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2013 News in Brief



November On Balance: Hidden risk in supply chains

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November 2013 On Balance NewsletterThe November issue of the On Balance newsletter describes a study led by Professor David Simchi-Levi that provides a new quantitative model for analyzing a corporation’s supply chain risk. Surprisingly, the study shows no correlation between the total amount a manufacturer spends with a supplier and the profit loss it would incur if that supply were suddenly interrupted. This finding goes against traditional business thinking, which equates the greatest supply chain risk with suppliers of highest annual expenditure. When applied to Ford Motor Company’s supply chain, the analysis shows that the supply firms whose disruption would inflict the greatest blow to Ford’s profits are those that provide the manufacturer with relatively low-cost components.