FMEA Based Potential Risk Analysis of Lower Cost Region Sourcing

Abstract

Lower cost region sourcing (LCRS) is becoming one of the important activities of the sourcing manager in many enterprises in the higher cost region, such as America, Japan, etc. When Supply chain managers are facing the lower price products from the LCR, they must consider how to analyze the risks of LCRS to control these risks and take the relate measures. A risk analysis and assessment approach is proposed which applied failure mode effect analysis methodology to layout the potential risks of lower cost region sourcing. The approach of risks identification, risk analysis and risk assessment is discussed to control and mitigate potential risks associated with lower cost region sourcing activities. The proposed approaches can help enterprise to know clearly the risks in LCRS and to determine the corresponding actions and their priority sequence to cope with the risks so as to avoid the damages caused by blindness actions