The paper "A Supply Chain is Only as Strong as Its Weakest Link - Zoran Corporation " is a good example of a management case study. Zoran Corporation faces supply chain risks due to the nature of the supply chain which is vertically integrated and global. The risks, in this case, maybe explained from either the supply or demand side of the supply chain. Risks related to supply are associated with disruptions or delays which could be so demanding for Zoran Corporation. Zoran is exposed to the risk of possible economic recession across the world.
This is likely to affect the consumers’ buying decision in such a way that the demand for electronic products will remain lower than expected. Alternatively, a worldwide recession would lead to more consciousness of value in the entire business of consumer electronics which could then affect profit margins for the corporation. When the demand for electronics decreases, Zoran is also affected, since it will have to supply a few chips to the Chinese factories who are its main consumers (Phred, 2009). Although the problem of low demand will first be experienced by Best Buy, it will eventually be felt by Zoran Corporation because now Best Buy will order less from Toshiba.
Due to a few orders from Toshiba, the Chinese factories will also be forced to order for a few chips from Zoran which will affect its profit margins as well. Another risk Zoran faces is forecast risk. This risk is likely to occur due to mismatch between Zoran’ s forecast and actual demand for chips by the Chinese factories. In case it makes very low forecasts it implies that there will be no enough chips to sell.
On the other hand, if it makes very high forecasts, it will have more than enough inventory to sell and it may also experience price-markdowns. Inaccuracies in the forecast may arise due to distortion of information leading to the bullwhip within Zoran’ s supply chain. Zoran may expect that Chinese factories will order for more chips due to the upward shift in demand for electronic products, but instead, demand falls and vice versa. This will have an effect on its overall sales and even profitability. The corporation is exposed to the risk related to issues of production quality.
In case the manufacturing companies Zoran contracts such as Semiconductor Manufacturing Company (TSMC) supply chips with quality issues or even if Zoran suspects of the same, it may cause delays in delivery of the product to the Chinese factories (Phred, 2009). Even if Zoran does not realize quality issues on time before supplying the chips to Chinese factories, it may result in costly recalls later. Quality issues if chips will affect the entire chain and may, in particular, destroy the reputation of Zoran Corporation.
Since Zoran is just a designer of the chips, it is very challenging to maintain quality in the supply of these products to customers. Thus, any compromise in quality will adversely affect the operations of the corporation and may even lose some customers. Delay in the supply of chips by the manufacturers is a possible risk to Zoran Corporation. As indicated in the case study, Zoran has subcontracted manufacturing of chips to various companies that specialize in chip-making (Phred, 2009). For instance, delay in delivery of chips by TSMC may hinder Zoran from meeting orders placed by Chinese factories and this will extend up to the final consumers of electronic products.
This is riskier when Zoran uses a single manufacturer at a time to produce chips. Any interruption in the manufacturing process could have a serious impact on meeting the demand for chips by customers. This may translate to losses to Zoran Corporation and more so its customers.