The Importance Of Supply Chain Management

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Logistic and supply chain managers in the current age have to deal with uncertainty, risk and volatility; they have to keep on preparing for the unexpected. The need for quality and effectiveness means that supply chain has become highly vulnerable to any simple interruptions. Uncertainty is a serious element that will affect the ability of the supply chain to meet the demand of the customers (Waters, 2007).
This is the reason why close attention has to be paid to the supply chain management in terms of the standards, methodologies, and strategies. Risk mitigation has turned out to be a hot topic in supply chain management. Several firms are currently looking for the best ways through which they can manage to measure risk in supply chain and …show more content…
It is important that different firms are unique when it comes to the risks in the supply chain, and there are those, which will be affected differently by similar risks in the supply chain (Hugos, 2003). The most important thing in risk analysis in the supply chain is, therefore, the aspect of risk identification.

The Toyota Case
There was a brake pedal disaster in Toyota back in 2010, which did indicate a huge failure in terms of a product designed. The company did lose close to $2 billion in revenue, and this was without the inclusion of the future cost, which was related to lost customer confidence (Waters, 2007). This was an issue of quality, which occurred in Toyota, and the supply lead-time would have indicated the time needed to solve the problem. The problem in a company like Toyota is that it is huge with a huge supply chain, which does complicate the problem for the business (Mentzer, …show more content…
The revenues of the business rely on the supply chain that delivers the products, and incase a key component of the process does not function as per the expectations; it becomes very difficult on the part of the business (Trunick, 2010). Most executives are faced with the difficult situation where they have to cut costs and at the same time meet the customer demands. This is a justification why it is important to have a risk analysis of the supply chain in order to avoid situations where the business operations are affected by events that are related to business or environmental
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