Approaches to Supply Chain Risk Management: Identification, Analysis and Control

Supply chain risk management has emerged as an increasingly important issue in logistics as disruptions in the supply chain have become critical issues for many companies. The scientific literature on the subject is developing and in many respects the understanding of it is still in its infancy. Thus, there is a need for more information in order for scholars and practitioners to understand the causalities and interrelations that characterise the phenomenon. The aim of this dissertation is to narrow this gap by exploring key aspects of supply chain risk management through two maritime supply chains in the immediate region of the Gulf of Finland. The study contributes to the field in three different ways. Firstly, it facilitates the identification of risks on different levels of the supply chain through a systematic analysis of the processes and actors, and of the cognitive barriers that limit the actors’ visibility and their understanding of the operations and the risks involved. There is a clear need to increase collaboration and information exchange in order to improve visibility in the chain. Risk management should be a collaborative effort among the individual actors, aimed at obtaining a holistic picture. Secondly, the study contributes to the literature on risk analysis through the use of systemic frameworks that illustrate the causalities and linkages in the system, thereby making it easier to perceive the vulnerabilities. Thirdly, the study enhances current knowledge of risk control in identifying actor roles, risk visibility and risk controllability as being among the key factors determining risk-management effectiveness against supply-chain vulnerability. This dissertation is divided into two parts. The first part gives a general overview of the relevant literature, the research design and the conclusions of the study, and the second part comprises six research publications. Case-study methodology with systematic combining approach is used, where in-depth interviews, questionnaires and expert panel sessions are the main data collection methods. The study illustrates the current state of risk management in multimodal maritime supply chains, and develops frameworks for further analysis. The results imply that there are major differences between organizations in their ability to execute supply chain risk management. Further collaboration should be considered in order to facilitate the development of systematic and effective management processes.

Untangling the Organizational Ambiguities in Supply Chain Risk Recognition, Assessment, and Response: The Role of Network Embeddedness

In this thesis, I focus on supply chain risk related ambiguity, which represents the ambiguities firms exhibit in recognizing, assessing, and responding to supply chain disruptions. I, primarily, argue that ambiguities associated with recognizing and responding to supply chain risk are information gathering and processing problems. Guided by the theoretical perspective of bounded rationality, I propose a typology of supply chain risk related ambiguity with four distinct dimensions. I, also, argue that the major contributor to risk related ambiguity is often the environment, specifically the web of suppliers. Hence, I focus on the characteristics of these supplier networks to examine the sources of ambiguity. I define three distinct elements of network embeddedness – relational, structural, and positional embeddedness – and argue that the ambiguity faced by a firm in appropriately identifying the nature or impacts of major disruptions is a function of these network properties. Based on a survey of large North American manufacturing firms, I found that the extent of the relational ties a firm has and its position in the network are significantly related to supply chain risk related ambiguity. However, this study did not provide any significant support for the hypothesized relationship between structural embeddedness and ambiguity. My research contributes towards the study of supply chain disruptions by using the idea of bounded rationality to understand supply chain risk related ambiguity and by providing evidence that the structure of supply chain networks influences the organizational understanding of and responses to supply chain disruptions.

Global supply chain risk management: a multicase study in the mango exportation chain

The purpose of this study is to understand how different members manage risk in the global supply chain. Through a multi-case study of the Brazilian mango exportation chain to the United States, four actors of this chain were investigated: supplier, exporter, importer and logistics operator. A research protocol was developed based on previous research conducted by Christopher, et al. (2011). Main results show that risk management is heterogeneous among members of the mango chain, the exporter is the most penalized by the results of the risk chain and collaboration is the main mitigation strategy observed

Supply chain risk management: An exploratory research in Brazilian aerospace industry

This paper aimed to analyse supply chain risk factors in aerospace industry. It was conducted an exploratory research at an important Brazilian aerospace company. This company has a major role at the global aerospace industry. Senior managers assessed risk factors such as quality, productivity, supply chain, business strategy, organisation, environmental and natural political, indicators, product management, and information system. Analytic hierarchy process was applied to prioritise these factors. The most relevant were quality and productivity. Copyright © 2011 Inderscience Enterprises Ltd.

Understanding supply chain disruption risk with the aid of social networks and information flows analysis

Supply Chain Risk Management (SCRM) has become a popular area of research and study in recent years. This can be highlighted by the number of peer reviewed articles that have appeared in academic literature. This coupled with the realisation by companies that SCRM strategies are required to mitigate the risks that they face, makes for challenging research questions in the field of risk management. The challenge that companies face today is not only to identify the types of risks that they face, but also to assess the indicators of risk that face them. This will allow them to mitigate that risk before any disruption to the supply chain occurs. The use of social network theory can aid in the identification of disruption risk. This thesis proposes the combination of social networks, behavioural risk indicators and information management, to uniquely identify disruption risk. The propositions that were developed from the literature review and exploratory case study in the aerospace OEM, in this thesis are:- By improving information flows, through the use of social networks, we can identify supply chain disruption risk. - The management of information to identify supply chain disruption risk can be explored using push and pull concepts. The propositions were further explored through four focus group sessions, two within the OEM and two within an academic setting. The literature review conducted by the researcher did not find any studies that have evaluated supply chain disruption risk management in terms of social network analysis or information management studies. The evaluation of SCRM using these methods is thought to be a unique way of understanding the issues in SCRM that practitioners face today in the aerospace industry.

The analysis and mitigation of risks in FMCG supply chain: the case of British American Tobacco Eastern Europe

This work investigates the Bullwhip Effect, which is one of the most important phenomena in contemporary supply chain management. The author uses most recent theoretical apparatus to analyze operational activities of a leading FMCG company British American Tobacco Eastern Europe. This paper investigates and describes the process in BAT supply chain management and considers the impact of the Bullwhip Effect together with the potential risks threatening company's operations. Emergence of the Bullwhip Effect leads to supply chain inefficiency. This paper contains methodological supply chain risk mitigation recommendations, description of a real case study and an analytical study of internal and external supply chain processes

Handling of Uncertainty in Life Cycle Inventory by Correlated Multivariate Lognormal Distributions: Application to the Design of Supply Chain Networks

In this work, we analyze the effect of incorporating life cycle inventory (LCI) uncertainty on the multi-objective optimization of chemical supply chains (SC) considering simultaneously their economic and environmental performance. To this end, we present a stochastic multi-scenario mixed-integer linear programming (MILP) coupled with a two-step transformation scenario generation algorithm with the unique feature of providing scenarios where the LCI random variables are correlated and each one of them has the desired lognormal marginal distribution. The environmental performance is quantified following life cycle assessment (LCA) principles, which are represented in the model formulation through standard algebraic equations. The capabilities of our approach are illustrated through a case study of a petrochemical supply chain. We show that the stochastic solution improves the economic performance of the SC in comparison with the deterministic one at any level of the environmental impact, and moreover the correlation among environmental burdens provides more realistic scenarios for the decision making process.

Balancing push and pull information management within the supply chain

The aim of this paper is to explore the management of information in an aerospace manufacturer's supply chain by analysing supply chain disruption risks. The social network perspective will be used to examine the flows of information in the supply chain. The examination of information flows will also be explored in terms of push and pull information management. The supply chain risk management (SCRM) strategy is to assess the management of information that allows companies to gather information which will allow them to mitigate that risk before any disruption to the supply chain occurs. There is a shortage of models in analysing the supply chain risk associated with information flows, possibly due to the omission of appropriate modelling techniques in this area (Tang and Nurmaya, 2011). This paper uses an exploratory case study consisting of a multi method qualitative approach using fifteen interviews and four focus groups.

Design and management of a supply chain: a joint location-inventory problem under uncertainty (Part B)

In recent years, global supply chains have increasingly suffered from reliability issues due to various external and difficult to-manage events. The following paper aims to build an integrated approach for the design of a Supply Chain under the risk of disruption and demand fluctuation. The study is divided in two parts: a mathematical optimization model, to identify the optimal design and assignments customer-facility, and a discrete-events simulation of the resulting network. The first one describes a model in which plant location decisions are influenced by variables such as distance to customers, investments needed to open plants and centralization phenomena that help contain the risk of demand variability (Risk Pooling). The entire model has been built with a proactive approach to manage the risk of disruptions assigning to each customer two types of open facilities: one that will serve it under normal conditions and a back-up facility, which comes into operation when the main facility has failed. The study is conducted on a relatively small number of instances due to the computational complexity, a matheuristic approach can be found in part A of the paper to evaluate the problem with a larger set of players. Once the network is built, a discrete events Supply Chain simulation (SCS) has been implemented to analyze the stock flow within the facilities warehouses, the actual impact of disruptions and the role of the back-up facilities which suffer a great stress on their inventory due to a large increase in demand caused by the disruptions. Therefore, simulation follows a reactive approach, in which customers are redistributed among facilities according to the interruptions that may occur in the system and to the assignments deriving from the design model. Lastly, the most important results of the study will be reported, analyzing the role of lead time in a reactive approach for the occurrence of disruptions and comparing the two models in terms of costs.

Risk Management in Sustainable Supply Chain

Growing awareness in corporate responsibility and issues related to sustainability is seen to increase innovativeness in a company as well as in its supply chain. The stakeholders’ awareness on sustainability has increased, and they demand the companies to identify sustainability risks and adapt procedures for mitigating them. The purpose of this thesis is to examine how risks are managed in sustainable supply chain. Definition of sustainability risks and risk management procedures construct the framework of the study. It is done through an empirical study conducted on 95 Finnish companies operating in the manufacturing industry. The data is acquired via an online questionnaire. The research has been conducted as a quantitative study utilizing the methods of statistical analysis, such as correlation analysis and factor analysis. The essential results of this thesis are identified risk-procedure connections, and the importance of different risks and procedures in the respondent companies.

Efficiency optimization of the transportation supply chain activity: the maritime option for Volkswagen Autoeuropa

Field Lab of Entrepreneurial Innovative Ventures

Improving the effectiveness of supply chain development work – an expert role perspective

This study focuses to the intersection of three sets of activities in a company: expert work, development work and supply chain management, SCM. Experts and expert work represent a set of individuals whose efficiency and impact this study is intended to improve, while development work defines the set of organizational activities to focus on. SCM as an expertise area acts as the platform on which this study is built. The study has two aims. Firstly, it aims to derive a model helping an SCM expert to increase the effectiveness of expert work in development tasks by understanding the encountered organizational situations and processes better, reflecting his/her past and future actions to organizational processes and selecting and adjusting the processes and contents of his/her work accordingly. Secondly, it aims to develop applicable approaches and methods to understand, evaluate and manage the organizational processes and situations in development work. The integrative model on approaches and methods to improve the effectiveness of development processes is split to two aggregate dimensions: technical performance of the developed solution and consumption of resources of the development process. Six potential approaches and methods aiming at helping in the management of organizational dimensions are presented in enclosed publications. The approaches focus on three subtasks of development work: decision making, implementation and change, and knowledge accumulation. The approaches and methods have been tested in case studies representing typical development processes in the area of supply chain management. As a result, four suggestions are presented. Firstly, SCM experts are advised to consider the SCM development work to be consisting of development processes. Secondly, inside these processes they should identify and evaluate the risk of difficult decision-making related to organizational factors. Thirdly, they are prompted for an active role in implementation and change, supporting the implementation through whole process. Finally, the development should be seen in a holistic view, taking into account the stage of knowledge and organizational issues related to it, and adopt a knowledge development strategy.

Information exchange and disruption risk in multimodal maritime supply chains

Supply chains are becoming increasingly dependent on information ex-change in today’s world, and any disruption can cause severe repercus-sions to the flow of materials in the chain. The speed, accuracy and amount of information are key factors. The aim in this thesis is to address a gap in the research by focusing on information exchange and the risks related to it in a multimodal wood supply chain operating between the Baltic States and Finland. The study involved interviewing people engaged in logistics management in the supply chain in question. The main risk the interviewees identified arose from the sea logistics system, which held a lot of different kinds of information. The threat of breakdown in the Internet connection was also found to hinder the operations significantly. A vulnerability analysis was carried out in order to identify the main actors and channels of infor-mation flow in the supply chain. The analysis revealed that the most important and therefore most vulnerable information-exchange channels were those linking the terminal superintendent, the operative managers and the mill managers. The study gives a holistic picture of the investigated supply chain. Information-exchange-related risks varied greatly. One of the most frequently mentioned was the risk of information inaccuracy, which was usually due to the fact that those in charge of the various functions did not fully understand the consequences for the entire chain.