Supply-Chain Risk Management: Attuning the
Interplay
Between Engineering and Markets
Suzhou Huang
Ford Research Lab
Financial risks in supply
chains of manufacturing firms not just stem from price fluctuations in
commodity markets, they also arise from other business fluctuations that
often cannot be readily traded away. Consequently, the conventional financial
risk management using hedging may not be always effective for many non-financial
institutions. In this presentation we describe a risk management framework
that is adapted from the standard portfolio theory by optimally tailoring
engineering to quantitatively characterized market behaviors. We illustrate
the idea by explicitly considering the case of planning precious metal
usage in automotive catalyst converter design.