- Network Design
- Risk Management
Companies can expect to lose almost 42% of one year’s profit every decade because of supply chain disruptions. Working to have better supply chain resilience and robustness is now a necessity to stay competitive and profitable. This capstone addresses the creation of a comprehensive and scalable vulnerability assessment framework for an FMCG company to help assess risks in supply chains and take the right resilience measures. Currently, the sponsoring company is facilitating this process by event simulations, but results are not consistent, as the input variables to its simulation model are not based on empirical data. To address this problem, this research project developed a step-by-step methodology for creating a vulnerability map for the supply chain in scope. Questions to answer were: what can go wrong, what is the likelihood of it occurring, what is the consequence from it, and what are recommended resilience strategies? The approach taken was threefold. First, we mapped the supply chain by location and gathered data of natural disruptions and their consequences to establish statistical database. Second, we developed a model that simulated the natural disruptions for each country in scope by using Monte-Carlo technique. Third, we translated the results of natural disruptions into operations shutdown days. Our results were fairly high and showed that our sponsoring company’s supply chain in scope could expect to have 227 days of total operations shutdown in the next 10 years. Results were visualized on a vulnerability map with the countries as nodes together with a breakdown of where most of the risks come from. In closing, our sponsoring company now has a model to better assess vulnerability on its supply chain and can therefore focus on resilience strategies to mitigate the risks by more accurate simulations of events.