The supply chain is the foundation of the operations in any company that must be given

attention for it is a network between a company and its suppliers to produce and distribute a
specific product to the final buyer. This process is quite complex and difficult to achieve a
perfectly smooth operation, so we can't rule out the possibility of encountering mistakes that
could incur during the process. That's why we have to employ risk management in order to
identify risk, evaluate its impact, and propose potential mitigation strategies to address the
risk. Moreover, we can classify those risks into two types and those are the tactical risk that
refers to the inventory, capacity, and logistics and scheduling risk, and the strategic risk that
compose of product, government, security, and global economic risk.

As the management laid out its strategy that consists of their long-term goals and how
they're planning to achieve them. It is inevitable to encounter risk on certain factors such as
in their product. The product risk could be about producing a good that doesn't match the
needs and wants of the market due to cultural differences, error in forecasting about the
product by country, chronic inventory or capacity shortages, and obsolescence of products
and services. Those risks can be mitigated by the supply chain managers through
developing an action plan. The first they must do is to improve their strategic planning and
methods of forecasting through hiring experts and consultants, and improve the data
systems. As the major components of the forecasting are supply chain, customer
relationship, and revenue management system. If you have a poor forecast, it could result in
poor staffing decisions and inventory shortages that lead to inadequate customer service.
Therefore, management should assess first during the forecast the data quantity, data
reliability, age of data, and accurate assumptions in order to achieve a good forecast. In
addition, they should also negotiate and implement plans with the cooperatives in sharing
resources. Since the members of the cooperative are also the owners, they must invest and
have interest in the success of the company by giving their part of resources that could
lessen the risk in the operations. In terms of capacity shortages, it only means that there is a
need to employ additional workforce and need for outsourcing. They can do this by hiring my
employees or make use of the existing one and transfer them in that needed area, and
having representatives to look for potential suppliers that pass through the company's
standards. Lastly, to avoid obsolescence of product, the management should have an
excess inventory purchased or kept in stock as a buffer with the objective of reducing or
limiting risks associated with future price fluctuations or to take the best advantage of it.

On the other hand, the need for the company to implement tactics to achieve the goals also
have a risk that goes along with it. There are tactical risks that are crucial to the operation
and those are inventory and capacity risk. When we say inventory risk, it mainly deals with
problems such as inventory and warehouse stockouts, backorders, and imbalances between
work centers. Having stockouts is a great challenge for the producers because this shows
the inability of the company to satisfy a demand and could somehow result in backorders
where customers have to wait for the product which is not good for their image and
reputation. To avoid these instances, operations management should consider having
additional inventory that is more than the average in the SKU's to cope up with an
unexpected demand. Moreover, in every delivery order, especially if the demand is not
stable, there is a need for them to change the quantity of their orders to ensure the stock
maintains its numbers. In relation to that, they should also have to make sure that their
inventory facility can carry extra capacity. In addressing problems for any possible delay,
they should find ways to speed up the production process by removing unnecessary tasks,
waste, as well as waiting time from different processes. Lastly, in order not to have idle
systems, the flow process must be working effectively, and there is a necessity for producing
more WIP in each process.

On the other hand, the capacity risk involves probable problems that requires the need for
expansion or cutting off and scheduling. The risks involving this area are the equipment
shortages and breakdowns, production capacity shortage, overproduction, and employee
shortages, strikes, and layoffs. In order to mitigate these tactical risks, management should
assess first what is the current average capacity of the operation and know the impact of
those risks to know what should be the preventive measures to be taken in order to lessen
its impact. One of the countermeasures for shortages and breakdowns in equipment are
simply having an extra of it ahead of time through leasing or sharing from another production
and frequent maintenance check up. If the shortage is regarding production capacity, the
company can resolve it through using the existing equipment for a greater time period by
adding shifts, by asking employees to work overtime, or by multiple outsourcing. Opposite to
this is the overproduction, because the scheduling must implement an undertime, and lessen
the time of ongoing workforce and cease up operations temporarily. Lastly, if the company
will experience employee issues, they should consider adding new workers by hiring or have
a part time from another production area to fill out the needed position.

Risk is always inevitable and adheres in the supply chain. And through enforcing methodical
and logical countermeasures with the source to define a strategy based on shared business
goals, you will reduce your exposure to risk and the catastrophic impact it can have. Not just
it enables you to gain new ability to address those issues before they occur, but also leads
you to improve in implementing effective decision making and problem-solving in the
operations. The best-laid strategies require the operation managers to shift their mind-set, to
divide their attention equally between cost-reduction efforts and risk mitigation
considerations, but the rewards are well worth the effort.