The biggest risk in any supply chain is having either too much inventory or too little, at different points in your supply network. Too much of it leads to additional cost, as well as the waste of capacity and space for products that are not selling. On the other hand, not enough inventories would obviously lead to less revenue, and in many instances loss of valuable market share. After 3 years, GM is most likely to reclaim the title of the world’s largest automaker from Toyota, the father of best supply chain practices in the industry–due to Japan’s earthquake’s devastating effect on its production and inventory levels. Could it happen to you? You bet!
Some may argue that there are many more risks other than the two specified above. Our experience shows that all the other factors lead either to the availability of inventory, or lack of it. Consider the following scenarios: