Month: September 2025

Best Practices for Managing Supply Chain Disruption Risk in Manufacturing
Financial Mathematics Topics

Best Practices for Managing Supply Chain Disruption Risk in Manufacturing

- by Nathan Robinson

In today’s interconnected global economy, manufacturing supply chains face constant threats, ranging from geopolitical conflicts and natural disasters to material shortages and cyber-attacks. Building a resilient and agile supply chain is no longer a luxury but a fundamental requirement for business continuity and sustained profitability. Managing supply chain disruption risk in manufacturing requires a proactive, multi-faceted approach.

1. Enhance Visibility and Risk Assessment

The first step toward resilience is knowing your supply chain intimately—not just your immediate (Tier 1) suppliers, but their suppliers (Tier 2 and beyond) as well.

  • Multi-Tier Mapping: Go beyond Tier 1. Use technology and supplier questionnaires to map out your entire supply chain, identifying the source of critical components and raw materials. Disruptions often originate at sub-tier levels that are otherwise invisible.
  • Comprehensive Risk Assessment: Conduct regular, detailed risk assessments. Pinpoint specific vulnerabilities, such as:
    • Single Points of Failure (SPOFs): Reliance on one supplier, one geographic
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Limitations of Using ROI for Long-Term Project Decisions
Calculating ROI for Business

Limitations of Using ROI for Long-Term Project Decisions

- by Nathan Robinson

Return on Investment (ROI) is a fundamental and easily understood financial metric, providing a simple ratio of net gain to total cost. While excellent for comparing short-term, low-risk, and straightforward investments, its simplicity becomes a major drawback when evaluating long-term project decisions like major infrastructure upgrades, R&D initiatives, or complex digital transformations.

Relying solely on ROI for long-term capital budgeting can lead to skewed project comparisons and poor strategic choices because it ignores three critical financial realities: the time value of money, the project’s risk profile, and non-financial benefits.

1. The Time Value of Money (TVM) is Ignored

The most significant limitation of the basic ROI formula for long-term projects is its failure to account for the time value of money (TVM). A dollar received today is worth more than a dollar received five years from now due to factors like inflation and the opportunity to invest the money …

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