MH&L Reports: New MIT Study Defies Basic Business Tenet in Supply Chain Risk Management
Dec. 18, 2013
A new MIT study concludes that there is no correlation between the total amount a manufacturer spends with a supplier and the profit loss it would incur if that supply were suddenly interrupted.
Quantitative analysis by Professor David Simchi-Levi of MIT’s Department of Civil and Environmental Engineering and Engineering Systems Division shows that the supply firms whose disruption would inflict the greatest blow to Ford’s profits are those that provide the manufacturer with relatively low-cost components.
The application of Simchi-Levi’s model to Ford Motor Company’s supply chain was funded by the Ford-MIT Alliance.
