Risk Assessment And Mitigation At Platinum Manufacturing Group

Raw material purchasing process

Platinum Manufacturing Group is a rising electronics manufacturing company. Most of its customer base are small and medium sized businesses. Due to its excellent performance the organization is growing at a steady rate and making a lot of profit. In this current situation there is a need to assess the risks and implement improvements in the organizational process to make the overall system flawless and better (Hopkin, 2018). This study is mainly conducted to assess all the areas of risk the company has. It could be conducted to provide the CEO with a proper report to mitigate the risks which may otherwise cause problem for the organizational work process of the organization (Ruan et al., 2015, pp. 1440).

The above level 0 Data Flow Diagram provides all the details of the raw material purchasing procedure. The diagram was constructed with the help of Microsoft Word. It has all the necessary information regarding that particular matter. The storeroom staffs initiate the process of raw material acquisition whenever there is a low count. For that, they enter the item inventory number in the purchase requisition list and mail it to the purchasing department. According to Sadgrove (2016), the purchasing department prepares the purchase order based on the received feedback and initiates the process of buying raw materials by emailing the requirements to the supplier. In this process, the purchasing department retains the copy of the order. After receiving the order the supplier sends the supply to the company and after receiving, the purchasing department initiates the payment to the company based on the invoice.

At the present situation, the company is performing quite well but for better functioning, there is a requirement of assessing the risks of the operational processes properly. Risk assessment is a very important procedure in an organization (Bergamaschi et al., 2015, pp. 192). Almost all the business organizations employ specific analysts who perform thorough check-up of all the organizational processes to determine the areas of weakness which may give serious trouble to the organization in the future (Ratnayake&Antosz, 2017, pp. 42). The risk is anything which may have a high or low chance to harm by some hazard or provide some sort of damage to an individual or an organization (Hopkin, 2018). There are various tools, techniques and frameworks to assess and evaluate the risks in an organization. Among all the existing processes, Risk Assessment Matrix is the most effective technique (Ni et al., 2010, pp. 1273). The technique provides a detailed description of all the underlying risks and also provides proper knowledge about how much probability of that risk has to occur (Knutson &Huettel, 2015, pp. 144). Most of the businesses organizations use these particular tool asses the risks in their organizations and based on the result they undertake various important decisions to develop various strategies (Albery et al., 2016, pp. 183). The strategies are developed regarding the severity and the probability of the risk to occur (Sadgrove, 2016). The risk assessment matrix is developed after properly analyzing the work operations and detecting various risks. The risk assessment and mitigation process consists of five main steps (Stergiopoulos et al., 2015, pp. 44). These steps are as follows:

Risk identification

1.Identification of the risks.

2.Quantification of the risks.

1. Developing strategies to contain the risks.
2. Implementing the developed strategies.
3. Monitoring the tasks which are associated with the risks.

The likelihood of risk to occur has some specific scales based on which the result is provided (Pritchard & PMP, 2014). The scale is described below:

1 = Rare

2 = Unlikely

3 = Possible

4 = Likely

5 = Frequent/almost certain

On the other hand, the tool also provides a scale of impact (Ruan et al., 2015, pp. 1445). The scale of impact is as follows:

1 = Insignificant

2 = Minor

3 = Moderate

4 = Major

5 = Catastrophic

The best way to utilize the risk assessment matrix is to properly assess the impact by utilizing a combination of thought and properly provide a rating in the areas where there is a possibility to have the largest impact of the risk (Nishatet al., 2006, pp. 550).

The organization has a lot of functions which are undergoing to deliver their products to the customers. The manufacturing process involves the storage of various raw materials. The overall functions of the organization were found to be satisfactory and functioning well, however the analysis, showed some important gaps in the purchase and storage of raw materials. The areas of risks are as follows:

• Risk 1: The numbers of staffs in the storeroom are low.
• Risk 2: Being a large company with a huge turnover the company has not implemented any proper inventory system. The company still relies on the storeroom facility and the counting of the raw materials is done by hand counting method (Ni et al., 2010).
• Risk 3: The authorization process of the company is outdated. The authorization for acquiring the raw materials is still done verbal and written method. There is not any further monitoring of the process after getting the initial authorization.
• Risk 4: The items received after purchasing are counted by the storeroom staff without any proper supervision. There are no personnel to verify the count of the raw materials by tallying it with the provided permission.
• Risk 5: Filing of the received orders is outdated. The filing is still done by using the old age method of paperwork and there is no softcopy of the orders received or sent.

The above discussion provided a lot of information about the current work operation and the various risks associated with the operations. The assessed risks and their degree of impact are provided below:

The risk matrix analysis provided one key information that the company has some critical risks in the department of purchase and storing. The present situation means a lot of reformation needs to be done so that the future incidents of organizational failures may be avoided (Reason,2016). Most of the risks are in the level of medium to high impact level and their probability of occurrence is very much high.

From the above discussion, it was clear that the present situation needs to be changed promptly as the company is already functioning with a lot of underlying risks. For better understanding of the risks, a proper discussion of the risks, their impacts and solutions are provided below:

Conclusion and recommendation

The present report was solely conducted to assess the present condition of Platinum Manufacturing Group. As the company is constantly growing and gaining more revenues it is important to assess the operations of the company. Generally the risk assessment procedures are conducted to make some reforms in the existing strategies and policies. This was also same in case of the present company. The risk assessment pointed out that in spite of the growth of the company; the various internal operations are still done in the traditional methods. It may be due to the fact that the company management has not yet considered this portion for up gradation.

The above report provided a lot of important facts about the company’s sales and raw material purchasing section. The risk analysis provided a lot of important gaps in the relevant sector. The company utilizes the old methods of pen and paper technique to manage the product sales and purchases. The most risky factor was the absence of a proper inventory. In light of this present finding it can be said that the company could suffer from critical data leak or resource theft any time. It is highly recommended to implement an efficient inventory with modern IT systems so that the internal critical operations can be made secure.

The above study provides a lot of information regarding the implementation of risk matrix and also helps to understand the various methods to assess the internal risks on an organization. It should be always remembered that the successful companies run on effective risk analysis and risk mitigating methods and it is the sole reason why they always stay at an advantageous position than other companies.

References

Albery, S., Borys, D., &Tepe, S. (2016). Advantages for risk assessment: Evaluating learnings from question sets inspired by the FRAM and the risk matrix in a manufacturing environment. Safety science, 89, (180-189).

Bergamaschi, E., Murphy, F., Poland, C. A., Mullins, M., Costa, A. L., McAlea, E., …&Tofail, S. A. (2015). Impact and effectiveness of risk mitigation strategies on the insurability of nanomaterial production: evidences from industrial case studies. Wiley Interdisciplinary Reviews: Nanomedicine and Nanobiotechnology, 7(6), (839-855).

Hopkin, P. (2018). Fundamentals of risk management: understanding, evaluating and implementing effective risk management. Kogan Page Publishers.

Knutson, B., &Huettel, S. A. (2015).The risk matrix. Current Opinion in Behavioral Sciences, 5, (141-146).

Ni, H., Chen, A., & Chen, N. (2010). Some extensions on risk matrix approach. Safety Science, 48(10), (1269-1278).

Nishat Faisal, M., Banwet, D. K., & Shankar, R. (2006). Supply chain risk mitigation: modeling the enablers. Business Process Management Journal, 12(4), (535-552).

Pritchard, C. L., & PMP, P. R. (2014). Risk management: concepts and guidance. Auerbach Publications.

Ratnayake, R. C., &Antosz, K. (2017). Risk-based maintenance assessment in the manufacturing industry: minimisation of suboptimal prioritisation. Management and Production Engineering Review, 8(1), (38-45).

Reason, J. (2016). Managing the risks of organizational accidents.Routledge.

Ruan, X., Yin, Z., &Frangopol, D. M. (2015). Risk matrix integrating risk attitudes based on utility theory. Risk Analysis, 35(8), (1437-1447).

Sadgrove, K. (2016). The complete guide to business risk management.Routledge.

Stergiopoulos, G., Kotzanikolaou, P., Theocharidou, M., &Gritzalis, D. (2015). Risk mitigation strategies for critical infrastructures based on graph centrality analysis. International Journal of Critical Infrastructure Protection, 10, (34-44).

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