Supply Chain Risk Management

xiii

Preface

Perhaps the best way to introduce a book about supply chain risk manage-

ment (SCRM) is to start with some real although not necessarily upliing

stories. Each of the following occurred in the same week and year during a

December holiday season. e names of the companies involved have not

been changed to protect the innocent.

Guaranteed On- Time Delivery, Except When It’s Not. In its end- of-

year edition, Business Week magazine prominently featured a cover story

about how UPS was going to save Christmas. e magazine chronicled the

eorts of the man responsible for making sure all those packages ordered

just before Christmas would make their way under the tree in time.

Retailers such as Amazon guaranteed that orders placed by December23

would arrive in time for the big day. is was going to be a dening

moment for supply chain managers and online retailers! A convergence of

events, however, ensured that Scrooge would have the nal say.

What actually happened is a perfect storm that will be studied for

many years. While big shippers like Amazon claimed their innocence by

announcing that its shipments were given to UPS on time (failures from

risk events almost always feature blaming someone else), not enough

planes at UPS were available to move such a large number of packages,

creating huge bottlenecks.

So, what happened? More consumers than forecast shopped online

that holiday season, creating higher- than- anticipated demand. And, only

26days separated anksgiving and Christmas, compared with 32days

the previous year. A great deal of shopping was crammed into fewer shop-

ping days. It did not help that bad weather across much of the United States

during this period interrupted package delivery service. Bad weather had

a secondary eect of keeping consumers inside where they proceeded to

do to even more online shopping. And not surprisingly, many consumers

waited until the last minute to place their orders. Why not wait? Retailers

such as Amazon guaranteed delivery even though UPS has some ne

print stating that delivery is not guaranteed during peak holiday periods.

Unfortunately, UPS took a substantial hit to its earnings and reputation.

When Swiping Means Getting Swiped. Target Corp. announced that

40 million customer credit cards were in jeopardy because of a security