Case Study 2

NicNak Ltd, an emerging player in the UK convenience market, has been growing at an impressive rate
over the past five years since recruiting a new sales director who arrived with a first-class team of
buyers. One of the key growth areas for the company has been in the Far East, particularly China, where
numerous new products are designed and mass produced by several companies, purchased at very
competitive rates, and sold in the UK with good margins. Within the Board of Directors, there is some
concern at the dependence on this market and how any disruption to the supply chain of goods from
China could impact the business. In particular, the Board of Directors is concerned at the complexity of
the supply chain. It worries that disruption could be caused by transport delays, such as problems with
goods clearing the many ports due to localized strikes, resulting in goods not arriving on time.

NikNak Ltd has recently appointed a supply chain risk manager, Joe Smith, to review the business and
report back with proposals of how to introduce policy, review strategy and advise the Board to reduce
the risks that exists in the business’s supply chain.

Joe’s report highlights the following points.

1) The reliance on China has been driven by cost reduction and he believes a more collaborative
approach will reduce risk by widening the supplier base.

2) The supply chain is too complex due to the way the company has expanded through acquisition.

3) Within NikNak Ltd there is a lack of understanding by managers outside the supply chain of their
required involvement and responsibilities across functional and organizational boundaries.

Below are several questions the risk manager is considering.

Question 49: What category of risk is the possible transport delay that concerns the Board?
Select one:
a. Hazard
b. Financial
c. Operational

Question 50: Which of the following would be considered a risk specific to the globalization of the
supply chain that NikNak Ltd has followed?
Select one:
a. Number of transportation touch points.
b. Compliance of suppliers to ethical standards.
c. Ability of suppliers to upscale at short notice.

Question 51: What are the key benefits of NikNak’s collaboration with suppliers?
1. Reduced research and development costs.
2. Process improvement in supply chain.
3. Better supply and demand planning.
4. Reduced costs of transportation.
Select one:
a. 1, 2, 3 and 4
b. 2, 3 and 4
c. 1, 2 and 3

Question 52: Which of the following are recognized ways in which NikNak Ltd could reduce the
complexities in its supply chain?
1. Simplify product design.
2. Tighten legal contracts with suppliers.
3. Rationalize supply base.
4. Setting up cross functional design teams.
Select one:
a. 1, 2 , 3 and 4
b. 1, 3 and 4
c. 1, 2 and 3