Supply chain risk management : tools for analysis PDF
Preview Supply chain risk management : tools for analysis
THE BUSINESS Supply Chain Risk Management O Supply and Operations L EXPERT PRESS SO Management Collection Tools for Analysis, Second Edition DIGITAL LIBRARIES N M. Johnny Rungtusanatham, Editor David L. Olson EBOOKS FOR BUSINESS STUDENTS The supply chain management field is one of the fast- Curriculum-oriented, born- est growing fields in our economy, given the heavy digital books for advanced growth in international trade as a means to access Supply business students, written outsourced production opportunities to lower costs by academic thought and the growth in information technology to coordi- leaders who translate real- world business experience nate supply chains. However, this opportunity to lower Chain Risk into course readings and costs entails significant risks, such as tsunamis, earth- reference materials for quakes, political unrest, and economic turbulence. students expecting to tackle This book discusses risks in supply chain manage- Management management and leadership ment, followed by graphic and quantitative tools (risk challenges during their professional careers. matrices, selection methods, risk simulation mod- elling, linear programming, and business scorecard POLICIES BUILT Tools for Analysis BY LIBRARIANS analysis) to help manage these risks. SU P • Unlimited simultaneous P David L. Olson is the James & H.K. Stuart Professor L usage Y • Unrestricted downloading in MIS and Chancellor’s Professor at the University C Second Edition H and printing of N ebraska. He has published research in over 150 A I • Perpetual access for a refereed journal articles, primarily on the topic of mul- N one-time fee R tiple objective decision making, information technolo- I S • No platform or K maintenance fees gy, supply chain risk management, and data mining. He M • Free MARC records teaches in the management information systems, man- A N • No license to execute agement science, and operations management areas. A G The Digital Libraries are a He has authored 18 books; is associate editor of Service EM comprehensive, cost-effective Business, Decision Support Systems, and D ecision Sciences; E N way to deliver practical and co-editor in chief of International Journal of Services T David L. Olson treatments of important Sciences. He was a Lowry Mays endowed Professor at business issues to every Texas A&M University from 1999 to 2001. He was named student and faculty member. the Raymond E. Miles Distinguished Scholar award for 2002, and was a James C. and Rhonda Seacrest Fellow from 2005 to 2006. He was named Best Enterprise Infor- For further information, a mation Systems Educator by IFIP in 2006. He is a Fellow free trial, or to order, contact: of the Decision Sciences Institute. [email protected] Supply and Operations www.businessexpertpress.com/librarians Management Collection M. Johnny Rungtusanatham, Editor ISBN: 978-1-63157-057-5 Supply Chain Risk Management Supply Chain Risk Management Tools for Analysis Second Edition David L. Olson Supply Chain Risk Management: Tools for Analysis, Second Edition Copyright © Business Expert Press, LLC, 2014. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopy, recording, or any other except for brief quotations, not to exceed 400 words, without the prior permission of the publisher. First published in 2011 by Business Expert Press, LLC 222 East 46th Street, New York, NY 10017 www.businessexpertpress.com ISBN-13: 978-1-63157-057-5 (paperback) ISBN-13: 978-1-63157-058-2 (e-book) Business Expert Press Supply and Operations Management Collection Collection ISSN: 2156-8189 (print) Collection ISSN: 2156-8200 (electronic) Cover and interior design by Exeter Premedia Services Private Ltd., Chennai, India First edition: 2011 Second edition: 2014 10 9 8 7 6 5 4 3 2 1 Printed in the United States of America. Abstract The supply chain management field is one of the fastest growing fields in our economy, given the heavy growth in international trade as a means to access outsourced production opportunities to lower costs and the growth in information technology to coordinate supply chains. However, this opportunity to lower costs entails significant risks, such as tsunamis, earthquakes, political unrest, and economic turbulence. This book dis- cusses risks in supply chain management, followed by graphic and quan- titative tools (risk matrices, selection methods, risk simulation modeling, linear programming, and business scorecard analysis) to help manage these risks. Keywords Supply chain, risk management, risk matrix, system selection, Monte Carlo simulation, optimization model, balanced scorecard Contents Chapter 1 Introduction ....................................................................1 Chapter 2 Supply Chain Risk Management Process .......................11 Chapter 3 Risk Matrices in Supply Chain Risk Management ..........................................................29 Chapter 4 Supply Chain Selection Decisions ..................................43 Chapter 5 Simulation of Supply Chain Risk ...................................61 Chapter 6 Supply Chain Management Risk Models .......................77 Chapter 7 Optimization Models in Supply Chain Risk Management ..........................................................89 Chapter 8 Balanced Scorecard in Supply Chain Management ...............................................................111 Epilogue: Recapitulation ...................................................................125 Notes................................................................................................. 127 References ...........................................................................................131 Index .................................................................................................137 ChApteR 1 Introduction Supply Chains and Risk Supply chains have connected sources of goods to customers for as long as humans have done business. Military organizations have always been involved in logistics, which is moving things over a supply chain, and they still are, as demonstrated by the movement of U.S. and allied forces to Iraq and Afghanistan. But armies aren’t the only organizations involved in supply chains. Toyota’s lean manufacturing, Dell’s make- to- order operations, and Walmart’s revolutionary retail operations all rely on supply chains linked across many source organizations through computer systems. Supply chains provide all of us with many benefits as consumers. Producers of goods and services need to take advantage of the many opportunities for efficiency provided by global linkage. However, these opportunities are not free— they involve risks. This book is about the risks involved in supply chains, especially in contemporary global operations. Some supply chains can be quite simple—b ananas picked in Costa Rica may be directly delivered to the plantation owner who might be living in the Cayman Islands. Beans can be picked in California and delivered to a farmers’ market in Nevada. However, most goods require a lot of processing, especially foods and drugs, partially for reasons of preservation and partially for reasons of safety. Standard Oil had a wide- spread supply chain from oil wells throughout the world to places where crude oil was refined. Steel producers had even more complicated supply chains, from various kinds of mines (again, worldwide) to various pro- cessing facilities, to blast furnaces, to open- hearth steel producing ovens, to rolling mills, and on to steel yards, which in turn fed many different
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