Supply Chain Risk Assessment and Forecasting Assignment Sample

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Supply Chain Risk Assessment and Forecasting Assignment Sample

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INTRODUCTION

Risk management can be explained as process of identifying, assessing, and controlling various issues that can affect the profitability and performance of organization in global market (Abdel-Basset and Mohamed, 2020). This is important for the business organization to consider all type of risks in the business process to avoid interruption in the business operations and reduce chances of failure in target market. Major types of risks that are considered by the business organization are- financial uncertainty, strategic management issues and errors, legal liabilities, and accidents and natural disasters. The risk management process is effective for the business organization to reduce changes in facing major failures in business operations. This study is providing brief introduction to the risk management process that is used at KFC. KFC is an American fast-food restaurant chain that was founded by Colonel Harland Sanders and Pate Harman in the year 1930 at North Corbin, Kentucky. Headquarter of Kentucky Fried Chicken is at 1441 Gardiner Lane Louisville, Kentucky, United States. KFC is currently operating over 23000 locations around world.

Complete overview of supply chain Risk Management for business organization will be analysed in report. The use of supply chain risk quantification in business management will be described in report. The best approaches to risk assessment and supply chain risk model will be assessed in study. The road map of supply chain risk management will be explained for the business organization. The structure of the supply chain risk management process will be analysed for business organization like Kentucky Fried Chicken. Possible supply chain risk for KFC will be evaluated in study. Different forecasting moles that are used in the supply chain management process of KFC will be discussed in report. This study also will be analysing the contribution of forecasting to supply chain performance and benchmarking in business management.

TASK 1

1.1 Supply Chain Risk Management in Business

For the business organization, this is most important to keep the level of risk minimum to maintain the performance of organization in target market. The supply chain is one of the most important elements of the business organization to generate revenue. Majorly supply chain risk management process is consists of implementation of various strategies in processes to improve the performance of business organization in market place. For the business organization, supply chain is one of the main element that is directly connected to the customers. The effectiveness of supply chain management is important for client satisfaction. Effective supply chain risk management process can help the organization to gain failure in the business operation and avoid affecting the purchase process of the customer (Fan and Stevenson, 2018). In different ways, this is important for the business organization to manage the risk in the supply chain to improve the productivity of the organization in target market. In supply chain management, all the risks are considered by the business organization that is encountered by the organization on everyday basis and exceptional in the supply chain management process.

Supply chain of organization is consists of various things to manage the movement of goods in the business operations. Risk could be associated with any element in the supply chain management process. For the business organization, this is most important to track all the factors in the supply chain management process to keep the supply chain management process efficient and effective for the business organization and the satisfaction of the customers. The main focus of the business organization to keep the risk minimum for maximum customer satisfaction level. This is how the supply chain risk management process is most important for the business organization. In the supply chain management process both internal risks and external risks to the supply chain process of the company are addressed. The major risks that are faced by the business organization in the supply chain management process are- internal supply chain risks and external risks.

Internal Risk

Internal risks can be considered or explained as risks that are result of change in the key personnel of the organization, and misunderstanding in the communication process (Ivanov, 2018). Major types of internal supply chain management risks are- Manufacturing risks, business risks, planning and control risks, mitigation or contingency risks, and cultural risk.

Manufacturing Risk- This type of risks are caused by the interruption in the internal processes of organization.

Business Risks- Business risks are caused by change in the reporting person of the organization. Change of ley personnel, processes or management, business process and reporting structure. Mainly this type of risk occurs due to interruption in the communication process.

Planning and Control Risk- This type of risk mainly occurs due to improper assessment and planning in the business operation. This type of risk can lead to ineffective management in the operations.

Mitigation and Contingency Risk- This type of risk occurs in the supply chain management process in which no alternate plan is used for strategy failure condition.

Cultural Risk- These types of risks are result of hidden or delayed negative report in the supply chain process (Pournader, Kach and Talluri, 2020). This condition can affect the process of organization to take effective action and it also slows down the response of the organization towards the problem.

External Supply Chain Risk

External risk in the supply chain management process is result of the factors that are either upstream or downstream. Major external types of risk in the supply chain process are- Demand Risk, Supply Risk, Environmental Risk, Business Risk and Physical Plant Risks.

Demand Risk- This risk is result of the unpredicted change of demand or misunderstanding of customer needs in the market place.

Supply Risk- This risk occurs when an interruption occurs in the flow of the supply chain in the business process. This type of risk also can occur in condition of interruption in the flow of the raw material.

Environmental Risk- This type of risk mainly occurs in the external flow of goods where environmental factors can affect the transportation of goods of material in the supply chain process.

Business Risk- This type of risk is result of factors like suppliers financial and management stability. This risk also can occur in condition of instability in sales or purchase of the company.

These are major types of supply chain risk that are faced by the business organization in the supply chain management process (El Baz and Ruel, 2020). These external and external risks can affect the supply chain process of the business organization.

1.2 Supply Chain Risk Quantification in Business Management

For the business organization, this is import important to identify where and how value is generating along with the supply chain process. Quantification can be explained as process that is used by the business organization to analyse various risks and arrays in the business process to mitigate the supply chain risks effectively (Bak, 2018). Supply chain risk quantification is the most effective process to improve the effectiveness of the risk mitigation process. Supply chain quantification also can be explained as process that is used by the business organization for mapping the value and vulnerability of supply chain risk quantification. In the supply chain, the risk quantification process existing business data and information is used by the business organization for the quantification of the supply chain risk. Through this process, exposure to various supply chain processes to the external environment and risk factors can be evaluated by the company. This is the most effective process to identify the impact of particular risk on the business of company. Quantification is the most effective process to evaluate the loss of individual on different supply points. Supply chain risk quantification is a model of evaluating the reputational damage that is caused by the particular supply chain risk or interruption. Permanent loss due to supply chain risk also can be evaluated through this process. All loss estimate includes various factors such as as- Gross profit loss at time of supply outage that is dependent on scenario. Loss in the market share till the supply chain is effectively restored. The Added cost of working in restoring process.

There is a specific framework is used for the quantification of the supply chain risks. Major benefit of the supply chain risk quantification is related to the estimation of risk. This process can help the business organization to estimate the total impact of supply chain risk on the business of company. This can help the organization to implement a cost-benefit analysis of investments in the contingency income sources. This is an effective process to mitigate the impact of risk on a business organization. The major advantages of the supply chain risk quantification are related to the evaluation or estimation of particular risk on the business and profitability of the business organization. The risk quantification process can allow the organization to take responsive

1.3 Best Practices in Supply Chain Risk Assessment and Supply Chain Risk Model in Business Management

Practices in Risk Identification

Some practices are performed by the management of the organization in the risk assessment process to improve the effectiveness of the risk assessment process (Norrman and Wieland, 2020). The initial practice which is used by the organization related to the process of the identification process. In the risk identification system, organization uses various measures and indicators to identify possible risk for the operations of the organization.

Risk Quantification

In the risk quantification process, different tools are used by the organization to analyse the impact of particular risk on internal processes of the organization. For example, artificial intelligence and information systems are used by the organization to analyse the impact of particular risk on the productivity and internal process of company.

Contingency Planning

In the contingency planning process, organization can use various tools and processes to develop effective alternate business plans for the organization to maintain productivity of company in business operations.

These are some common practices that are used by the business organization to analyse and deal with various type of risk in business process. These practices can improve the effectiveness of supply chain risk management practices (Ahmed and Huma, 2021). These practices can be used by the organization to gain a higher performance rating in the supply chain risk management process.

2.1 Supply Chain Risk Management Road Map in Business

Supply chain risk management can be explained as a process if initiating various strategic steps for identification, assessment, and mitigation of risk in the end-to-end supply chain management process of company. The supply chain risk management process includes all type of risks. The supply chain risk management process is applicable for all level of risks in the supply chain management of business organization. Supply chain risk management is a system that is integrated into the core processes and operations of business organization. The complete operations or application of the supply chain risk management process can be explained with help of the supply chain risk management cycle. The main stages that are considered in the supply chain risk management processes are- risk identification, risk assessment, and risk mitigation. These are major steps that are followed in the supply chain risk management process in business organization.

Risk Identification- This is the first step in the process of the supply chain risk management process. For the mitigation of supply chain risk, this is important for the business organization to identify the risk. This process is effective to collect information about the possible risk (Yazdani, Gonzalez and Chatterjee, 2019). In this process, organization have to establish a risk profile for proper monitoring of the risk. This monitoring process is important to collect effective information about the particular risk. The information collected in the risk identification process can be used to design an effective strategy in the risk mitigation process.

Risk Assessment- This is second stage of the supply chain risk management cycle. In this process, main objective is to analyse the impact of the supply chain risk on the business operation or performance of company. This stage also consists of making all partners aware of the impact of supply chain risk on the sales, profit margin, and overall profitability of company.

Risk Mitigation- This is the final stages of the supply chain risk mitigation process. In this stage, various actions are performed by business organization to avoid risk effectively (Heidari, Khanbabaei and Sabzehparvar, 2018). In the stage, preventive action and reactive plans are implemented by the business organization. In this process, various measures and strategies are used by the organization to effectively mitigate the risk.

This is how the supply chain risk management process is consists of three-stage for management of the risk in the supply chain of the company.

2.2 Structure of Supply Chain Management Process in Business Organization Like KFC

There is a specific process that is used by the business organization in the risk assessment process. There are four different steps are used in the risk assessment process. these steps I the risk assessment process are- Identification and documentation risks, build a supply chain risk management framework, risk monitoring and institute and regular review (Keilhacker and Minner, 2017). These are the most common practices that are used by the business organization in the risk assessment process. In this stage mapping out process is used by the business organization to assess the value of the products of company. All the aspects that are considered in the supply chain risk assessment process are- suppliers, plants, warehousing and transporting routs in the supply chain management process in detail. All the risks that are assessed in the assessment process are entered in the risk registers that are assessed as ongoing process. All the information related to the risk in the supply chain is recorded to make database about the risk.

In this stage of the supply chain, risk assessment process a specific framework is used to assess the risk effectively. In the supply chain, risk assessment process three different dimensions are considered by the business organization. The dimensions that are considered in the risk assessment process are- impact of risk on the business organization as risk materializes, chances of risk materializing and preparedness of the organization to mitigate the risk. In this stage, processes with the highest risk are considered in the supply chain management process for better management (Song and Zhuang, 2017). The third stage in the supply chain risk management process is risk monitoring. In the risk, the monitoring process is those risks factors are monitored that are considered on major risks that are considered in the risk management framework. In this process, various monitoring processes are used by the business organization to track the risk effectively. This risk monitoring process helps the organization to assess the change in the critical impact of risk on the performance and supply chain of the organization. For the monitoring process, various measures are used by the business organization for the effective measurement of the factors that are related to the supply chain risk. It is how monitoring in supply chain risk management is most important for the business organization to conduct business operations effectively. The monitoring and measurement systems that are used by the business organization are customisable to effectively track the major risks in the supply chain process of company.

Institute governance and regular review is nest stage in the supply chain risk assessment process. In the last stage, the main function of the supply chain risk management and assessment process is to develop effective and robust system for the regular review of supply chain risk and developing mitigating measures to effectively reduce the risk to the organization. This is a cross-functional system that is used by the organization to analyse and mitigate risk on each node of the supply chain system. This cross-functional system is effective for the company to take effective measures to mitigate the risk factors in the supply chain process of company.

This is how the process that is used by organization in the risk assessment is consists of various stages for effective assessment of the risk factors that are crucial for the business organization.

2.3 Supply Chain Risk for KFC in Business Management

The main item on the menu of KFC is chicken. Most of the food items that are sold by KFC are made of Chicken, so, this is highly difficult for the company to maintain operations without enough raw material. The reason for shortage in the raw material and can affect the operations of the organization. Major supply chain management risk that is faced by the KFC is- shortage of the raw material, technical failure, uncertain weather condition, and transportation issue. These are major issues that are faced by the organization in supply chain management. Shortage of raw material can affect the operations of the organization and it can affect the production line of company (K?r?lmaz and Erol, 2017). In the case of KFC, it can affect the operations of kitchen of KFC outlets. Technical failure in the transportation process can lead to complete supply chain failure for the company. Due to safety considerations, this is difficult to manage any kind of delay in the supply chain process. The other risk that is associated with the risk management process is connected to weather conditions. Poor weather condition can affect the transportation process in the supply chain process of company and it can lead to major failure in supply chain management process. Delay in transportation can affect the operations of the organization. Technical failure at the airport or in other transportation failures, complete supply chain management process can be collapse and it can affect the operations of the KFC outlets.

3.1 Forecasting Models used in Supply Chain Management of KFC

For KFC it is most important for the organization to use effective forecasting process to reduce the chances of failure in operations. There are two different types of forecasting processes are used by the business organization for the forecasting process. Qualitative and quantitative forecasting modal are most common in the business organization. KFC is using both quantitative and qualitative forecasting modal to predict the demand for company product in market place (Brindley, 2017). The forecasting models that are used by KFC to predict the risk in the supply chain of the company is market research method and associative model. Both models are used by the KFC to predict the demand for the product in the market to analyse the need for raw material. In the market research process, range of market surveys is performed by the organization to analyse the demand for the company product. On basis of market information, better prediction can be generated. The other forecasting that is used in the supply chain process of KFC is the Associative model. This model is considered as most effective model to analyse the demand of the company product in target market. The associative model is also known as the casual model. In this model, various variables are considered by of organization to analyse the value of other variables. In the associative model, various dependent and independent variables are considered by the organization. After this process, relationship between these variables is analysed to evaluate the demand for product I market place. This is how both quantitative and qualitative models are used by KFC in the forecasting process in the supply chain management process to reduce the level of risk in the supply chain management process of company.

3.2 Contribution of Forecasting to Supply Chain Performance and Benchmarking in Business Management

In different ways, the forecasting process can be used in the supply chain management process of the company. Initially forecasting process can be used by the organization to develop better relationships with supplier and purchasing terms. An effective supply chain-forecasting model can reduce the issues in the management of the risk in the supply chain management process. This process also can increase the capacity of the organization to provide services to the customers in effective manner (Kilubi and Rogers, 2018). Better, forecasting process also can be helpful to reduce the operation cost of company and it is also effective to reduce the losses of the company. Effective supply chain forecasting processes and methods can help the organization to manage the inventory of company. It also can be helpful for organization to provide services to the customers within the time and maintain higher customer's satisfaction. The forecasting process in the supply chain management process can be helpful to improve the effectiveness of logistics distribution and planning. This is effective for the organization to maintain operations and develop a better product lifecycle to gain higher performance standard in organization.

CONCLUSION

The above study is concluding the role and importance of the supply chain risk management process for business organization like KFC in global market. Various aspects that are related to the supply chain risk management process of the organization has been considered in the report to increase the effectiveness of the organization in the operations. Initially, role of the supply chain risk management process has been explained in a report to understand the need of the supply chain risk management process in organization. Different risk quantification models that are used by the organization also has been analysed in report. The process of the supply chain risk assessment process also has been analysed in report. The structure of the supply chain management process has been evaluated in the study to learn the process that is used to improve the efficiency of the supply chain risk management process. The forecasting models that are used in the supply chain risk management process have been analysed in the study to analyse the importance of forecasting in supply chain risk management process within the organization. The importance of forecasting in supply chain risk management has been analysed in report. The benefits of forecasting models also have been evaluated for the business organization.

REFERENCES

Books and Journals

Abdel-Basset, M. and Mohamed, R., 2020. A novel plithogenic TOPSIS-CRITIC model for sustainable supply chain risk management. Journal of Cleaner Production. 247. p.119586.

Ahmed, W. and Huma, S., 2021. Impact of lean and agile strategies on supply chain risk management. Total Quality Management & Business Excellence. 32(1-2). pp.33-56.

Bak, O., 2018. Supply chain risk management research agenda. Business Process Management Journal.

Brindley, C. ed., 2017. Supply chain risk. Taylor & Francis.

El Baz, J. and Ruel, S., 2020. Can supply chain risk management practices mitigate the disruption impacts on supply chains' resilience and robustness? Evidence from an empirical survey in a COVID-19 outbreak era. International Journal of Production Economics, p.107972.

Fan, Y. and Stevenson, M., 2018. A review of supply chain risk management: definition, theory, and research agenda. International Journal of Physical Distribution & Logistics Management.

Heidari, S.S., Khanbabaei, M. and Sabzehparvar, M., 2018. A model for supply chain risk management in the automotive industry using fuzzy analytic hierarchy process and fuzzy TOPSIS. Benchmarking: An International Journal.

Ivanov, D., 2018. Structural dynamics and resilience in supply chain risk management (Vol. 265). Berlin, Germany: Springer International Publishing.

Keilhacker, M.L. and Minner, S., 2017. Supply chain risk management for critical commodities: A system dynamics model for the case of the rare earth elements. Resources, Conservation and Recycling. 125. pp.349-362.

Kilubi, I. and Rogers, H., 2018. Bridging the gap between supply chain risk management and strategic technology partnering capabilities: insights from social capital theory. Supply Chain Management: An International Journal.

K?r?lmaz, O. and Erol, S., 2017. A proactive approach to supply chain risk management: Shifting orders among suppliers to mitigate the supply side risks. Journal of Purchasing and Supply Management. 23(1). pp.54-65.

Norrman, A. and Wieland, A., 2020. The development of supply chain risk management over time: revisiting Ericsson. International Journal of Physical Distribution & Logistics Management.

Pournader, M., Kach, A. and Talluri, S., 2020. A review of the existing and emerging topics in the supply chain risk management literature. Decision Sciences. 51(4). pp.867-919.

Song, C. and Zhuang, J., 2017. Modeling a Government-Manufacturer-Farmer game for food supply chain risk management. Food Control. 78. pp.443-455.

Yazdani, M., Gonzalez, E.D. and Chatterjee, P., 2019. A multi-criteria decision-making framework for agriculture supply chain risk management under a circular economy context. Management Decision.

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