Supply chain risk management: outlining an agenda for future research

TLDR: In this article, a review of 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 risk managem...

Abstract: 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...

Figures

Figure 2: Risk sources in supply chains

Table 3: An agenda for future research in supply chain risk management

Figure 1: Supply chain risk management - the basic constructs

Table 2: Risk mitigating strategies in supply chains

Table 1: Industry sectors represented in the field research

Full text

International Journal of Logistics : Research & Applications, Vol. 6, No. 4, 2003, pp197-210
SUPPLY CHAIN RISK MANAGEMENT:
OUTLINING AN AGENDA FOR FUTURE RESEARCH
Uta Jüttner, Helen Peck*, Martin Christopher
CCLT, Cranfield School of Management, Cranfield University
*Correspondence: Helen Peck, Cranfield School of Management, Cranfield University,
Cranfield, Bedford, MK43 8SG, United Kingdom; Tel: +44 1234 751122; Fax: +44
1234 751806; E-mail:h.peck@cranfield.ac.uk
Acknowledgement
The research reported in this paper is part of a wider UK government-funded programme of
research into Supply Chain Risk and Resilience, undertaken by Cranfield School of
Management for the Department for Transport.

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SUPPLY CHAIN RISK MANAGEMENT:
OUTLINING AN AGENDA FOR FUTURE RESEARCH
Abstract
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 management strategies.

3
SUPPLY CHAIN RISK MANAGEMENT:
OUTLINING AN AGENDA FOR FUTURE RESEARCH
INTRODUCTION
On an individual firm basis, companies have been aware of the need for risk management and
contingency planning for some considerable time and there exists a wide body of literature
from such diverse fields as economics (e.g. Kahnemann and Tversky, 1979; Tversky and
Kahnemann, 1992), finance (e.g. Smith et al., 1990), strategic managememt (e.g. Bettis and
Thomas, 1990; Simons, 1999) and international management (e.g. Miller, 1992; Ting, 1988).
Recent events have vividly demonstrated that a disruption affecting an entity anywhere in the
supply chain can have a direct effect on a coporation’s ability to continue operations, get
finished goods to market or provide critical services to customers. Organisations that think
they have managed risk have often overlooked the critical exposures along their supply
chains. As noted by Braithwaite and Hall (1999), supply chains that run to hundreds if not
thousands of companies over several tiers present significant risk. Some writers suggest that
the domino effects of disruptions in supply chains might have been exacerbated in the last
decade (Christopher and Lee, 2001; McGillivray, 2000; Engardio, 2001). In an analysis of the
inventory problems recently facing the US electronics and telecoms industry, Engardio (2001)
points out that the “boasts” of flexible manufacturing and Just-in-Time supply chains have
disguised some of the risks involved. He projects hefty writedowns for “whomever ends up

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stuck with the inventory hot potato”. In a similar vein, Svensson (2002) stresses that JIT issues
have been explored in many different aspects but vulnerability issues remain largely
unexplored. Also, an executive at a US distribution giant stresses the lack of ownership in
highly integrated supply chains, where “the finger pointing is likely to get faster” and risks of
product obsolescence, inventories and a lack of responsiveness to peaks and troughs in end
customer demand become even more troublesome (Souter 2000).
Given the widely acknowledged vulnerabilities of todays’ complex supply chains, one might
expect the concept to have a clear meaning and a rich tradition of empirical findings and
managerial approaches. On the contrary, a close examination of the literature reveals that only
recently can a more systematic and structured approach to conceptualise vulnerabilities and
supply chain risks be traced (e.g. Harland and Brenchley, 2001; Norrman and Lindroth, 2002;
Svensson 2000 and 2002; Sheffi, 2002; Johnson, 2001; Zsidisin et. al., 2000). This article
seeks to further that interest by providing a framework and foundation for systematically
exploring the concept of risk management in supply chains. The purpose of this paper is to
delineate the domain of risk management in supply chains, to provide an operational
definition and to outline an agenda directing future research. We draw on the literature in risk
management and supply chain management and compare, contrast and supplement it with the
preliminary analysis of empirical findings from exploratory semi-structured field interviews.
RESEARCH METHODOLOGY
In order to tap the “mental” maps and experiences of supply chain professionals, a discovery-
oriented, practitioner-based approach was applied, with semi-structured interviews being the
primary method of data collection (Zaltman et al., 1982; Yin, 1989). In addition, because the

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purpose of the study was theory construction (i.e. eliciting constructs and research issues), it
was important to capture a wide range of experiences and perspectives in the course of the
data collection. Therefore, a purposive or “theoretical” sampling plan (Glaser and Strauss,
1967) was used to ensure that the sample included managers with responsibilities in supply
chain management and risk management in industrial, consumer and service industries (see
Table 1).
Table 1: Industry sectors represented in the field research
Manufacturing Companies Retail Companies Logistics Service Provider
 Aerospace
 Automotive
 Brewing
 Building Supplies (SME)
 Capital Equipment
 Cosmetics
 Groceries (packaged
foods)
 Cleaning Products
(household)
 Healthcare
 Packaging
(pharmaceutical)
 Tabacco
 Grocery
 Apparel
 Cosmetics
 Seasonal Gifts
 Management Consultancy
 Freight Forwarding
 Shipping
 Third Party Logistics
To maintain a level of consistency between interviewees and researchers, an outline protocol
was developed. However, given the overall paucity of literature directly addressing supply
chain vulnerability and risk management, care was taken not to be too prescriptive. The
questions and issues were to be treated only as discussion starters. The interviews typically
lasted one to one and a half hours and were, where possible, conducted at the interviewees’
premises. These interviews were supplemented by focus groups held at Cranfield University
as part of a Supply Chain Vulnerability Conference held in April 2002. This tended to result
in better overall quality of discussions and enabled some supporting documentary evidence to

Frequently asked questions

Q1. What contributions have the authors mentioned in the paper "Supply chain risk management: outlining an agenda for future research" ?

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. 

Q2. What are the future works in "Supply chain risk management: outlining an agenda for future research" ?

There now follows a summary of their findings on each of 23 these aspects by distinguishing between positive as well as normative future research issues. The following table summarises the future research issues under each of the critical aspects. 

Q3. What is the definition of a supply chain structure?

The supply network structure describes lateral and horizontal inter-linkages, reverse loops or two-way exchanges encompassing the upstream and downstream activities within and among the supply chain organisations (Lamming et al., 2000). 

Q4. What are some examples of control strategies in supply chains?

Examples in supply chains include vertical integration, increased stockpiling and the use of buffer inventory or maintaining excess capacity in production, storage, handling and/or transport or finally, imposing contractual requirements on suppliers. 

Q5. What was the attitude of the latter towards supply chain risk management?

The attitude of the latter towards supply chain risk management was deeply rooted in its engineering heritage and the philosophy of Total Quality Management, together with a vivid awareness of the worse case consequences of failure. 

Q6. What is the purpose of this paper?

The purpose of this paper is to delineate the domain of risk management in supply chains, to provide an operational definition and to outline an agenda directing future research. 

Q7. What was the common end of the spectrum?

At one end of the spectrum were acutely commercially focused fast moving consumer goods companies, particularly those selling through conventional retail channels. 

Q8. Why did a brewery run out of cardboard trays?

Yet a brewery was hit in the fuel crisis because it ran out of cheap but bulky packaging cardboard trays, where maintaining more than 24 hours emergency stock was deemed unnecessary. 

Q9. What are the main findings of the literature review?

To summarise, the findings from the literature review as well as their interviews indicate two issues to be addressed by future research: first, understanding risk assessment along the chain and developing more practicable approaches to guide the process and second, investigating risk implications of different network structures and developing effective tools for identifying network-related risks. 

Q10. Why is supply chain risk pushed to the fore?

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’. 

Q11. What was the common incident where a local supplier ceased to supply?

One company reported an incident where their local supplier, who only accounted for 5% of the organisation’s business, ceased to supply when he was swamped with orders from its main, prioritised customer. 

Q12. What are the four basic constructs of the supply chain risk management concept?

”The four basic constructs of the supply chain risk management concept enable us to identify the related critical aspects of the managerial concept: (1) Assessing the risk sources for the supply chain; (2) identifying the risk concept of the supply chain by defining the most relevant risk consequences (3) tracking the risk drivers in the supply chain strategy and (4) mitigating risks in the supply chain. 

Q13. What are the three types of network-related risk sources?

as the construction of a building is decisive in terms of the disruptive impact of an earthquake, the network structure of a supply chain influences the supply chain effect of events arising for example from environmental risk sources. 

Q14. What are the five generic strategies companies use to mitigate risk?

(4) Mitigating Risks for the Supply Chain19From a single organisation view, Miller (1992) distinguishes five generic strategies companies undertake in order to mitigate risk, four of which can be adapted to supply chain contexts: (1) avoidance, (2) control, (3) cooperation and (4) flexibility. 

Q15. Which of the following companies was closer to the other end of the spectrum of potential risk concepts?

Closer to the other end of the spectrum of potential risk concepts were the supplier of critical health products and an aerospace company. 

Q16. What is the definition of supply chain vulnerability?

From this structure, the terms supply chain vulnerability and supply chain risk management can be derived: Supply chain vulnerability is “the propensity of risk sources and risk drivers to outweigh risk mitigating strategies, thus causing adverse supply chain consequences”. 

Q17. What are some examples of the types of disruptions that were reported?

Examples include the detrimental effects of a fire in a centralised warehouse, the bankruptcy of the sole supplier of a key component or a critical system failure, which was compounded by the company’s prior move into a 3rd party environment.