Test your Supply Chain Risk Management knowledge

Do you have an understanding of how supply chains operate and the risk implications of ongoing developments from a public and private perspective?

Test your knowledge here on our 10 question quiz. You must submit your email address at the end of the quiz to find out your results.

How much of an organisation’s costs are typically derived from its supply chain?

This question shows how important supply chains have become. Many large brand names such as Apple have outsourced nearly all their manufacturing.

Proxima a UK based procurement consultancy found that between 2009 and 2011, 69.9 per cent of revenues from 1,954 global businesses were spent on suppliers, compared to 12.5 per cent on staffing.

Even in Financial Services or Local Government a high percentage of their cost base is in the supply chain (Third Parties) as a result of outsourcing services like IT, call centers and refuse collection.

a) Under 20%

b) 30 -40%

c) At least 50%

What percentage of companies responding to the Annual BCI Supply Chain Resilience Survey suffered at least one significant supply chain disruption each year between 2012 and 2018:

This question in showing the current level of supply chain disruptions indicates the opportunity to improve business performance by enhancing supply chain resilience.The survey also shows many organisations are suffering numerous events each year.

This can often result in the failure to deliver for the customer on time which is one of the most frequently used key performance indicator across different industry sectors.

a) 10-30%

b) 35-55%

c) 59-71%

The year 2011 was a year when many organisations realised the importance of having appropriate supply chain risk management, because of the economic losses they suffered, many of which were due to their supply chains. What was the level of economic losses (Per Lloyd's Insurance Market London)?

This question serves to illustrate the substantial economic losses that can occur across a supply chain. In the case of the Thailand floods several industry sectors were impacted, in particular, the electronics and automotive sectors.

These impacts can be felt across the globe, with for example production lines in the US impacted by Thailand floods. These effects continue for some time after the flood events. In this case a few organisations had not fully recovered even 12 months later.

a) $4 Billion

b) $21 Billion

c) $45 Billion

What term best describes the degree of risk that an organisation is willing to take in pursuit of its supply chain objectives?

The IRM defines risk appetite as 'the amount and type of risk that an organisation is willing to take in order to meet their strategic objectives.' Different organisations will have different risk appetites depending on their sector, culture and objectives.

A range of appetites exist for different risks and these may change over time. Risk appetite and tolerance need to be high on any board's agenda and is a core consideration of an enterprise risk management approach. IRM’s guidance provides practical direction, advice and information to support boardroom debate. It is critical that supply chain risk is managed in this overall context.

a) Risk vulnerability

b) Risk appetite

c) Risk exposure

Most observers have concluded that supply chain risk has increased over the last 20 years. Which of the following has contributed to the increase in supply chain risk?

There are in fact numerous reasons for supply chain risk to have increased over the last 20 years. one of the most significant however is globalisation driven at least in part to drive down costs using lower labour costs in certain geographies.

There has in fact been a decrease in vertical integration in production over the last 20 years as elements of manufacturing or service provision have been outsourced and production facilities have become more specialised. There has also as a result of consumer pressure in fact been a shortening of product life cycles.

a) Increased globalisation of supply chains

b) Lengthening product life cycles

c) Increased vertical integration in production

An understanding of supply chain risk management requires an understanding of supply chain management (SCM). A major part of SCM involves managing flows that move across a supply chain. What are those flows?

This answer illustrates that in order to operate successfully several networks or chains need to be coordinated appropriately.

For example, a modern warehouse cannot operate without the information that is provided by the computerised system to enable goods to be tracked and shipped. Additionally, if the funds related to the supply chain transactions do not flow then this can also cause disruption.

a) Transactions, materials, funds, and information

b) Materials, services, funds, and information

c) Services, transactions, information, and materials

The sourcing of conflict minerals from Central Africa can expose a company’s supply chain to increased governmental scrutiny and legal risk. What elements comprise what are known as conflict minerals?

Supply chains create substantial financial flows between countries and organisations. It has been found that some of these funds are supporting armed conflicts. This has led to the development of several pieces of legislation.

In 2010, the U.S. Congress passed a landmark law. The “conflict minerals” provision—commonly known as Section 1502 of the Dodd Frank Act. It requires U.S. publicly-listed companies to check their supply chains for tin, tungsten, tantalum and gold, if they might originate in Congo or its neighbours, take steps to address any risks they find, and to report on their efforts every year to the U.S. Securities and Exchange Commission (SEC). The EU is also progressing similar legislation that will come into effect in 2021.

a) Platinum, palladium and cobalt

b) Tin, tungsten, tantalum and gold

c) Diamonds, gold, cobalt and platinum

Chinese wage inflation and currency re-evaluations are risks that affect a large number of participants from many different industries. Your manager has asked you to explain this risk to her since your company, like thousands of others, is being affected. What do you tell her?

Systemic risk refers to the risk of a breakdown of an entire system rather than simply the failure of individual parts.

In a supply chain context, if denotes the risk of a cascading failure in supply chains, caused by linkages within the economic system, resulting in a widespread disruption. A key question is always how to limit the build-up of systemic risk and contain crises events when they do happen.

a) This is an example of an event risk

b) This is an example of a company risk

c) This is an example of a systemic risk

What factors are likely to be relevant in developing a Return on Investment model for supply chain risk management? (Select multiple answers)

A common challenge for many organisations when looking to improve their supply chain resilience is being able to make the relevant business case to support the investment being made.

This is in part because of the uncertainty around disruptions. The answers to this question illustrate that there are several financial benefits that derive from an improvement in supply chain resilience, for example, the avoidance of lost sales and associated margins.

a) Lost sales margins

b) Spend with a supplier

c) Increased cost of raw materials

d) Overhead staff costs

Which of the following are likely to impact on supply chain risk in the future? (Select multiple answers)

As Michael Porter has indicated organisations increasingly compete in terms of their value (supply) chains. This answer indicates the risks and opportunities in relation to supply chain and organisational performance are growing at an exponential rate. An understanding of these will be critical to anybody operating in the risk management field going forward.

a) Internet of things

b) Urbanisation

c) Climate change

d) Longer Product Life cycles

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