Supply Chain risk

Supply chain risk management (SCRM) is a nascent area emerging from a growing appreciation for supply chain risk by practitioners and by researchers. However, there is diverse perception of research in supply chain risk because these researchers have approached this area from different domains. This paper presents our study of this diversity from the perspectives of operations and supply chain management scholars: First, we reviewed the researchers' output, i.e., the recent research literature. Next, we surveyed two focus groups (members of Supply Chain Thought Leaders and International SCRM groups) with open-ended questions. Finally, we surveyed operations and supply chain management researchers during the 2009 INFORMS meeting in San Diego. Our findings characterize the diversity in terms of three ''gaps'': a definition gap in how researchers define SCRM, a process gap in terms of inadequate coverage of response to risk incidents, and a methodology gap in terms of inadequate use of empirical methods. We also list ways to close these gaps as suggested by the researchers.

Businesses operate in environments that are full of dynamism and uncertainties. These uncertainties constitute risks in the business operations. In the context of pineapple production, risk is inevitably, an integral part of the supply chain and comes in various forms. The principle of risks management recognizes the fact that risks are potential source of threat that undermines corporate strategy. Therefore, the need for systematic and proactive measures to deal with risk is paramount and should not be left to chance. This study assesses the overall supply chain network of selected organisations, identifies the risks inherent along its supply chain, analyses the risks and categorises them  according to their level of impact on the company’s operations   and develops mitigation strategies to dealing with them. Primary data was used for the study through questionnaire instrument. Pareto analytical model with Failure Mode and Effect Analysis (FMEA) framework was adopted in analyzing t...

The strategic importance of vendor evaluation is well established in the purchasing literature. Several evaluation methodologies that consider multiple performance attributes have been proposed for vendor evaluation purposes. While these techniques range from scoring models that utilize prior articulation of weights to derive composite scores for vendors to advanced mathematical models, methods that incorporate the inherent variability in vendor's performance attributes have been limited. The primary reason for the lack of development of such models is due to the complexities associated with stochastic approaches. In order to more accurately evaluate the performance of vendors, it is critical to consider variability in vendor attributes. This paper is an attempt to fill this void in vendor evaluation models by presenting a chance-constrained data envelopment analysis (CCDEA) approach in the presence of multiple performance measures that are uncertain. Our paper effectively demonstrates the first application of CCDEA in the area of purchasing, in general, and vendor evaluation, in particular. The model is demonstrated by applying it to a previously reported dataset from a pharmaceutical company. r

Supply Chain Risk Management.- Risk Identification.- Risk Assesment.- Mitigating Risks.- Response as a Mitigation Approach.- How do Global Manufacturing Companies Mitigate Supply Chain Risks.- Strategic Approaches for mitigating Supply Chain Risks.- Tactical Approaches for Mitigating Supply Chain Risks: Financial and Operational Hedging.- Application - Scenario Planning for Mitigating Supply Chain Restructuring Risk at a PVC Manufacturer.- Application - Mitigating Outsourcing-Related Risks.- Application - Mitigating New Product Development Risks - The Case of the Boeing 787 Dreamliner.- Application - Managing Product Recalls - The Case of Mattel, Inc.- Risk Models for Supply Chain Management.- Modeling the Vaule of Flexibility.- Stochastic Programming for Supply Chain Planning Under Demand Uncertainty.- Researchers' Prespectives on Supply-Chain Risk Research.- Conclusion and Future Research.

The strategic importance of vendor evaluation is well established in the purchasing literature. Several evaluation methodologies that consider multiple performance attributes have been proposed for vendor evaluation purposes. While these techniques range from ...

A number of trends like globalisation, outsourcing, single sourcing, and leanness have together created a more vulnerable supply chain. This increased vulnerability has made supply chain risk issues a hot topic in academia as well as in industry. There has, however, been a lack of suitable models. The objective of this paper is to develop one such model – a conceptual model with the help of which risks, seen from the perspective of a single focal company in the chain, related to disturbances and interruptions in the physical flow in the supply chain, could be structured and described on a general level. Only economic risks are considered. The paper is based on a literature review and some case studies. The literature review was focused on articles and reports/books on supply chain risk management and related areas. There are one main case study (Beta) and two smaller ones (Alfa and Gamma). The author has spent five weeks on the floor in two of the factories of Beta. One basic assump...

This paper focuses on the importance of decoupling recurrent supply risk and disruption risk when planning appropriate mitigation strategies. We show that bundling the two uncertainties leads a manager to underutilize a reliable source while over utilizing a cheaper but less reliable supplier. As in Dada et al. (working paper, University of Illinois, Champaign, IL, 2003), we show that increasing quantity from a cheaper but less reliable source is an effective risk mitigation strategy if most of the supply risk growth comes from an increase in recurrent uncertainty. In contrast, we show that a firm should order more from a reliable source and less from a cheaper but less reliable source if most of the supply risk growth comes from an increase in disruption probability. © 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007

Many banks provide supply-chain finance solutions that might include insurance services that further mitigate trade risk such as the default of suppliers. This study proposes the development of an insurance model that uses the Black Scholes-Merton (BSM) Model for default prediction and risk pooling management techniques as a way to reduce the risk
due to supplier bankruptcy and estimate an insurance premium that banks can use to charge this service to their customers. In order to demonstrate the use of the proposed insurance model, a sample of companies is selected from the New York Stock exchange and data for historical stock prices from the Center for Research in Security Prices database is collected in order to calculate the probability of bankruptcy of a sample of suppliers from different industries by using the BSM model. A Monte Carlo simulation to simulate the impact on risk and expected losses on the number of insurance policies sold is implemented with the use of simulation software. The results show that the simulation is useful to estimate the number of sold policies required in order to reduce the risk to a minimum level and predict with a high level of certainty the losses due to bankruptcy of suppliers.

Supply Chain Risk Management.- Risk Identification.- Risk Assesment.- Mitigating Risks.- Response as a Mitigation Approach.- How do Global Manufacturing Companies Mitigate Supply Chain Risks.- Strategic Approaches for mitigating Supply Chain Risks.- Tactical Approaches for Mitigating Supply Chain Risks: Financial and Operational Hedging.- Application - Scenario Planning for Mitigating Supply Chain Restructuring Risk at a PVC Manufacturer.- Application - Mitigating Outsourcing-Related Risks.- Application - Mitigating New Product Development Risks - The Case of the Boeing 787 Dreamliner.- Application - Managing Product Recalls - The Case of Mattel, Inc.- Risk Models for Supply Chain Management.- Modeling the Vaule of Flexibility.- Stochastic Programming for Supply Chain Planning Under Demand Uncertainty.- Researchers' Prespectives on Supply-Chain Risk Research.- Conclusion and Future Research.

ABSTRACT This paper describes an integrated framework for handling disruptions in supply chains. The integrated framework incorporates two main views on managing disruptions, namely pre- and post-disruption views, which are usually treated as separate issues in existing frameworks described in literature. The proposed integrated framework is used to structure literature review on the supply chain risk and disruption management. The literature review gives an overview of key aspects and specific methods which can be used for each step in the framework. Finally, two main observations in the existing literature on supply chain risk/disruption management are discussed. The first observation is that the literature has not uniformly discussed different parts of the framework. In general, the post-disruption process for managing supply chain disruptions has received relatively less attention than pre-disruption activities. The second observation which can be regarded as a direction for future research is lack of quantitative studies involving modeling and simulation to support the decision makers in better handling supply chain disruption.

The paper is based on a general conceptual supply chain flow risk model developed in an earlier paper, a literature review and case studies. The paper has the title "Developing a supply chain risk model" and is reported as a final paper at the NOFOMA 2005 conference. The literature review has been focusing articles and reports/books on supply chain management. Some of its findings have earlier been reported in a book chapter in Brindley (2004). There is one main case-study, presented here as case Beta and two minor cases (Alfa and Gamma). The author spent five weeks during the autumn of 2004 on the floor in two of the factories of Beta. That resulted in three internal reports to Beta and a lot of experience and ideas about supply chain flow related risks including the valuation of risks through indexing. Earlier drafts of this paper have on some occasions been tested on risk managers of Beta and developed further based on their feedback. The three cases illustrate the use ...

This paper focuses on the importance of decoupling recurrent supply risk and disruption risk when planning appropriate mitigation strategies. We show that bundling the two uncertainties leads a manager to underutilize a reliable source while over utilizing a cheaper but less reliable supplier. As in Dada et al. (working paper, University of Illinois, Champaign, IL, 2003), we show that increasing quantity from a cheaper but less reliable source is an effective risk mitigation strategy if most of the supply risk growth comes from an increase in recurrent uncertainty. In contrast, we show that a firm should order more from a reliable source and less from a cheaper but less reliable source if most of the supply risk growth comes from an increase in disruption probability. © 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007

The purpose of this paper is to develop a framework for the quantification of the costs and benefits associated to these supply chain risk management strategies and of their potential impact on performance as well as on the risk profile of firms. To do this, we adopt a Real Options approach, where a real option is the "right but not the obligation" to choose a course of action and obtain an associated payoff. By using this approach, in this paper we develop a real options-based framework which models some of the most common supply chain risk management strategies in terms of real options, thus posing the base for the further evaluation of the costs and benefits associated to these strategies.

Bramhults Juice AB is a Swedish company producing fresh juice for the Scandinavian market. Fresh juice is rich in taste but has limited durability and must be treated with special care throughout the whole supply chain. Not only will the quality of the product be affected if mistreated, but there are also contamination risks meaning that people actually could get sick, although the risk is very small. There are also other kinds of flow-related risks like single-sourced packages. To reduce the risk of spoiled juice, Bramhults installed a pasteurizer in their production process during spring 2005. An interesting question is how this affected the risks in the supply chain flow. One of the authors (Paulsson 2007) has in another study developed a model, called the DRISC (Disruption Risks In Supply Chains) model, for the structuring, evaluation and handling of risks related to disruptions in the product flow in the supply chain. The DRISC model, seen from the angle of an individual (focal...

Ports-of-entry are critical components of the modern international supply chain infrastructure, particularly container seaports and airfreight hubs. The potential operational and economic impact resulting from their temporary closure is unknown but is widely believed to be very significant. This paper investigates one aspect of this potential impact, focusing specifically on the use of supply chain inventory as a risk mitigation strategy for a one supplier, one customer system in which goods are transported through a port-of-entry ...

Ports-of-entry are critical components of the modern international supply chain infrastructure, particularly container seaports and airfreight hubs. The potential operational and economic impact resulting from their temporary closure is unknown but is widely believed to be very significant. This paper investigates one aspect of this potential impact, focusing specifically on the use of supply chain inventory as a risk mitigation strategy for a one supplier, one customer system in which goods are transported through a port-of-entry ...

... offers contract electronic manu-facturing services (EMS) primarily to large and powerful OEM customers. ... supporting the implementation of the approach is an enabling IT tool designed to ... For example, Ericsson applies a risk management evaluation tool referred to as 'ERMET ...

The paper is based on a general conceptual supply chain flow risk model developed in an earlier paper, a literature review and case studies. The paper has the title "Developing a supply chain risk model" and is reported as a final paper at the NOFOMA 2005 conference. The literature review has been focusing articles and reports/books on supply chain management. Some of its findings have earlier been reported in a book chapter in Brindley (2004). There is one main case-study, presented here as case Beta and two minor cases (Alfa and Gamma). The author spent five weeks during the autumn of 2004 on the floor in two of the factories of Beta. That resulted in three internal reports to Beta and a lot of experience and ideas about supply chain flow related risks including the valuation of risks through indexing. Earlier drafts of this paper have on some occasions been tested on risk managers of Beta and developed further based on their feedback. The three cases illustrate the use ...