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Supply risk is the probability that an inbound supply problem will disrupt a business. This includes issues with suppliers, shipments and markets that disrupt production, operations, sales and/or projects. Supply risk can also result in quality problems, liability and reputational issues. The following are illustrative examples of a supply risk.
ShortagesShortages of a component, part or material.Price IncreasesIncreasing prices due to factors such as supply, demand and tariffs.Quality failures such as a shipment of parts that do not conform to specifications.Delivery FailureLate deliveries and lost & damaged packages.
Supplier RelationshipsA breakdown in your relationship with a supplier potentially leading to a need to replace them.AvailabilitySupplies that are out of stock when you need them.An inability to obtain supplies when you need them including failures of your ordering or receiving processes.Discontinued ItemsAn essential input to your products or processes that is discontinued by the supplier.
Supplier FailureA supplier who goes out of business or discontinues an entire business unit.ReputationA supplier that faces negative press such that the reputation of your products is damaged by extension. For example, a part that is found to be a safety hazard or supplier who is treating employees or the environment poorly.Supply ShocksA sudden drop in supply on a global or industry-wide basis due to events such as a disaster, labor dispute, trade embargo or political instability.
Items that disappear or are damaged between the point of shipping and receiving.Exchange RiskThe risk of cost increases due to foreign exchange rates.Procurement risks such as the risk of fraud in the selection of a supplier.|
| Type | | | Definition | The probability that an inbound supply problem will disrupt a business. | | Related Concepts | |
Risks
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