Category: Supply Chain Strategy

An innovative model that combats supply chain disruptions

Posted by MIT Sloan Executive Education - 2 months and 9 days ago

If the nature of your business is manufacturing, chances are one of your biggest concerns is supply chain disruption. While there are plenty of traditional ways to manage ordinary risks, when dealing with high-impact occurrences like viral epidemics or devastating storms--when the risks are often difficult to quantify and prepare for--a different method can help.

A model developed recently by MIT Sloan Professor David Simchi-Levi and his colleagues William Schmidt and Yehua Wei offers an alternative solution that concentrates on quantifying supply chain risk by using a breakthrough Risk Exposure Index (REI). In essence, says Simchi-Levi, the model "focuses on the impact of potential failures at points along the supply chain (such as the shuttering of a supplier’s factory or a flood at a distribution center), rather than the cause of the disruption."

It's a mathematical depiction of the supply chain that can be computerized and updated by employing a common math technique, called linear optimization, to determine the best response to a disruption. Simchi-Levi says that a key component of the model is "time to recovery (TTR), or the time it takes for a particular node (e.g., a distribution center, supplier facility, or transportation hub) to be restored after a disruption." The model removes one node at a time and determines the supply chain response that would minimize the performance impact of the disruption at that node--allowing the company to identify the nodes that need the most attention. 

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The need for supply chain flexibility

Posted by MIT Sloan Executive Education - 1 year and 1 month and 4 days ago

According to David Simchi-Levi, Professor of Engineering Systems at MIT Sloan, “a growing number of U.S. executives are moving some production operations back from overseas.” While there are a great number of factors driving that trend, one is the need for supply chain flexibility. Today’s global supply chain presents a significant amount of risk, mostly due to the combination of geographically diverse supply chains and Just-in-time (JIT) manufacturing that results in low inventory levels. 

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How to manage effectively in the face of risk

Posted by MIT Sloan Executive Education - 1 year and 5 months and 11 days ago

With globalization comes increased risk and uncertainty in nations, environments, communities, and businesses. As growing complexity makes it more difficult to determine the source of risk in these complex systems, it also reveals the interdependent nature of risk within a greater ecosystem. New studies show the best way to manage an organization in the face of risk is to build resiliency—the ability to withstand, recover from, and maintain function through a crisis.  But in order to manage risk effectively, resiliency must be built into the entire interrelated system of an organization.

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Mapping risk with the beer game

Posted by MIT Sloan Executive Education - 1 year and 6 months and 25 days ago

As MIT Sloan Professor John Sterman told MIT Technology Review, “there’s no actual beer in the Beer Game.” Instead, it’s an exercise for MIT Sloan students that simulates the supply chain of the beer industry. The roles include retailer, wholesaler, distributor, and brewer; the goal is to make operating costs as low as possible. The Beer Game demonstrates the fluctuations of inventories and backlogs and how they impact the bottom line.

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Does the return of manufacturing to the U.S. mean more jobs?

Posted by MIT Sloan Executive Education - 1 year and 7 months and 10 days ago

The return of manufacturing to the U.S., also referred to as the “repatriation” or “re-shoring” by American and non-American companies alike, on the surface sounds like good news for employment. However, this is not necessarily the case. Although manufacturing output over the last 60 years has grown roughly by 3.7% annually, employment has stayed mostly flat during this time. Why does this continue to be true, even as many companies have been moving manufacturing back to the U.S. since 2010?

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