Ashmark Corporation: Dealing with a Supply Disruption

Description

When Ashmark Corporation’s largest supplier, Red Star Castings (Red Star), was forced to declare bankruptcy, Ashmark had to develop and implement a contingency plan, while also appeasing its customers, who were growing increasingly impatient for their parts to arrive. Since Red Star closed, Ashmark had been late on 200 units of production due to missing components. Although this figure represented less than 1 per cent of the company’s total monthly shipments, things were likely to get more difficult, especially with the loss of key employees due to the stressful situation. In addition, the new supplier was having trouble bringing the tooling online, there were delays in the qualification and testing process, and the modest amount of inventory built up in advance of the bankruptcy had diminished. As Ashmark looked to move forwards, it would need to develop a much better sense of how to manage supply chain risk.

Learning Objective

Using the case, students will: ·Discuss the tradeoffs of single versus multiple sourcing, and in particular, when supply consolidation can increase risk. ·Examine and define risk in a supply chain management context, and how factors can increase (or decrease) either the likelihood or impact of a disruptive event. ·Evaluate how differing incentive systems can lead to positive outcomes for the firm and for individual managers in the short term, but can lead to increases in long-term systematic risks to the firm and, in turn, affect supply chain continuity and resiliency. ·Understand the issues facing original equipment manufacturers in managing Tier I, Tier II and Tier III suppliers, where there is limited (or no) visibility to the supply base.

Keywords

Procurement Risk management Supply chain management