Nature of the supply chain risk:

Physical contamination of product: physical contamination of product can occur because machines have not been set up as per specification causing foreign material may be discharged into the juice. Example, if a capper head is not set up to specification shavings can be discharged into the juice and if this is not observed by QC right away, thousands of cases of juice maybe destroyed leaving customer out of stock. Physical contamination may also occur because of human error both at the supplier’s end and within the manufacturing plant. For example, an employee can add an ingredient which is not declared on a juice label. If that ingredient contain any allergens then the juice cases that were produced with the ingredient by error may need to be destroyed.

Too much inventory: Too much inventory is due to inaccurate forecasting. Too much inventory may also occur because La need to continue to keep producing juice to keep it employees employed. La forecast is only about 75% accurate. When the forecast is to high lots of inventory is kept ideal and sometimes causing obsolesce. Also, finished goods are not sold quick enough and since some customers demand juice with no less than 60% of their shelf life, plenty of juice is sent to the food bank causing shortages and fines.
Bio terristism: La recognizes that there is real risk of biological contamination along its supply chain. We order numerous numbers of orange tankers, High fructose corn syrup, liquid sucrose and an abundance of ingredients. We rely on our trucking companies to deliver these to us free of contamination.

Risk mitigation strategy and reasons for that choice:
To minimize the effect of physical contaminated product, I would reduce inventory of both raw materials/ingredients and for finished goods in that way if there is a recall because foreign material was found in raw ingredients or finished goods cost of destruction of product would minimal, thus minimizing the effect on the customer.

To minimize the risk of too much inventory, La should carry only carry a maximum of 3 weeks of inventory of finished goods SKU at any given time. So we are reducing inventory. Customers need to give La confirmed orders 2 week in advance to facilitate proper planning, thus ensuring that La does not short ship orders. The company also need to install new lines in the invent that it needs to boost up capacity with short lead time. La should be doing more of demand or risk pooling where by its head office buys raw materials in bulk and distribute them among the various divisions as needed. This will reduce the total carrying cost of raw material inventory. The reason why this strategy was chosen is because the company has plenty of extra warehouse space at their head office location that could be utilized.