Read the Sandora Company Case Study (Kerzner, 2022). https://myresource.phoenix.edu/secure/resource/PM587v1/pm587_v1_wk2_wiley_sandora_company_case_study.pdf
You are assigned to replace the existing project manager in charge of the Sandora product line. You understand there are issues with outsourcing manufacturing to overseas suppliers, which have been exasperated by current business and political conditions. Your first assignment is to perform a risk analysis on the existing project based on the enterprise environmental factors identified by the consulting company in the case.
Assume the product cost of goods sold (COGS) is $100, the retail price is $500, and the consumer demand is approximately 1,000 units per day. With full staff and inventory, Sandora can build 1,500 units per day running 3 shifts.
Write a 2- to 3-page risk analysis and remediation/risk reduction plan describing your findings and your plan as you would present it to management stakeholders (C-level, division heads, etc.). Do the following in your risk analysis and remediation plan:
• Summarize the possible risks identified.
• Based on these risks, assess the value and potential impact to the organization.
• Indicate which metrics might be useful in this scenario.
• Provide policy recommendations that would mitigate the impact of these risks, and explain how you would convert these policies into processes.
Risk Analysis and Remediation Plan for Sandora Company
Introduction
As the newly appointed project manager for the Sandora product line, it is crucial to conduct a comprehensive risk analysis to address the challenges associated with outsourcing manufacturing to overseas suppliers. This risk analysis will focus on identifying potential risks, assessing their impacts on the organization, determining relevant metrics, and providing policy recommendations to mitigate these risks effectively.
Possible Risks Identified
1. Supply Chain Disruption: Dependence on overseas suppliers can lead to delays in product delivery due to transportation issues, political instability, or natural disasters.
2. Quality Control Issues: Outsourcing manufacturing may result in inconsistencies in product quality, leading to customer dissatisfaction and reputational damage.
3. Exchange Rate Fluctuations: Changes in exchange rates can impact production costs and profit margins, affecting the overall financial health of the organization.
4. Regulatory Compliance: Non-compliance with regulations in different countries could result in legal penalties, fines, or even product recalls.
5. Intellectual Property Theft: Sharing sensitive information with overseas suppliers may pose a risk of intellectual property theft, compromising the company's competitive advantage.
Value and Potential Impact Assessment
These risks have the potential to significantly impact Sandora Company:
- Financial Loss: Supply chain disruptions and exchange rate fluctuations can lead to increased costs and reduced profitability.
- Reputational Damage: Quality control issues and regulatory non-compliance can tarnish the company's reputation, resulting in loss of customer trust.
- Legal Consequences: Failure to address regulatory compliance and intellectual property theft risks can lead to legal repercussions and financial liabilities.
Relevant Metrics
- Supplier Performance Scorecard: Measure supplier performance based on criteria such as on-time delivery, product quality, and responsiveness to issues.
- Inventory Turnover Ratio: Monitor how quickly inventory is sold to assess efficiency in managing stock levels.
- Customer Satisfaction Index: Gauge customer satisfaction levels to evaluate the impact of quality control issues on customer perception.
Policy Recommendations and Process Implementation
1. Diversification of Suppliers: Engage with multiple suppliers across different regions to reduce dependency on a single source and mitigate supply chain disruption risks.
2. Quality Assurance Standards: Implement stringent quality control measures and regular audits to ensure consistent product quality and meet customer expectations.
3. Hedging Strategies: Utilize financial instruments like forward contracts to hedge against exchange rate fluctuations and minimize financial risks.
4. IP Protection Protocols: Establish confidentiality agreements and secure data transmission protocols to safeguard intellectual property rights and prevent theft.
Conclusion
In conclusion, addressing the identified risks through proactive risk management strategies is essential for safeguarding Sandora Company's operations and reputation. By implementing the recommended policies and monitoring relevant metrics, the organization can enhance its resilience to external threats and optimize its performance in the competitive market landscape.