Implementation of Risk Management Framework in Supply Chain - Term Paper Example

The paper "Implementation of Risk Management Framework in Supply Chain" is a great example of a term paper on management. The subject of risk has been studied extensively in the field of business and also other fields such as science and engineering. Through this study, experts have come up with essential investigations of corporate function. This includes decision-making tools, strategic management tools, and operations. Today, many companies have come to the realization that effective risk management strategies are essential for a company's success. There is a wide body of literature pertaining to risk management from diverse areas such as economics, finance, strategic management, and international management. One definition of risk is the likelihood of loss and the implication of that loss for the individual or organization. A broader definition of risk captures three dimensions of outcome uncertainty, outcome expectations, and outcome potential (Anggara 2011, p.6).

Apart from the three mentioned dimensions, other studies suggest different dimensions of risk. These dimensions are the probability of certain outcomes occurring, consequences from the happening of certain events, and pathways leading to the events (Anggara 2011, p7).

Supply chain risk management

In today’s world of business, the concept of risk management is the leading contributor to the majority of management fields. Supply chain management is one such field that cannot run away from inherent risks. Today, it is a common practice in supply chain management to embrace a risk concept and apply it as the main role in supply chain management. Therefore, it is necessary to develop risk management and risk mitigation strategies in the field of the supply chain. Nowadays, there are immense challenges when it comes to the management of the supply chain due to increased competition, a turbulent market, and increased uncertainty (Anggara 2011, p7).

Contemporary issues that are posing challenges on supply chain risk management include supplier bankruptcy, labor disputes, political changes, uncertainty in supply and demand, and increased terrorism. Therefore, the biggest challenge facing supply chain managers today is the management and mitigation of risks that are inherent in all business situations. For this reason, companies need to have a good understanding of risks plus the factors that drive such risks. In order to understand risks within the supply chain, businesses should be well equipped with knowledge on risk events, probability of occurrence of risk events, and the impact of risk events (Anggara 2011, p8).

Failure mode and effect analysis

One way to analyze risk in the supply chain is through the use of failure modes and effects analysis. This is a reliable approach used to analyze potential reliability problems or undesired events in the early stages of a development cycle. This method is adopted to identify likely failure forms, determine impacts of failures on the supply chain, and come up with strategies to control the identified failures. Failure modes and effects analysis are tools used on services, products, and developing processes. In the deployment of services and products, the FMEA tool allows for troubleshooting and identification of appropriate interventions. The application of FMEA methodology takes into consideration the occurrence, severity, and detection of individual risk events (Anggara 2011, p9).

The FMEA approach can be of immense benefit to a manager working with a phone manufacturing company. This is because the tool provides an easy approach for the analysis of crucial steps within the supply chain. This will help the manager to anticipate problems arising on products and services (Anggara 2011, p.9).