| Tactical Risks | Ways to Mitigate Tactical Risks |
| Inventory Risks | |
| Inventory and warehouse stockoutsInventory backordersImbalances between work centers | Add safety stockChange order quantitiesReduce lead timesCarry extra capacityAdd more inventory buffers between stages (work-in-progress) |
| Capacity Risks | |
| Equipment shortageProduction capacity shortageOverproductionEquipment breakdownsEmployee shortages, strikes, and layoffs | Lease/share extra equipmentSchedule overtimeMultiple suppliersSchedule under timeFrequent preventive maintenanceAdd temporary and backup (float pool) workers |
| Logistics and Scheduling Risks | |
| Supplier quality problemsSupplier delivery problemsLong lead times for order cyclesPoor transportation infrastructure by country | Add safety stockChange order quantitiesIncrease lead timesExtra local warehouse spaceIncrease quality control inspectionsHire new and/or multiple contract manufacturer(s) and supplier(s)Partnerships with local transportation firmsEmergency and/or backup plans to ship by air, truck, ship, or rail by alternative shippers |
Exhibit 12.3: Tactical Supply Chain Risks and Possible Management Actions
| Exhibit 12.4: Strategic Supply Chain Risks and Possible Management Actions | |
| Strategic Risks | Ways to Mitigate Strategic Risks |
| Global Economic Risks | |
| Population and wealth forecasts by countryMonetary exchange rates and market sizeRegulations, taxes, and tariff laws by countyNatural disasters such as earthquakes, tsunamis, volcanoes, hurricanes, and droughts.Workforce skills, pay, and availability | Franchise and company owned store mixVirtual versus direct sales channel mixFacility locations (headquarters, R&D, factory, warehouse, service centers, distribution hubs, call centers, etc.)Disaster and emergency plans and pre-deployment of resourcesMulticountry sourcing of suppliersChampioning social sustainability in host country |
| Government Risks | |
| Intellectual/patent rights and protectionMan-made disasters such as wars, chemical spills, transportation accidents, political revolutions, government instability, and terrorist attacks. | Global legal team to defend infringementFacility locations (headquarters, R&D, factory, warehouse, service centers, distribution hubs, call centers, etc.)Disaster and emergency plans and pre-deployment of resourcesMulticountry outsourcing to contract manufacturers and suppliers |
| Product Risks | |
| Product modifications due to cultural differencesMajor forecasting errors by product by countryChronic inventory and/or capacity shortagesGoods and service (product) obsolescence | Better strategic planning and demand forecasting capability (i.e., hire experts, upgrade software and hardware data mining technology including social networks)Cooperative plans to share resourcesHire more contract manufacturers and suppliers (outsourcing)Hedging inventory |
| Security Risks | |
| E-commerce system downtimeCybersecurityTheft, fraud, and payoff practices by country | Technology upgrades and backup systems and sitesSourcing (hiring) criteria for workforceCorporate value and mission statements |
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