An Improved Method for Managing Catastrophic Supply Chain Disruptions by James R. Bradley

Supply Chain Breakdowns

Supply chain breakdowns stop the flow of products through the market, which costs firms money and causes customers to wait longer. The brief absences, machine malfunctions, and late delivery are the main sources of the minor disturbances. On the other side, there are significant factors that contribute to market delays, such as devastating earthquakes, plant fires, and tsunamis that harm infrastructure and obstruct transportation and communication activities. The following events have recently led to the disturbance of different supply chains in the global market: Taiwan earthquake, changes in the import quotas in the year 2005, the Hurricane Katrina of 2005, 9\/11 attack, and Fukushima earthquake of 2011. Catastrophic events may cause the disruptions of supply chains for a given period of time.

Management of Supply Chain Risk

The management of the supply chain risk involves the identification of risks, prioritizing the risks for mitigation, measuring the level of the risks and evaluating the risk mitigation procedures. The identification of the risk associated with the disruption of the supply chains can be accomplished through interviews, evaluating supply chain maps, and brainstorming. Measuring the supply chain risk involves the use of mathematical probability that critically analyzes the particular risk factors and their potential disruptive nature. The frequency by which the event is occurring can also be determined by the use of statistical probability. The detection of the likelihood of the event occurring is also another important measure that is usually put into consideration to protect the supply chains.

Prioritization and Measurement of Risks

The prioritization of the risks is usually done by the two-by-two matrix, a measure that gives appropriate prediction mechanism by several elements into consideration. There are also cases when the risks can be defined on a one-dimensional scale whereby only specific factors are considered for the prediction of the disruptive factor. The application of common methods of measuring risks like brainstorming and interviews can be effective when determining the occurrence of the past disruptive events. Brainstorming the events that have not occurred may sometimes prove challenging because the nature of the event might look unfamiliar. The use of historical data in the prediction of the possible occurrence of the disruptive event can reveal the best prediction since there will be exact variables that can be used to determine specific measurements.

Management of Risks Associated with Catastrophic Events

The management of the risks associated with the catastrophic events is sometimes challenging because the events cannot be foreseen and the likelihood of the disruptions and the distributions of the disruptions are only estimated, there is no exact measure that can be used to determine the possible disruptive nature of the catastrophic events. There are various failures that occur as a result of the catastrophic events. Transportation is one factor that is usually influenced by the catastrophic events. The stoppage of the ports and reduction in flights to different destinations can lead to the reduction in the supply of different goods and series from one market to the other. Failure in the communication infrastructure can disrupt the communication between the producers and consumers thereby interfering with the supply chains. The results of catastrophic disruptions can be observed where there is no flow of goods and services through the supply chains, a situation that can lead to customer’s dissatisfaction and the reduction in the financial status of different companies. The reduction in the revenue collection is the measure that can be applied in the determination of the nature of the catastrophic events.

Evaluation

The case study provides good decisions on the analysis of the effects of the catastrophic events. There is a detailed analysis of the measures and variables that can be used to determine the devastating effects of the catastrophic events on the supply chains. The case study also presents the significant factors that may cause disruption in the supply chain. There is a presentation of the frequent versus rare catastrophic disruptions which are a vital factor in the analysis of events. There is an elaborate representation of the risk assessment strategies, a scenario that stresses on the management of the risks. However, the representation of the quantitative data can make the case study better because it can facilitate the understanding of the concept of risk analysis.

Risk Management in a Corporation

The appropriate approach to the risk management involves the identification of the risks, assessment of the risk, and taking the actual steps towards mitigating the risks to the accepted standards. When planning for the risk management procedures, it is necessary to determine the process, roles and responsibilities of the team, techniques and the tools required for the definite project. The formulation of the risk management plan is essential as it will elaborate different ways on how the risk management will be structured and implemented on a given project. The process of risk management is applied in the identification of the potential schedules, costs and the technical risks in a corporation. Taking structural and the proactive approach is vital in the management of the unexpected outcomes and responding to them if they occur. When mitigating risks, it is necessary to maintain costs while adopting creative and innovative ways of approaching different techniques.