Title: Amplifiers of Supply Chain Disruptions: A Managerial Framework for Reducing the Impact of Disruption to the Supply Chain | SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State UniversitySupply Chain Resource Cooperative | NC State University
Headings: Amplifiers of Supply Chain Disruptions: A Managerial Framework for Reducing the Impact of Disruption to the Supply Chain
Amplifiers of Supply Chain Disruptions: A Managerial Framework for Reducing the Impact of Disruption to the Supply Chain
Amplifiers of Supply Chain Disruptions
The extent to which a firm relies on global sources of supply
The complexity of the product or process
Table 1 – Global Sourcing Amplifiers of Disruption
Table 2 – Product / Process Complexity Amplifiers of Disruption

Content: During Wall Street’s last round of quarterly earnings announcements, few large companies got very far into their conference calls with analysts before the subject of China came up. Companies such as General Motors, General Electric, Goldman Sachs, Home Depot, and even Avon have Chinese expansion plans and global sourcing plans at the top of their to-do list. Although the decision to source in areas such as China is often based on the anticipation of lower costs, these decisions often overlook the potential amplification of risk that occurs when these global sourcing channels are developed. Specifically, leverage points, or points in the chain where subsequent flows of product are present, are the catalysts for a “domino” factor to occur. As shown in Table 1, a number of different elements are driving globalization, which are also contributing to increasing disruption responses time and recovery time. Language and timezone differences for example, delay responses, as opposed to working with a supplier who is local and speaks the same language. Further, as the length of the lead-time required to obtain shipments from these locations for domestic imports increases, so does the time that a firm has to react to a disruption which therefore may reduce the potential impact. Consider the following: * A major retailer that imports the majority of its products from China was devastated by the West Coast Port strike, which caused many of its products to be out-of-stock during the critical Christmas season. Although the exact number of lost sales is unknown, estimates are that millions of dollars were lost due to “out of stocks” when customers could not find the items they wanted and went elsewhere to purchase them.