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Supply Chain Risk Management - PPT Presentation

Ken Lawlis Supply ChainProject Management Professional Agenda Introduction University of Bath Video Supply Chain Risk Management duration 438 Canadian Professional Logistics Institute ID: 491346

2015 risk chain supply risk 2015 supply chain risks kirov

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Slide1

Supply Chain Risk Management

Ken LawlisSupply Chain/Project Management ProfessionalSlide2

Agenda

IntroductionUniversity of Bath Video – Supply Chain Risk Management

(duration 4:38)

Canadian Professional Logistics Institute – Risk and Resilience Conference Threat, Vulnerability, Risk & Resilience – Defined Practical Guide to Risk Management (PwC) Kirov’s Supply Chain Risk Register – OverviewKirov’s Tools for Risk AssessmentFrom Risk to Resilience – Deloitte’s Model for Identifying, Assessing and Mitigating Supply Chain RiskConclusions - Tom Teixeira, Supply Chain Risk in a Global Economy (duration 4:19)Suggested/Further Reading

2015-06-24

2Slide3

INTRO – Biographical Data – Ken Lawlis40 years in Supply Chain Management (Coca-Cola, National Grocers/Loblaws, CSC, PSC, AARLIS Consulting Inc., CIHI

– have returned to private consulting Most of my career has been focussed on Public Safety

Masters candidate in IPIS

(sponsored by Department of Civil and Environmental Engineering and the Norman Paterson School of International Affairs at Carleton University)PMPMCPM – Masters Certificate in Project ManagementP.Log.Member of: APICS, Canadian Professional Logistics Institute, PMI, Project Management Association of Canada (PMAC), Canadian Public Procurement Council, Canadian Advanced Technology Alliance (CATA) – Cyber Crime Cyber Terrorism Working GroupGraduate Studies in the MA program in Public Policy & AdministrationBA (Hons) Political Science – focus: Economics and International AffairsExecutive training – Queen’s University, Carleton University, the Canadian Professional Logistics Institute, Public Works and Government Services Canada (Procurement, EDP Project Management, Negotiations, Strategic Planning)2015-06-243Slide4

Supply Chain Risk Management Video

https://youtu.be/cq1PL1eo4ZUProfessor Brian Squire, Information, Decision and Operations Group,

Supply Chain Risk Management

– University of Bath – September 6, 2013 – duration 4:38

2015-06-244Slide5

National Conference on Supply Chain Risk and ResilienceThe Logistics Institute – April 16,

2015

2015-06-24

5Slide6

National Conference on Supply Chain Risk and ResilienceThe Logistics Institute – April 16, 2015

2015-06-24

6Slide7

National Conference on Supply Chain Risk and ResilienceThe Logistics Institute – April 16, 2015

2015-06-24

7Slide8

National Conference on Supply Chain Risk and ResilienceThe Logistics Institute – April 16, 2015

2015-06-24

8Slide9

National Conference on Supply Chain Risk and ResilienceThe Logistics Institute – April 16, 2015

2015-06-24

9Slide10

Presentation MaterialsThe presentation materials from the Canadian Professional Logistics Institute’s April 16, 2015 Conference on Supply Chain Risk & Resilience may be accessed at:

http://www.loginstitute.ca/event-risk-and-resilience-conference.html

2015-06-24

10Slide11

ThreatThe presence of a hazard and an exposure pathway - threats may be natural or human-induced, either accidental or intentional (source:

Federal Emergency Response Plan (2009) – Public Safety Canada)

2015-06-24

11Slide12

VulnerabilityA characteristic or attribute of an asset which renders it susceptible to the effects of an incident. Vulnerability informs both the likelihood and consequences of an incident (source:

Risk Management Guide for Critical Infrastructure Sectors, Public Safety Canada)

2015-06-24

12Slide13

What is Risk?Risk

refers to the uncertainty that surrounds future incidents and outcomes. It is a function of the likelihood and consequences of an incident – the higher likelihood and/or the greater the consequences, the greater the risk (source: TBS

Integrated Risk Management Framework

)2015-06-2413Slide14

Risk Management…is systematically setting the best course of action under uncertainty by identifying, assessing, understanding, acting on and communicating risk issues (source:

TBS Integrated Risk Management Framework)

2015-06-24

14Slide15

ResiliencyResilience is seen as the ability to accommodate abnormal threats and events, be they terrorist attacks, or perturbations from climate change, or natural disasters such as earthquakes or floods, or economic shocks. Most definitions, particularly those involving individuals, communities and

organizations also refer to identifying, assessing and communicating the risk from such threats and events.

http

://

torrensresilience.org/resilience-and-risk2015-06-2415Slide16

Risk & ResiliencyThe traditional definition of risk is a measure that reflects the probability

and the magnitude of an adverse effect. More recently a broader and more balanced definition has been adopted by the risk management community which

recognizes

that individuals and

organizations take risk to achieve potential benefits. Individuals, communities and organizations which are prepared and ready for an abnormal event, tend to be more resilient. Understanding the probability and the magnitude of potential threats enables an organization to make decisions on how best to reduce the probability and/or impact of such threats, to transfer the risk by taking out adequate insurance, or indeed to do nothing and be ready to accept the potential consequences.http://torrensresilience.org/resilience-and-risk2015-06-2416Slide17

Risk MitigationIt

will never be possible to completely remove the probability of a disruptive event. Supply Chain leaders are expected to have processes which aim to identify, analyse and evaluate risks and through

consultation, agree upon

levels of residual and tolerable risk, and to take decisions on mitigating the risks

.If risk mitigation is conducted in a formal and open manner, organizations are much more willing to accept the consequences of a disruptive event as people are then aware that all reasonable action was taken to reduce the probability and/or impact. In such circumstances, businesses/organizations will more readily recover and return to normality. They are more resilient.http://torrensresilience.org/resilience-and-risk2015-06-24

17Slide18

Simple Graphical Representation of Resilience

2015-06-24

18Slide19

PwC Risk Response Strategies2015-06-24

19Slide20

Risk Assessment Methodology

2015-06-2420Slide21

Kirov’s Risk Register Acknowledgement

Krasimir Kirov holds a Master Degree in Industrial Management and is a Certified Supply Chain Professional (CSCP) and member of APICS. He is a certified Lean Six Sigma Black Belt and certified in Sales and Operations Planning by the S & Op Institute. His book, entitled:

Supply Chain Risk Management: Minimize Disruptions, Reduce Risk and Make Your Supply Chain Resilient

is a great read. The risk register that follows was provided gratis to those who purchased his book, along with a wide variety of tools to characterize, identify and mitigate SC risk.2015-06-2421Slide22

Kirov’s Risk RegisterExternal, End to End Supply Chain Risks

1. Natural DisastersEpidemics

Earthquakes

Tsunamis

VolcanoesWeather disasters (hurricanes, tornados, storms, blizzards, floods, droughts)2015-06-2422Slide23

Kirov’s Risk RegisterExternal, End to End Supply Chain Risks

2. AccidentsFiresExplosions

Structural failures

Hazardous spills

2015-06-2423Slide24

Kirov’s Risk RegisterExternal, End to End Supply Chain Risks

3. Sabotage, Terrorism, Crime, and WarComputer attacks

Product tampering

Intellectual theft

Physical theftBombingsBiological and chemical weaponsBlockades2015-06-2424Slide25

Kirov’s Risk RegisterExternal, End to End Supply Chain Risks

4. Government Compliance and Political UncertaintyTaxes, customs, and other regulations

Compliance issues

Regulatory financial reporting (e.g., Sarbanes-Oxley)

OperationsLogistics / TradeRegulatory Approvals - Marketing Approvals2015-06-2425Slide26

Kirov’s Risk RegisterExternal, End to End Supply Chain Risks

4. Government Compliance and Political UncertaintyPublic Health

Environmental requirements

Trade restrictions (e.g., Buy American Act)

Regulatory Audit historyCurrency fluctuationsPolitical unrestBoycotts2015-06-2426Slide27

Kirov’s Risk RegisterExternal, End to End Supply Chain Risks

5. Labour Unavailability and Shortage of SkillsAvailabilityQuality

Cost

Unrest

Strikes and slowdowns2015-06-2427Slide28

Kirov’s Risk RegisterExternal, End to End Supply Chain Risks

6. Industry-wide (i.e., Market) ChallengesCapacity constraintsUnstable prices

Lack of competition

Entry barriers

Capital requirementsSpecific assets2015-06-2428Slide29

Kirov’s Risk RegisterExternal, End to End Supply Chain Risks

6. Industry-wide (i.e., Market) Challenges

Process patents

Shrinking industry

Low supplier profitabilityCertificationCost trendsRecessions/Inflation2015-06-2429Slide30

Kirov’s Risk RegisterExternal, End to End Supply Chain Risks

7. LawsuitsEnvironmentalHealth and safety

Intellectual property

2015-06-24

30Slide31

Kirov’s Risk RegisterExternal, End to End Supply Chain Risks

8. Technological TrendsEmerging technologies (pace/direction)Obsolescence

Other technological uncertainty

2015-06-24

31Slide32

Kirov’s Risk RegisterSupplier Risks: External, Contract Manufacturers

or Internal Business Unit

1.

Physical and Regulatory Risks

Key Suppliers Located in High Risk AreasMaterial Unavailability/Poor PlanningRaw materialsOther materialsLegal Noncompliance / Ethical practicesLabour practicesSafety practices & performanceEnvironmental practicesHistory & outcomes of lawsuitsTax practices2015-06-2432Slide33

Kirov’s Risk RegisterSupplier Risks: External, Contract Manufacturers

or Internal Business Unit

1.

Physical and Regulatory Risks

Regulatory NoncomplianceCustoms/tradeSecurity clearance requirementsHistory & outcomes of regulatory auditsRegulatory certification requirements (e.g., Food & Drug Administration, Federal Aviation Administration)Critical disclosure – International Traffic & Arms Regulations2015-06-2433Slide34

Kirov’s Risk Register

Supplier Risks: External, Contract Manufacturers or Internal Business Unit

2.

Production Problems

CapacityToo little, too much, or diminishingOrder and shipping timesOut of stock (i.e., no/low inventory)Performance history, equipment age & downtime (manufacturing & testing equipment)Repair cycle time2015-06-2434Slide35

Kirov’s Risk Register

Supplier Risks: External, Contract Manufacturers or Internal Business Unit

2.

Production Problems

Inflexible Production Capabilities (Long setup times)Technological Inadequacies or FailuresIncompatible information systemsSlow adoption of new technology2015-06-2435Slide36

Kirov’s Risk Register

Supplier Risks: External, Contract Manufacturers or Internal Business Unit

2.

Production Problems

Poor QualityDefects / contamination in manufactured productMislabeling of itemsLack of training or knowledgeLead TimesBacklogsUnresponsiveUnreliableVariable2015-06-2436Slide37

Kirov’s Risk Register

Supplier Risks: External, Contract Manufacturers or Internal Business Unit

3.

Financial Losses and Premiums

Degree of Competition/ProfitabilityDownstream integration or too much competitionLittle/no competition - sole sourceMergers & AcquisitionsFinancial ViabilityInability to sustain in a downturnBankruptcyWithdrawal from the market2015-06-2437Slide38

Kirov’s Risk Register

Supplier Risks: External, Contract Manufacturers or Internal Business Unit

4.

Management Risks

Inadequate Risk Management PlanningLack of business continuity plansLack of requirements for supplier's supplier business continuity plansManagement QualityHigh turnoverDishonestyPoor labour relationsPoor metric scorecards2015-06-2438Slide39

Kirov’s Risk RegisterSupplier Risks: External, Contract Manufacturers

or Internal Business Unit

4.

Management Risks

Substituting inferior or illegal materials/partsFailing to perform required treatments/testsSubmitting inaccurate/false invoicesLack of Continuous ImprovementUnwillingnessCost escalationOpaque processesOpportunistic behavior2015-06-2439Slide40

Kirov’s Risk RegisterSupplier Risks: External, Contract Manufacturers

or Internal Business Unit

4.

Management

RisksInflation of purchase costsDependence on One or a Few Customer(s)Poor CommunicationInternalExternalTransparency of data & operations2015-06-2440Slide41

Kirov’s Risk Register

Supplier Risks: External, Contract Manufacturers or Internal Business Unit

5.

Upstream Supply Risks

(i.e., Subcontractors and their Subcontractors)Any of the above external/supplier risksLack of visibility into subcontractorsNo or poor relationships with subcontractorsDiminishing sources of supplyTransition “costs” for new suppliers2015-06-2441Slide42

Kirov’s Risk RegisterDistribution Risks/Disruptions:

Inbound or Outbound

1.

Infrastructure Unavailability

RoadsRailsPortsAir capacity/availability2015-06-2442Slide43

Kirov’s Risk RegisterDistribution Risks/Disruptions:

Inbound or Outbound2.

Assets - Lack of Capacity or Accidents

Containers

TrucksRail carsShipsAirplanes2015-06-2443Slide44

Kirov’s Risk RegisterDistribution Risks/Disruptions:

Inbound or Outbound3.

Labor Unrest/Unavailability

Truck drivers

Rail operatorsLongshoremenPilots2015-06-2444Slide45

Kirov’s Risk RegisterDistribution Risks/Disruptions:

Inbound or Outbound4. Cargo Damage/Theft/Tampering

Physical damage

Theft and other security problems

Tracking the damageEnvironmental controls (e.g., temperature, humidity)2015-06-2445Slide46

Kirov’s Risk RegisterDistribution Risks/Disruptions:

Inbound or Outbound5. Warehouse Inadequacies

Lack of capacity

Inaccessibility

DamageEnvironmental controls (e.g., temperature, humidity)Lack of security2015-06-2446Slide47

Kirov’s Risk RegisterDistribution Risks/Disruptions:

Inbound or Outbound6. IT System Inadequacies/Failures

7.

Long, Multi-Party Supply Pipelines

Increased chance of all problems aboveLonger lead time2015-06-2447Slide48

Kirov’s Risk RegisterInternal Enterprise Risks

1. Operational RiskLoss of Inventory (damage, obsolescence)

Equipment loss, mechanical failures

Process Issues

Process reliabilityProcess robustnessLead time variabilityInflexible Production Capabilities (long set up times, etc.)2015-06-2448Slide49

Kirov’s Risk RegisterInternal Enterprise Risks

1. Operational RiskCapacity

Too little, too much, or diminishing

Order and shipping times

Out of stock (i.e., no/low inventory)Performance history, equipment age & downtime (manufacturing & testing equipment)Repair cycle time2015-06-2449Slide50

Kirov’s Risk RegisterInternal Enterprise Risks

1. Operational RiskPoor Quality

Defects in manufactured product

Failure to maintain equipment

Lack of training or knowledgeEnvironmental performance to permits / other2015-06-2450Slide51

Kirov’s Risk RegisterInternal Enterprise Risks

2. Government Compliance and Political UncertaintyTaxes, customs, and other regulationsCurrency fluctuations

Political unrest

Boycotts

2015-06-2451Slide52

Kirov’s Risk RegisterInternal Enterprise Risks

3. Demand Variability/VolatilityDrawdown of the stockpileExceeding maintenance replacement rateShelf life expiration

Surges exceed production, repair, or distribution

Shortfalls

2015-06-2452Slide53

Kirov’s Risk RegisterInternal Enterprise Risks

4. Personnel Availability/Skills ShortfallsSufficient numberSufficient knowledge, skills, experience

Union contract expiry

High turnover rate

2015-06-2453Slide54

Kirov’s Risk RegisterInternal Enterprise Risks

5. Design UncertaintyChanges to requirementsLack of technical detail

Lack of verification of product

Changes to product configuration

Poor specificationsReliability estimates of componentsAccess to technical dataFailure to meet design milestonesDesign for supply chain (e.g., obsolescence, standardization, and commonality)2015-06-2454Slide55

Kirov’s Risk RegisterInternal Enterprise Risks

6. Planning FailuresForecast reliability/schedule availability

Planning data accuracy

Global visibility of plans & inventory positions

Competition/bid processAcquisition strategyManufacturability of a designProgram maturitySubcontracting agreements2015-06-2455Slide56

Kirov’s Risk RegisterInternal Enterprise Risks

7. Financial Uncertainty/LossesFunding availabilityWork scope/plan creep

Knowledge of supplier costs

Strategic risk

2015-06-2456Slide57

Kirov’s Risk RegisterInternal Enterprise Risks

8. Facility Unavailability/Unreliability/ CapacityFacility breakdown

Mechanical failures

Sites located in high risk areas

Adequate capacity2015-06-2457Slide58

Kirov’s Risk RegisterInternal Enterprise Risks

9. Testing Unavailability / Inferiority / CapacityUnreliable test equipmentOperational test qualifications

Operational test schedule

Integration testing

Transition from first test to mass production2015-06-2458Slide59

Kirov’s Risk RegisterInternal Enterprise Risks

10. Enterprise Underperformance/Lack of ValueCustomer satisfaction/loyaltyLiability

Cost/profit

Customer demand

UniquenessSubstitutabilitySystems integrationOther application/product value2015-06-2459Slide60

Kirov’s Risk RegisterInternal Enterprise Risks

11. Supplier Relationship Management (SRM) UseContract/supplier management availability and expertiseIn-house SRM expertise

Lack of internal and external communication/coordination

Supplier development and continuous improvement

2015-06-2460Slide61

Deloitte’s Risk Model

2015-06-24

61Slide62

Video - Conclusion

https://youtu.be/-zIyGpRar24Tom Teixeira,

Supply Chain Risk in a Global Economy

– Willis TV – November 18, 2013 – duration

4:192015-06-2462Slide63

Suggested Reading/Bibliography

APICS. Dictionary 14th Edition, the Essential Supply Chain Reference, Chicago: APICS, 2013.

APICS

.

Certified Supply Chain Professional (CSCP) Learning System, 2012 version, Chicago: APICS, 2012.CACI International Inc. (CACI) and the U.S. Naval Institute. Cyber Threats to National Security: Countering Challenges to the Global Supply Chain, A summary of personal remarks made by participants at the March 2, 2010 symposium.http://asymmetricthreat.net/docs/asymmetric_threat_4_paper.pdf, accessed March 23, 2015.Canada, National Strategy for Critical Infrastructure, Her Majesty the Queen in Right of Canada, 2009.Carleton University. Welcome to Big Data: Introducing Carleton University’s Institute for Data Science, personal notes and recollections of Ken Lawlis who attended Data Day as a Representative of the CATA Alliance and MIPIS, Data Day was held, April 1, 2015

.Committee of Sponsoring Organizations of the Treadway Commission (COSO), by Dr. Patchin Curtis and Mark Carey, Deloitte & Touche LLP,

Thought Leadership in ERM, Risk Assessment in Practice, COSO: October 2012.

https

://

www2.deloitte.com/content/dam/Deloitte/global/Documents/Governance-Risk-Compliance/dttl-grc-riskassessmentinpractice.pdf

2015-06-24

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Suggested Reading/BibliographyDeloitte Development LLC.

Supply Chain Resilience: A Risk Intelligent Approach to Managing Global Supply Chains, New York: Deloitte Development LLC, 2012.Department of Homeland Security website,

http://www.dhs.gov/critical-infrastructure-sectors

, accessed March 23, 2015.

Findlay, Valarie. Cyber-Threats, Terrorism and the Counter-Terror Model Research Study, University of St. Andrew’s, The Handa Centre for the Study of Terrorism and Political Violence, vaf2@st-andrews.ac.uk / vfindlay@humanled.com, May 2014. Fernandez, Pascal. Supply Chain Collaboration Maturity - What Difference Does it Make? A presentation to APICS/Supply Chain Council on October 2, 2014.IBM Global Technology Services. IBM Security Services 2014 Cyber Security Intelligence Index: Analysis of Cyber Attack and Incident Data from IBM’s Worldwide Security Operations, Somers, NY: IBM, June 2014.IBM Global Technology Services. Resilience in the Era of Enterprise Cloud Computing: Design Considerations for Forward Thinking Organizations, Somers, NY: IBM, July 2014

.Manners-Bell, John.

Supply Chain Risk: Understanding Emerging Threats to Global Supply Chains, London: Kogan Page Ltd., 2014.

2015-06-24

64Slide65

Suggested Reading/BibliographyISASA.

An Introduction to the Business Model for Information Security, Rolling Meadows, IL: ISACA, 2009.

Kirov

, Krasimir.

Supply Chain Risk Management: Minimize Disruptions, Reduce Risk and Make Your Supply Chain Resilient, self-published, purchased on amazon.ca, April 8, 2014.http:// operationalexcellencetraining.com/ (Operational Excellence Series Book 6) (Kindle Locations 3-7). Kindle Edition.Maleski, Mark, et. al., Cyber Threat Metrics, Sandia Report, SAND2012-2427, Albuquerque, NM: Sandia National Laboratories, March 2012. http://www2.gwu.edu/~nsarchiv/NSAEBB/NSAEBB424/docs/Cyber-065.pdf , accessed March 23, 2015.

Marchese, Kelly and Jerry O’Dwyer. From Risk to Resilience: Using Analytics and Visualization to Reduce Supply Chain Vulnerability

, Deloitte Review, Issue 14, 2014.

http://dupress.com/articles/dr14-risk-to-resilience

/, accessed March 23, 2015.

MLA Handbook for Writers of Research Papers

, 7th Edition, New York: The Modern Language

Association

of America, 2009.

2015-06-24

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Suggested Reading/BibliographyNorman

, Thomas L. Risk Analysis and Security Countermeasure Selection, Boca Raton: CRC Press, 2010.

Peck, Helen.

Supply Chain Vulnerability, Risk, Robustness & Resilience

, PowerPoint Presentation, a synopsis of Mangan, Lalwani and Butcher’s work published in: Global Logistics and Supply Chain Management, Hoboken, NJ: John Wiley & Sons, 2008.Ponemon Institute. 2014 Cost of Data Breach Study: Global Analysis, Benchmark research sponsored by IBM and independently conducted by Ponemon Institute LLC., Traverse City, MI: 2014.PwC. A Practical Guide to Risk Assessment: How Principles-Based Assessment Enables Organizations to Take the Right Risks, PwC: December 2008.http://www.pwc.com/en_us/us/issues/enterprise-risk-management/assets/risk_assessment_guide.pdf

PwC. From Vulnerable to Valuable: How Integrity Can Transform a Supply Chain – Achieving Operational Excellence Series, PwC : December 2008.http://www.pwc.com/en_US/us/supply-chain-management/assets/pwc-sci-112008.pdf

Rice

, James B. and Spayd, Philip W.

Investing in Supply Chain Security: Collateral Benefits

, Washington, DC: IBM Center for the Business of Government, May 2005.

Schuh, Christian., et al.,

Supplier Relationship Management: How to Maximize Vendor Value and Opportunity

, New York: A. T. Kearney Inc., 2014

.

2015-06-24

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Suggested Reading/Bibliography

Schuh, Christian. et al., The Purchasing Chessboard: 64 Methods to Reduce Cost and Increase Value with Vendors, New York: A. T. Kearney Inc., 2009 (Kindle Locations 2-4). Kindle Edition.

Telecommunications

Industry Association (TIA).

Securing the Network: Cybersecurity Recommendations for Critical Infrastructure and the Global Supply Chain, Portable Document File (pdf) document on the TIA website, date of publication: July 20, 2012.http://www.tiaonline.org/sites/default/files/pages/TIA%20Cybersecurity%20White%20Paper-Critical%20Infrastructure%20%26%20Global%20Supply%20Chain_0.pdf, accessed March 23, 20152015-06-2467Slide68

Supply Chain Risk Management Videos

https://youtu.be/bbZiGYmTbcw

Emeritus Professor Martin Christopher, Marketing and Logistics,

SCM Key Challenges

– Cranfield University School of Business – duration 8:31https://youtu.be/lTAbPvivDxsPeter Foster, Cyber Breach Response Plans – Willis TV – June 19, 2015 – duration 2:54https://youtu.be/ISrjWW9_O0ISharon Lindstrom, Managing Supply Chain Disruptions: How are Manufacturers Today Viewing Supply Chain Risk – Protiviti Risk and Business Consulting – November 12, 2012 – duration 3:14https://youtu.be/cq1PL1eo4ZUProfessor Brian Squire, Information, Decision and Operations Group,

Supply Chain Risk Management – University of Bath – September 6, 2013 – duration 4:38

https://youtu.be/-zIyGpRar24

Tom Teixeira,

Supply Chain Risk in a Global Economy

– Willis TV – November 18, 2013 – duration 4:19

https://youtu.be/QlZ6TyUaYpw

Professor Richard Wilding,

Supply Chain Risk Reduction

– Cranfield University School of Business – June 16, 2008 - duration 5:57

https://youtu.be/9AbCuAexUgU

Joe Yacura,

Supply Chain: Understanding Risk Factors

– Information Systems Group (ISG) – duration 7:58 for segment on cyber security (play 15:17 to 23:15) – total duration 28:45

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