Study: No link between supplier expenditures and risk

Traditional methods of identifying the suppliers and events that pose the highest risk require knowing two things: the probability that a specific type of risk event will occur, and the magnitude of the problems that would ensue. Because a company’s mitigation choices—maintaining more inventory or an alternative supply source—are the same regardless of the type of problem that occurs, Simchi-Levi reasoned, a more effective model of supply chain risk should calculate the impact of a supply disruption on a company’s operation.

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