Supply_Chain_Risk_Management_An_Emerging_Disciplin…_—-_13._Risk_Measurement.pdf
245 13Risk Measurement Imagine.a.measurement.system.that,.when.working.effectively,.offers.the.opportunity.to.reduce.supply.chain.risk..Next,. imagine.the.possible.out-comes.when.such.a.system.fails.to.work.as.intended..A.number.of.years.ago.a.consumer.products.company.with.$100.million.in.annual.sales.developed.a.scorecard.system.to.measure.supplier.performance..Besides.creating.a.sys-tem.that.was.not.validated.and.was.less.than.professional.in.appearance,.many.larger.suppliers.challenged.their.scores,.particularly.when.the.scores.were.lower.than.what.they.received.from.their.more.sophisticated.custom-ers.. The. measurement. system. was. such. a. nonstarter. that. it. deterred. the.company.from.moving.forward.with.its.supplier.measurement.objectives..It.also.affected,.and.not.in.a.good.way,.the.company’s.relationships.with.its.suppliers..Not.much.in.the.way.of.risk.reduction.occurred.here. Welcome. to. the. world. of. measurement,. a. topic. that. can. enhance. or.impede.a.company’s.risk.management.efforts..This.chapter.examines.risk.measurement. from. a. variety. of. perspectives.. We. first. discuss. measure-ment.validity.and.reliability,.something.that.is.critical.as.companies.create.new.ways. to.evaluate.risk..This. is. followed.by.a.presentation.of.best-.in-.class.supplier.performance.measurement.systems,.quantified.risk.indexes,.and.a.system.for.measuring.risk.at.the.country.level..Next,.we.present.the.increasingly.talked.about.subject.of.total.cost.measurement..The.chapter.concludes.with.a.set.of.emerging.risk.metrics. RiSk MeaSuReMent Validity and ReliaBility As. supply. chain. risk. management. (SCRM). evolves. as. a. discipline,. …
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