Supply chain risk at simultaneous robust perturbations

The focus of this paper is the risk management of total supply chains by identifying the risk drivers that could appear simultaneously, and the determination of their common denominator to mitigate supply chain risk using the Net Present Value (NPV) approach in Extended Material Requirements Planning (Extended MRP) models. Any risk driver that is likely to disrupt the procurement, production, transportation, warehousing, delivery or financing of a good or service constitutes a realisation of supply chain risk. Risk drivers often appear simultaneously. It is imperative, therefore, that an a priori assessment of the risk drivers that pose risk to the global supply chain is undertaken and that contingency plans are developed at every level to monitor and mitigate these risks, even when they appear simultaneously. To avoid the ruin of a supply chain we must ensure the availability of adequate funds in conjunction with safety stock. Therefore, the risk-mitigation approach pursued in our paper follows from our conviction that money is the stock of purchasing power of any activity cell in a global supply chain that could influence the perturbation of material flows—on many stages simultaneously. In the paper, we provide a method appropriate for preventing the long-term disruption of a supply chain with probability determined in advance.