Broadly categorized, potential supply-chain risks include delays, disruptions, forecast inaccuracies, systems breakdowns, intellectual property breaches, procurement failures, inventory problems and capacity issues. They can seriously disrupt or delay material, information and cash flows, any of which can damage sales, increase costs - or both. Supply-chain problems result from natural disasters, labor disputes, supplier bankruptcy, acts of war and terrorism, and other causes. These two dramatically different outcomes from one event demonstrate the importance of proactively managing supply-chain risk. 1 (Ericsson has since implemented new processes and tools for preventing such scenarios. Ultimately, Ericsson lost $400 million in sales. As a result, when the Philips plant shut down after the fire, Ericsson had no other source of microchips, which disrupted production for months. Ericsson, another mobile-phone customer of the Philips plant, employed a single-sourcing policy. Thanks to its multiple-supplier strategy and responsiveness, Nokia’s production suffered little during the crisis. Scandinavian mobile-phone manufacturer Nokia Corp., a major customer of the plant, almost immediately began switching its chip orders to other Philips plants, as well as to other Japanese and American suppliers. The strike caused a massive surge in the surrounding electrical grid, which in turn started a fire at a local plant owned by Royal Philips Electronics, N.V., damaging millions of microchips. On March 17, 2000, lightning hit a power line in Albuquerque, New Mexico.
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