The "possibility of loss of injury" is one definition for risk, per the Webster dictionary, but the word risk connotes so much more than simple loss. Some want to avoid it at all costs while others love being called "risk takers." These folks look risk in the eye and laugh, take chances and defy the odds. Or do they?
Aren't we all risk takers by just waking up every day and going about our lives? We are constantly dealing with risk and balancing our tolerance of it; basically, risk is in everything we do. What we wrestle with is the degree of risk we are willing to process.
So let's look at one area in manufacturing where there is always risk, much more tangible and real: your supply chain. The art and science that comprises supply chains are really looking to deal with three areas of concern: cost, revenue and mitigating risk. Risk touches both revenue and cost. It is also more elusive -- how do you measure and control it?
You might take on a strategy to eliminate safety stock in order to reduce costs and free up cash flow, but the risk is that if your forecast is wrong or you cannot produce in time, you will suffer in terms of lost revenues or even having to pay SLAs.
So what steps can you take to put in place the tools that will address your exposure to risk?
