Tag Archives: sourcing

Zycus and the Supply Risk Explosion

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Revised on: 2011-03-21

“Ten or fifteen years ago, you could not convince most procurement and supply-chain professionals to talk about supply-risk management. Today you can not get them to stop talking about it.” That is what Zycus, the self-proclaimed spend management experts, claims in their latest whitepaper  “The Supply Risk Explosion – Building a business culture that can cope“. I must admit that they do indeed have a point. Today’s list of supply-related risks can seem nearly infinite: supplier bankruptcy, tight credit, emerging capacity constraints, commodity price inflation, low inventories, product recalls, supply-chain globalization, supply-base rationalization, corporate cost cutting, dangerous management decisions, currency fluctuations, terrorism, increased regulatory activity, outsourcing, sustainability, social responsibility, social media, unfair trade practices, and so much more. How can any firm not be overwhelmed by this?

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Visualizing the risk of global sourcing

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Revised on: 2015-09-23

The benefits of global sourcing as part of a firm’s purchasing strategy have been widely discussed in the academic literature, yet so there are few models that provide a comprehensive risk and cost assessment to guide managerial decision-making. A picture says more than a thousand words, and here is one paper that has it all and that literally illustrates the differences between different sourcing strategies: On risk and cost in global sourcing by Matthias Holweg, Andreas Reichhart and Eui Hong. The paper defines three basic cost elements in global sourcing: static, dynamic and hidden cost, and uses this framework to assess the costs and risks inherent in global sourcing scenarios from three different points of view: conceptually, analytically and empirically. It is  paper shows how brings the message across of where to source and where not to source.

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Book Review: Procurement Risk

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Revised on: 2015-09-04

“Do yo like living dangerously? Then you should read this book. It exposes you to over seventy types of risk you  you can take in your business life.” Those are the opening words of the most recent book on my night stand.  Written by Richard Russill, the title Procurement Risk is perhaps misleading, as this book risk is just as much about supply chain risk or enterprise risks in general. In fact,  the book makes a strong argument for procurement risk management being just a short step away from business continuity management. Not only will this book help procurement professionals to lift their head from their desks and gain a wider perspective on possible ramifications of their purchasing decisions, it will also help top managers to seeing procurement as a crucial contributor to a company’s well-being and competitive advantage.

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Single, sole, dual, multiple sourcing?

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Revised on: 2015-09-22

Old classics never die. While some papers are written, published and quickly forgotten (because no one cites them), other papers stand the test of time and survive as classic or seminal papers. A risk/benefit analysis of sourcing strategies: Single vs. multiple sourcing, written by Mark Treleven and Sharon Schweikhart in 1988 is perhaps not the most cited paper since its inception more than 20 years ago (Scopus only comes up with 31 citations), but it is a paper that is cited in the supply chain risk literature until this day, and for a good reason, as it was among the first papers to examine the costs and benefits of single versus multiple sourcing strategies.

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Outsourcing – risking it all?

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Revised on: 2015-09-12

“The world is at risk and the supply chain is not exempt.” Are you scared? “Supply risk used to be defined as the potential for strikes by transport workers, fires at a key supplier’s plant, or missed deliveries. That simple vision no longer applies.” These pompous words mark the beginning of today’s article, Supply chain risk in an uncertain global supply chain environment, written by Jack Barry in 2004. His article raises some essential supply chain questions, and reminds us that global sourcing may be low cost, but not low risk.

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How to secure your supply chain – 5/7

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Revised on: 2015-09-02

With this post, number five in a series translated from the Swedish book “Säkra företagets flöden”, I am nearing a conclusion. I found the book by accident when reading a  PhD thesis on supply chain risk from Sweden. There will be three more posts, including this one, seven in total. Previously, I portrayed the different categories of buyer-supplier relationships, and how they influence supply chain disruptions. Today I will look at sourcing strategies and how to or may how not to source.

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Can you outsource risk?

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Revised on: 2011-03-17

While China has taken steps to address safety concerns after the recalls of last year, yet small players all round – both among Chinese manufacturers and European importers – tend to be the soft spots in the supply chain.This article, at the China Sourcing Blog, points at what is probably the weakest link in global supply chains: the fact that the more you outsource, the less control you have over your supply chain. If everything goes right, the cost are low, but, if something goes wrong, the stakes and costs are high.

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