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Case Study : Supply Chain System

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In the traditional concept of supply chain, for instance, a paper retailer buys paper from its wholesale supplier. Then this paper company sells them in its retail store. Or a paper manufacturer buys raw stocks from raw stocks suppliers, then turns raw stocks into paper and sells it to others. While, Extended supply chain tends to include the factories where the paper are made, the company that sells the paper, the mill where that supplier buys their raw materials, and other related segment units in this supply chain. Thus, paper retailers may not know very much about which companies originally made the paper, where the paper came from, and how it was transported to the wholesalers, what does the warehouses that store various paper look like. In this supply chain system, retailers may not be capable of reaching Tier-1 suppliers directly.
Although it is a clever and efficient way to manage the supply chain, what kind of risks will be faced in extended supply chain? There are two categories of risk affecting extended supply chain: one is the risk emerging from the problem of coordinating supply and demand, and the second risk is came from disruption. (Kleindorfer and Saad, 2004) Disruption risks include operational risks, which basically refer to equipment malfunctions, unforeseen discontinuities in supply, and human-centered issues from strikes to fraud, and as well as Natural hazards risks. And coordination risk is exposed in process of procurement, production and

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