Supply Chain Risk Management

EXECUTIVE SUMMARY

A growing number of hi-tech supply chain managers are being tasked to manage risks to their supply

chains in their increasingly competitive and innovative environments. This study proposes risk mitigation

methodologies relevant to the hi-tech industry. The proposed risk methodologies are based on analysis of

the supply-chain characteristics inherent to the hi-tech industry, vulnerabilities in the upstream and

downstream hi-tech supply chain and successful steps taken by hi-tech firms in response to supply chain

disruptions.

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1. INTRODUCTION

1.1. Definition of Supply Chain Risk Management

Supply chain risk management is the systematic identification, assessment, and quantification of potential

supply chain disruptions with the objective to control exposure to risk or reduce its negative impact on

supply chain performance (Supply chain council Risk SIG, 2009). Potential disruptions can either occur

within the supply chain (e.g. insufficient quality, unreliable suppliers, machine break-down, uncertain

demand etc.) or outside the supply chain (e.g. flooding, terrorism, labor strikes, natural disasters, large

variability in demand etc.). Management of risk includes the development of continuous strategies

designed to control, mitigate, reduce, or eliminate risk.

1.2. Hi-Tech Industry Supply Chain Characteristics

The high tech industry has the most complex supply chain structure of any industry sector. Despite their

supply chain complexity, Hi-tech companies consistently make up more than half of AMR's Top 25

Supply Chain List (See Appendix 1). There are several risk sources within the high-tech industry supply

chain that make it interesting to explore:

1.2.1. Globalization/ Supply Chain Complexity

High-tech industry supply chains span the globe and often include multitude of suppliers, manufacturers,

logistics companies, and other participants. Supply base globalization on the one hand, and

product/channel diversification on the other,