bundling
• Postponement (Effective way to
reduce variability)

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Information Management
• Improve collaboration by sharing information.
• Collaborative planning, forecasting, and replenishment (CPFR) -
Partners work together to develop mutually agreeable demand
forecasts.
• With improved supply chain visibility, each supply chain partner
can generate more accurate forecasts of future demands.

20. 20
Need for SCRM? Yes there is absolute need for some level of
SCRM
How can I learn more?
• Published Literature
• SCOR Model
• Methodologies by consulting companies such as PwC,
Deloitte, etc.
• Videos on YouTube
• Others

21. 21
SCOR Methodology and Risk Management
Supplier
Plan
Customer Customer’s
Customer
Suppliers’
Supplier
Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliver
Internal or
External
Internal or
External
YOUR COMPANY
Source
Supply Chain Operations Reference Model
PlanPlanPlanPlan
Return
Source: Supply Chain Council
Five management Processes – Plan, Source, Make, Deliver, Return

22. 22
SCOR Methodology and Risk Management
 SCOR 9.0 includes Risk Management processes,
practices, and performance indicators.
 Some benefits
● Comprehensive identification of potential risks
● Better application of SCRM best practices
● Better SCRM coordination with customers, suppliers, and
stakeholders.

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Source: Supply Chain Council
Risk Enabler Process Model

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Questions/Comments
Contact info:
Aman Gupta, PhD
aman.gupta@erau.edu
Office: (502)-475-4426

25. Upcoming Webinars:
webinars.erau.edu

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27. Thank You!
This concludes today’s webinar.
Watch for a follow up email that contains:
1. How to get a Participation Certificate and eBadge (Available
by request for both Live Session and On Demand viewers)
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Bill Gibbs, Webinar Series Coordinator
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