Supply Chain Risk
And What About Ethics?
Lee Buddress, Ph.D., C.P.M.
Robert G. Gleason Professor and Director
Supply and Logistics Program
Portland State University
Supply Chain Risk
 Events
or actions that result in a
transaction or project differing from
budget or plan
 Events or actions that prevent delivery
to customers as promised
Order Winning Characteristics

Design
 Lead Time
 Cost
 Quality/Durability
 Service

What Risks Most Impact


Ability to Serve Customers
Profitability
Supply Management Objectives
 Continuity
of Supply
 Least Total Cost of Ownership
 Create Competitive Advantage
 Sustainable
 What
Risks Interfere With These
Objectives
Supply Chain Risks
 Big,
Expensive Risks with Low
Probability
 Medium Risks with Medium Probability
 Smaller Risks with High Probability
External Risks
Supply Chain Risk
Classification
 External
Risks
 Governmental
 Infrastructure
 Supplier
 Logistical
 Price
 Terrorism
 Natural
Disasters
 Accidents
External Risks: Governmental
 Export
Policies
 Intellectual Property Protection
 Protective Tariffs and Duties
 Regulatory Changes
 Taxes
 Currency Fluctuations
 Political Unrest
External Risks: Infrastructure
 Roads
 Railroads
 Ports
 River
 Sea
 Airports
 Congestion
 Domestic
Infrastructure
External Risks: Suppliers

Operational



Equipment
Facilities
Management
 Financial
 Cultural/Language
 Labor
 Scalability

Quality
 Lead Times
 Monopoly/Oligopoly
 Technology



Communication
Operational
Sustainability
 Social Responsibility
External Risks: Logistics
 Supplier
Selection
 Transportation Equipment
 On Time
 Freight Damage
 Leakage/Shrinkage
External Risks: Price
 Trends
 Volatility
External Risks
 Terrorism
 Physical
Harm
 Personnel
 Cyber Attacks/Hacking
 Natural
Disasters
 Earthquakes,
Tsunamis
 Weather Related

Lightening Strikes
 Accidents
Key External Risks
 Labor
Issues
 Quality
 Timing
 Supplier Selection Process
 Total
Cost Analysis
Things to Watch
 East
& Gulf Coast Longshore Contract
 West Coast Longshore Grain Contract
 Ongoing Row Over Refer Plug-ins
 Port
Subsidizes Shipping Firms
 Carriers Add $150 per Container
 UPS/Teamsters
Contract Negotiations
 New Panama Canal
 EU/ Airline Row Over Carbon Emissions
 Carrier Capacity Constraints
Internal Risks
Supply Chain Risk
Classification
 Internal
Risks
 Policies
 Resources
 Operational
Internal Risks: Policies

Outsourcing
 Low Bid
 Freight Terms
 Managing




Reverse Logistics
Excess Inventory
Repairs
Sustainability/Social
Responsibility

No Standardization



Equipment
Procedures
No Formal Strategies
 Not Having Policies
Internal Risks: Resources
 Labor
 Finances
 Equipment
 Technology
 Automation
 Communication
 Enterprise
Internal Risks: Operational
 Personnel
 Numbers,
 Demand
Expertise
Management
 Customer
 Supplier
 Forecasting
 Project
Management
 Specifications
Order Winning Characteristics

Design
 Lead Time
 Cost
 Quality/Durability
 Service

What Risks Most Impact


Ability to Serve Customers
Profitability
Risk Prevention/Remediation

Safety Stock
 Safety Lead Time
 Additional Suppliers
 Geographic
Dispersion
 Ts and Cs
 Business Continuity



Ours
Suppliers
Training

ISO 31000 2009
 Supply Chain
Mapping
 Forecasting
 Project
Management
 Review Supplier
Selection Process
 Supplier Visits
 Daily Diligence
Key Risk Management Activity
 How
Suppliers Are Chosen
 Supplier Visits
 Supplier Mapping
 Forecasting
 Daily Diligence
Risk and Ethics
Ethics
 More
than Gifts and Gratuities
 Cialdini’s
Influence
 Appearances
Unethical Sales Practices

Commercial Bribery
 False Shortages
 False Price Breaks
 Market Allocation
 False Delivery Promises
 Quotation vs. Invoice
 False Representation
 Counterfeit
 Back Door Selling
Unethical Purchasing
Practices

Shopping Bids
 Shopping Ideas
 Samples
 Favoritism
 Payment Terms
 Contract Quantities
 Conflict of Interest
International Ethics Issues


Cultural Issues
Reciprocity
Foreign Corrupt Practices Act
 Illegal
to Make Payments Influencing
Purchase Decisions
 Exempts “Processing Payments”
 Accounting Requirements
 Applies
to ALL Publicly Traded Companies
Risk and Ethics
 Risks
to the Organization
 Customer
Loss
 Reputation
 Personal
Risks
 Job
 Reputation
 Personal
Liability
Columbia River Bar
http://www.youtube.com/embed/ByGSMme
nPDM?rel=0
Questions, Comments,
Observations, Conclusions,
Arguments?