Global Supply Chain Risks: Classification and Examples of Six Risk Types
Overview
This paper identifies and explains six types of risks that affect global supply chains: environmental, demand, supply, control, process, and mitigation risks. Each risk type is defined with its characteristics and illustrated with practical examples to demonstrate how uncertainties disrupt product delivery, costs, and organizational reputation.
What this coursework covers
- Environmental risks and external events affecting supply chain operations
- Demand and supply risks causing interruptions to product and information flow
- Control and process risks from internal management failures and operational breakdowns
- Mitigation risks resulting from inadequate contingency planning and resource allocation
Preview
Global Supply Chain Risks
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Global Supply Chain Risks
A risk can be caused by different forms of uncertainties in a process or environment. In the supply chain, a risk can occur in supplying products or services in terms of timely delivery, cost, or impact on a company’s image. Below are six types of risks to a global supply chain and an example of each.
Environmental risks
They are external events that may affect an organization directly, through its customers, or suppliers. These risks can either affect the supply chain upstream or downstream. An example of this type of risk would be the company’s impact on air, water, and soil due to different forms of waste.
Demand risks
They result from misunderstood or misinterpreted customer demands causing possible or actual interruptions to product, cash, or information flow. These risks commence in one company and affect other entities downstream in the supply chain.
Supply risks
Just like demand risks, these risks result in actual or potential disturbances of information or product flow. They affect companies upstream in the supply chain (Hugos, M. H., & Thomas, C. 2005). Such risks can include issues with the shipment of products that disrupt operations, production, or sales.
Control risks
These are internal risks caused by ineffective management of systems, procedures, and rules. They can include incorrect status reports and operational metrics such as forecasts, shipment, and production plans leading to incorrect results.
Process risks
These are interruptions causing inefficiency of a process that supports a business activity.