In recent years the issue of supply chain risk has been pushed to the fore, initially by fears related to possible disruptions from the much publicised “millennium bug”. Y2K passed seemingly without incident, though the widespread disruptions caused by fuel protests and then Foot and Mouth Disease in the UK, and by terrorist attacks on the USA have underlined the vulnerability of modern supply chains. Despite increasing awareness among practitioners, the concepts of supply chain vulnerability and its managerial counterpart supply chain risk management are still in their infancy. This paper seeks to identify an agenda for future research and to that end the authors go on to clarify the concept of supply chain risk management and to provide a working definition. The existing literature on supply chain vulnerability and risk management is reviewed and compared with findings from exploratory interviews undertaken to discover practitioners' perceptions of supply chain risk and current supply chain risk managem...

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Supply chain risk management: outlining an agenda for future research

Supply chain disruptions and the associated operational and financial risks represent the most pressing concern facing firms that compete in today's global marketplace. Extant research has not only confirmed the costly nature of supply chain disruptions but has also contributed relevant insights on such related issues as supply chain risks, vulnerability, resilience, and continuity. In this conceptual note, we focus on a relatively unexplored issue, asking and answering the question of how and why one supply chain disruption would be more severe than another. In doing so, we argue, de facto, that supply chain disruptions are unavoidable and, as a consequence, that all supply chains are inherently risky. Employing a multiple-method, multiple-source empirical research design, we derive novel insights, presented as six propositions that relate the severity of supply chain disruptions (i) to the three supply chain design characteristics of density, complexity, and node criticality and (ii) to the two supply chain mitigation capabilities of recovery and warning. These findings not only augment existing knowledge related to supply chain risk, vulnerability, resilience, and business continuity planning but also call into question the wisdom of pursuing such practices as supply base reduction, global sourcing, and sourcing from supply clusters.

The severity of supply chain disruptions: Design characteristics and mitigation capabilities

Today's marketplace is characterised by turbulence and uncertainty. Market turbulence has tended to increase for a number of reasons. Demand in almost every industrial sector seems to be more volatile than was the case in the past. Product and technology life‐cycles have shortened significantly and competitive product introductions make life‐cycle demand difficult to predict. At the same time the vulnerability of supply chains to disturbance or disruption has increased. It is not only the effect of external events such as wars, strikes or terrorist attacks, but also the impact of changes in business strategy. Many companies have experienced a change in their supply chain risk profile as a result of changes in their business models, for example the adoption of “lean” practices, the move to outsourcing and a general tendency to reduce the size of the supplier base. This paper suggests that one key element in any strategy designed to mitigate supply chain risk is improved “end‐to‐end” visibility. It is argued that supply chain “confidence” will increase in proportion to the quality of supply chain information.

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Mitigating supply chain risk through improved confidence

– Global supply chains are more risky than domestic supply chains due to numerous links interconnecting a wide network of firms. These links are prone to disruptions, bankruptcies, breakdowns, macroeconomic and political changes, and disasters leading to higher risks and making risk management difficult. The purpose of this paper is to explore the phenomenon of risk management and risk management strategies in global supply chains., – This paper is based on an extensive literature review and a qualitative study comprising 14 in‐depth interviews and a focus group meeting with senior supply chain executives., – The study provides insights into the applicability of six risk management strategies with respect to environmental conditions and the role of three moderators., – The model is developed in a global manufacturing supply chain context. It should be tested in other contexts and with other methods to provide generalizability. The study takes a much needed step toward building a theory of risk management in global supply chains, which opens important future research directions., – This research provides direction to managers for choosing risk management strategies based on the global supply chain environment. Moderators have practical implications for global supply chain managers., – The paper addresses an identified gap in the literature for selecting risk management strategies in global supply chains. It employs grounded theory, a methodology appropriate for theory‐building, to explore a phenomenon with an inadequate theoretical base.

Global supply chain risk management strategies

– This paper seeks to understand business requirements for supply chain risk management (SCRM) from a practitioner perspective., – Based on the findings from an exploratory quantitative survey and qualitative focus group discussions with supply chain managers, some issues of SCRM are derived and structured along the three conceptual levels of “philosophy”, “principles” and “processes”., – The survey showed that 44 per cent of all eight responding companies expect the vulnerability of their supply chains to increase in the next five years. However, the concept of SCRM is still in its infancy., – The paper contributes to our knowledge on SCRM by presenting the business requirements from a practitioner perspective and by deriving a structure for an integrated approach to SCRM which can guide further research.

Richard Brenchley

Papers

Risk in supply networks