A New Approach to Procurement and Supply Chain Risk
We present a new approach to analyzing procurement and supply chain risk.
This approach, developed by Professor David Simchi-Levi of MIT, can quantify the supply chain risk by determining the financial impact of site closures without the need to forecast unknown risks. By modeling the entire supply network and determining the firm's optimal response to any disruption within its supply network, managers can conduct a more comprehensive analysis of the most relevant exposures. The model estimates a single metric for supply chain disruption exposure called the Risk Exposure Index.
This enables managers to efficiently examine a variety of disruption scenarios and mitigation alternatives under the status quo and the impact of potential changes to the firm's supply network. We demonstrate how a large automotive manufacturing company applied this approach to identify previously unrecognized risk exposures in order to develop effective risk mitigation actions.
The analysis showed that not only can the greatest risk exposures be highly concentrated but they can reside in unlikely places which may be overlooked by traditional risk management techniques.
Presented by
David Simchi-Levi,
Professor of Engineering Systems at MIT and Chairman at OPS Rules Management Consultants
Professor of Engineering Systems at MIT and Chairman of OPS Rules Management Consultants, an operations strategy consulting company. He is considered one of the premier thought leaders in supply chain management.
His research focuses on developing and implementing robust and efficient techniques for logistics and manufacturing systems. He has published widely in professional journals on both practical and theoretical aspects of logistics and supply chain management.
Professor Simchi-Levi coauthored the books Managing the Supply Chain (McGraw-Hill, 2004), The Logic of Logistics (Springer 2005), as well as the award winning Designing and Managing the Supply Chain (McGraw-Hill, 2007). His latest book Operations Rules: Delivering Customer Value through Flexible Operations was published by MIT Press in October 2010.
Professor Simchi-Levi has consulted and collaborated extensively with private and public organizations. He is the founder of LogicTools which provides software solutions and professional services for supply chain planning. LogicTools is now part of IBM.
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Key Learning Objectives
- You can quantify supply chain risk without the need to forecast unknown risks
- Risk exposure index is the single metric of supply chain disruption
- You can efficiently examine a variety of disruption scenarios and mitigation alternatives
- Supply chain risk can reside in unlikely places
Audience
- Board Members
- C Levels
- Executives
- Managers
- Heads of Operation
- Senior Managers
- Heads of Strategy Planning
- Heads of Research & Development
- Heads of Risk Management
- VP Procurement
- VP supply chain
