Supply Chain Risk Management Challenges

This assignment explores the challenges of managing supply chain risks. It identifies several key risks, such as low returns on investment in supply chain technology and rising raw material prices. The document then outlines strategies to mitigate these risks, emphasizing the importance of realistic expectations, vendor selection, proper implementation, performance measurement, and maintaining optimal profit margins.

Running head: STRATEGIC SUPPLY CHAIN MANAGEMENT
Name of the Student:
Name of the University:
Strategic Supply Chain Management
Author Note

1STRATEGIC SUPPLY CHAIN MANAGEMENT
Table of Contents
Answer to Question 1......................................................................................................................2
Answer to Question 2......................................................................................................................4
References........................................................................................................................................7

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Answer to Question 1
The issue that the question highlights is that a particular company with the name Fresh
Connection has been trying to improve the non-financial and financial performance by the
engagement in the strategic management of the supply chain processes.
In order to understand the strategic management of the supply chain of the particular
mentioned company the meaning of the term supply chain must be understood. The term supply
chain refers to the sequence of processes that effectively involve the decision making and
execution of several business operations and the flow of material, cash and information for the
purpose of meeting the needs of the customers. It must be noted here that these processes and
flows happen at the different stages of the continuum starting from the production or
manufacture till the final consumption of the product. The essential components that are included
in the supply chain are the suppliers, retailers, producers, transporters, consumers and
warehouses (Fahimnia, Sarkis & Davarzani, 2015).
The supply chain strategy management of the company that has to be prepared is
essentially a juice company. Hence, the particular strategy in relation to the supply chain
management that should be adopted in regards to the inventory or stock of the company is the
execution of proper inventory management. It is the primary duty of the management to
determine whether to maintain any safety stock and the particular amount of safety stock that has
to be maintained in order to prevent the loss incurred on sales and to effectively minimize the
costs that have to be carried forward in case of excess inventory. Thus, the particular techniques
that should be adopted in order to ascertain the optimal amount of safety stock applicable for a
particular business is the fixed safety stock method, time based calculation method and statistical
calculation method. The disadvantages that are incurred by a manufacturer firm that maintains a
low safety stock is more than the disadvantages that are faced by a manufacturer firm that
maintains a high safety stock. Nevertheless, the particular recommendation for such a case is the
calculation of the optimal amount of safety stock that has to be maintained (Wu, 2014).
The next strategy related to the supplier chain management is that the supplier selected
for business should be proper and the agreement prepared should be free of errors. This can be
facilitated by the preparation of a supplier selection scorecard. The essential indicators that the

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scorecard would highlight could be the characteristics of the supplier along with the strategic
alignment factors that has been considered important by the management. The next indicator
could be the agreeableness with the crucial business policies by the supplier and the issues or
constraints associated with that particular supplier. The preparation of the scorecard would in all
probabilities help the management to filter out the suppliers who do not match the criteria of the
scorecard or have acquired very poor ranking in terms of the indicators inserted in the scorecard
(Ross, 2016).
The next strategy in regards to the supply chain management is the improvement of the
particulars in relation to the production capacity of the company. The business strategy that
could move business towards a positive turn in terms of the production capacity would be the
movement of facility to a particular low cost country, export of a selected batch of production via
a selected group of suppliers and maintenance of the capacity to demand ratio. The other
particulars that may be improved are the rate of equipment utilization, increase in the storage
capacity and the time period of working shifts of the employees (Ross, 2016).
The next management strategy that may be implemented by the administration of the
company is in regards to the improvement of the value proposition of the product that is
promoted by the company. The different aspects of a product that may be improved in order to
increase its value proposition is the time utility, form utility and quantity utility of the product
(Stevens & Johnson, 2016).
The supply chain management strategy that might be implemented by the company for
the purpose of improving the performance of the company is related to the production policy of
the company. The production policy should be designed in such a way that it effectively reduces
the cost that is related to the overall production and management. A suitable production policy
might be achieved by the development of a decision making model. This particular decision
making model would facilitate the selection of the optimal production rate in a single state
supply chain that is featured by the flexibility of the volume (Stevens & Johnson, 2016).
Lastly, the supply chain management strategy that has to be implemented in the company
is the use of the demand forecasting tool. In relation to supply chain management there are three
major types of forecasting that are supply forecasting, demand forecasting and price forecasting.

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But in case of the selected company being a manufacturing company it is recommended that it
opts for demand forecasting. This is because of the numerous advantages that is provided by
demand forecasting like increased customer satisfaction, inventory stock out reduction and
improved management of the particular process of shipping the products (Meixell & Luoma,
2015).
Answer to Question 2
The particular issue that has been highlighted in this question is that the explanation of
the ways in which strategic risk management has been useful in the management of the supply
chain disruption.
The primary step in developing a risk management framework is the identification of the
particular risks that disrupt the supply chain and the methods by which the risks can be
mitigated.
The major risk that can disrupt the supply chain is the risk of contamination. Being a
juice company the risk pertaining to the contamination of the product is an obvious risk that the
company is exposed to. Such a risk may be prevented by the utilization of proper antioxidants or
other chemicals that have been approved by the food regulating bodies (Hofmann caes et al.,
2014).
The risk of the spread of a pandemic disease may also disrupt the supply chain. Thus,
quick availability of the proper equipments that may store the finished goods in case of such an
emergency should be ensured so the degree by which the business is affected is minimized.
Loss of power is another risk pertaining to the disruption of the supply chain. The
availability of a substitute source of power should be made available in order to ensure that the
supply chain is not disrupted (Qrunfleh & Tarafdar, 2014).
Loss of water is another potential risk that may effectively hamper the supply chain
continuum. The food industry is hugely dependent over the agricultural industry. Thus, natural
disaster like floods or tsunamis will disrupt the supply chain. A particular prevention process in
such a case would be the maintenance of a financial reserve. However, the issue of scarcity of

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water can be prevented by utilizing the conservation methods like rain water harvesting, decrease
in the waste water volume and increase in the efficient use of water (Zhou caes et al., 2014).
Loss of IT is another major risk that may disrupt the supply chain. IT being a major
component of any business the loss of IT will effectively hamper business. Instances like breach
of security or any kind of discrepancy in relation to the customer data can be summed up as loss
of IT. The particular solution that is applicable to such a situation is that the access to all the
business portals should be restricted to the core management group. Furthermore, the backing up
of crucial customer data should also be executed for the purpose of reducing the risk (Zhou caes
et al., 2014).
Loss of logistics is a particular area where all businesses incur a certain amount of loss.
The loss of logistics might be reduced by the practices like the proper packaging of the product,
the proper labeling of the freight and choosing of the suitable transportation partner or carrier.
Unexpected economic forces are another potential risk that has the ability to disrupt the
supply chain management. This phenomenon can be explained by the particular instance when
the unexpected fall in the demand for a certain product results in excess supply or excess
inventory which has to be stored in the warehouses thus, hampering the supply chain. Therefore,
the particular recommendation here is the computation of the accurate amount of the safe stock
that would help in minimizing this particular risk (Zhou caes et al., 2014)
The risk that can disrupt the supply chain next, is less than expected return from the
investment on the supply chain technology. The risk that is associated with the low returns from
the supply chain technology can be effectively minimized by the proper establishment of the
expectations by the management in respect of the returns from the implemented technology; the
accurate evaluation, examination and finally selection of the correct vendor; effective
implementation of the technology and the exact measurements that depend on the particular
employed application (Roh, Hong & Min, 2014).
Lastly, the risk that may disrupt the supply chain is the increase in the price of the raw
materials. The increase in the price of the raw materials will potentially lead to the increase in the
cost price of the product which will in turn disrupt the supply chain. The particular risk can be
mitigated or prevented by maintaining an optimally profit margin that is incurred from selling the

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products so that the increase in the raw material of the product do not necessarily result in a loss.
(Wiengarten 2016)

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References
Fahimnia, B., Sarkis, J., & Davarzani, H. (2015). Green supply chain management: A review and
bibliometric analysis. International Journal of Production Economics, 162, 101-114.
Hofmann, H., Busse, C., Bode, C., & Henke, M. (2014). Sustainability‐related supply chain
risks: conceptualization and management. Business Strategy and the Environment, 23(3),
160-172.
Meixell, M. J., & Luoma, P. (2015). Stakeholder pressure in sustainable supply chain
management: a systematic review. International Journal of Physical Distribution &
Logistics Management, 45(1/2), 69-89.
Qrunfleh, S., & Tarafdar, M. (2014). Supply chain information systems strategy: Impacts on
supply chain performance and firm performance. International Journal of Production
Economics, 147, 340-350.
Roh, J., Hong, P., & Min, H. (2014). Implementation of a responsive supply chain strategy in
global complexity: The case of manufacturing firms. International Journal of Production
Economics, 147, 198-210.
Ross, D. F. (2016). Introduction to e-supply chain management: engaging technology to build
market-winning business partnerships. CRC Press.
Stevens, G. C., & Johnson, M. (2016). Integrating the supply chain… 25 years on. International
Journal of Physical Distribution & Logistics Management, 46(1), 19-42.
Wiengarten, F., Humphreys, P., Gimenez, C., & McIvor, R. (2016). Risk, risk management
practices, and the success of supply chain integration. International Journal of
Production Economics, 171, 361-370.
Wu, T., Wu, Y. C. J., Chen, Y. J., & Goh, M. (2014). Aligning supply chain strategy with
corporate environmental strategy: A contingency approach. International Journal of
Production Economics, 147, 220-229.

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Zhou, H., Shou, Y., Zhai, X., Li, L., Wood, C., & Wu, X. (2014). Supply chain practice and
information quality: A supply chain strategy study. International Journal of Production
Economics, 147, 624-633.