Quantitative Risk Assessment in Supply Chains: A Case Study Based on Engineering Risk Analysis Concepts

In recent years, numerous events have shown the extent to which companies, and subsequently their supply chains, are vulnerable to uncertain events. We have witnessed many supply chain malfunctions (with substantial consequences) due to supply and demand disruptions: affected companies reported, on average, a 14% increase in inventories, an 11% increase in cost, and a 7% decrease in sales in the year following the disruption (Hendricks and Singhal 2005). Component shortages, labor strikes, natural and manmade disasters, human errors, changes in customer taste, technological failures, malicious activities, and financially distressed and, in extreme cases, bankrupt partners, among many others, can cause disruptions in supply chains: