Risk Management in a Globalized Cosmetic Firm

The need of control and optimise the supply chain is now crucial for the firm operating in the actual economic environment. Some aspects such as globalisation, heavy dependence on transportation, communication infrastructures and lean manufacturing have led an increase in the vulnerability of supply networks. Owing to a large number of interrelated processes and products, disruptions caused by these vulnerabilities propagate rapidly. Firms, however, can partially control the robustness and resilience of their supply networks through strategic and tactical decisions. Therefore, a decision-support tool that assists managers to evaluate the risk exposure of their supply networks can considerably increase the robustness/resilience of these networks. In this paper, focusing the attention on a cosmetic sector where the uncertainty is even more high, it is shown how real option and risk analysis can help managers to manage new projects mitigating risk factors.