Risk in supply networks pdf

Despite the fact that expectations Henders, , and may need to be this is recognised as increasingly important, there is considered in assessing and managing risk. Ritchie et al.

In Section 5 we provide a Map supplynetwork tool to do this. Supply network risk tool its current location supply network risk strategy 6 - type 2 A tool for helping to identify, assess and manage risk - potential loss is provided in Fig. The tool is divided into boxes, commencing with the first box involving mapping the Assess risk Form collaborative - likelihood of occurrence supply network.

Here the supply network to be mapped supply network - stage inlife cycle would be defined by the problem or concern. For risk strategy 5 - exposure example, the network might be the product supply - likely triggers - likely loss 3 network for a particular product where it is felt there is Manage risk some exposure to risk. In this stage a diagrammatical - develop risk position - develop scenarios representation of the supply network enriched with 4 appropriate data is created.

Mapping this supply network is likely to involve understanding who owns Fig. Supply network risk tool. In the second box the map is enriched with informa- can use this tool independently. However, their own tion concerning the type of risk and its location.

A view of how to deal with risk in the network may not prompt list can be provided from those compiled from coincide with other actors and is likely to give rise to the literature review, i. Strategic Risk, Operations destabilising of the network at some point.

The 6. At provided here is a version derived from previous this stage only those with a significant potential loss to versions that have been tested in a pilot and four case any actor in the network should be considered.

The case studies were conducted to develop the network, potential triggers of the risk, at what stage in conceptual framework, and as such are not the main the life cycle the risk is likely to be realised, and what focus of the study. However, an overview of the cases is likely potential losses to whom might occur. The particular risk issues within these Risk management occurs in box 4, where the cases were related to trade compliance, in the instance of assessment information is analysed and alternative change in structure of the supply network.

Overview of case studies be reactive, defensive, prospective or analytical. UK Hi-tech products supply networks. As data were Depending upon the risk position, scenarios of alter- collected, a picture of three distinct evolutionary stages native network structures and relationship strategies can emerged.

The stages were the in-house model, the be developed to realign risk, exposure to it, likely losses focused model and the virtual model as shown in and location of those losses. Case 2 investigates the Americas distribution of It is intended that this tool is used in collaboration computer hardware.

Until all manufacturing took with other key network actors. Individual focal firms place in the US. In-house model: supply network of Hi-tech products Source: Brenchley, Focused model: supply network of Hi-tech products Source: Brenchley, The focal firm will manage the Case 3 looked at consumable products, which network via information systems and needs to know provided an opportunity to be involved at the evalua- whether this involvement will expose it to trade tion stage of a supply network.

The focal firm is in the compliance risk. This case allowed investigation of process of purchasing 70 new manufacturing lines.

Case 4 studied the introduction of a new technology After each case study the tool was changed to reflect product. The plan is for the whole network to be the learning gained within the case. Virtual model: supply network of Hi-tech products Source: Brenchley, These models show three stages of 6.

Key supply networks have gone through changes of dis- elements needed to be identified and others ignored. Focusing only on the product supply network layer The number of points of compliance assessment clarified the focus and what should be included.

Overall increases in Figs. There is one point of trade the mapping stage was viewed as particularly successful, compliance risk assessment in Fig. The following three figures from the distribution centres overseas.

There are eight points in pilot study show three evolutionary stages of the focal Fig. In Fig. The number of points of compliance at years ago, with components sourced locally and sales which risk has been identified has increased and shifted, made direct to the customer. Very few external partners as the supply network becomes more complex and existed and very few international boundaries were dynamic through the three stages of supply chain risk crossed.

The Focused model Fig. Identification of risk and its current location and using partners where they could add more value. The list of types of risk was useful in providing a This use of make-or-buy decisions resulted in parts of greater understanding of what was being observed. Most of the data were shown in Fig. The once core activity of manufacturing has On reflection, more data, not less, was required to been outsourced to contract manufacturers.

The ratio- complete the next phase of risk assessment. An interesting observation was made about the 6. Risk assessment frequency of occurrence; a relatively low level of risk There was no guidance within the tool to help identify for one occurrence could become a serious risk if exposure to risk, so in each case the focal firm sought to realised thousands of times a day around a global identify total exposure, how much related to its own network.

Therefore, some scenarios of risk frequency situation compared to others in the network, and how would have been of value. It became apparent during interviews conducted within the case studies that different levels of 6. Form collaborative supply network risk strategy management had different visibilities of risk.

There did not seem to be a clear set of risk visibility will reduce. The focal firm stressed arose at this stage. The cases were assessing trade that it appeared critical to involve as many of the key compliance risk; whilst the likely loss through non- network players as possible to ensure that better supply compliance was relatively easy to assess, because fixed networks would be designed.

Implement supply network risk strategy compliance would occur was difficult to gauge. For The focal firm identified that their managers would example, the US export administration will share data need to develop new skills to be successful in inter- on fines and penalties imposed, but will not provide for organisation management of this type; they recom- obvious reasons information on the likelihood of being mended that their staff were educated on risk in supply penalised.

Therefore, managers had to use judgment and networks. In particular they became more aware of the creativity to assess probability. This is particularly consequences of outsourcing, the total inherent risk in difficult if an event has not occurred previously.

It also became evident trade compliance risk. Risk management later on in the life cycle. Some uncontrollable risks were recognised by the Considerable benefit was seen to be derived from focal firm, such as an earthquake in California. A distinction was made also 8. Managers need to identify, analyse and manage risks, as well as potential opportunities, from a more diverse range of sources and contexts 7.

Discussion Clemons, ; Ritchie and Brindley, The research found that as supply network complexity This research described the development and testing increases, risk increases. This is illustrated with the of a supply network risk tool. The aim of the tool was to increasing numbers of points of trade compliance risk increase visibility of risk that actors in a network are assessment in subsequent supply network evolutions in exposed to, or might potentially become exposed to, and Figs.

As outsourcing and globalisation increased, to help in the assessment and management of that risk. In some areas it helped to do that, particular in the The focal firm had difficulties in assessing and provision of categorisations of types of risk and loss. Also, the ameliorate many of the external risks e. Risk ragged; it did not appear to be collected routinely in the management is more concerned with positioning the network actors.

It is recommended that as many supply than trade compliance risk. For example, a challenge Zheng et al. Supply networks are undoubtedly becoming signifi- Risk measurement at the level of the network proved cantly more messy units of analysis to deal with.

The very difficult. Halinen et al. Whilst there has been substantial research to the network to conduct the research. Therefore, attention to date on risk and on supply networks, there whilst it may be useful for this risk tool to be applied has only been limited empirical research on risk in supply and refined in other network contexts, this will be networks.

This paper provided a brief review of risk, difficult research to conduct. It The iterative process adopted to develop and test summarised a tool that has been developed in an the risk tool has its limitations. By seeking feed- iterative, action research based way, and briefly reviewed back from participants intermittently during the devel- the feedback from those involved in using the tool.

London, Press UCL. However, Araujo, L. A relational resource perspective on deciding against an iterative process may have led to social capital. In: Leenders, R. Kluwer Academic Lincoln, Publishers, London, pp. Trust, power and control in trans-organizational Social Capital of Organisations. Organization Studies 22 2 , — London, 18, pp. Bettis, R. Risk considerations in modelling corporate Harland, C.

Developing the strategy. Academy of Management Proceedings, 22— International Journal of Operations Bowen, F.

The role of risk in and Production Management 19, — Proceedings of the Ninth Brenchley, R. Henders, B. Positions in industrial networks: marketing Christopher, M. Logistics and supply chain management. Unpublished Ph. Clemons, E. Gauging the power play in the new economy. Hunt, B. Issue of the moment: the rise and rise of risk Financial Times, June Financial Times, June Croom, S.

Supply chain manage- Jacoby, J. The components of perceived risk. In: ment: an analytical framework for critical literature review. Ventakesan Ed. Knight, L. Outsourcing: a national and sector Das, T. Trust, control and risk in strategic level perspective on policy and practice.

In: Erridge, A. Organisation Studies 22 2 , McIlroy, J. Sector Perspectives. Gower, London, pp. Elloitt-Shircore, T. Procurement positioning Kraljic, P. Purchasing must become supply management. Purchasing and Supply Management, December 23— Harvard Business Review 61 5 , — Eppen, G. Charting a course through the perils of Lofland, J. Analyzing Social Settings: a Guide to production. Financial Times, May Qualitative Observation and Analysis, 2nd Edition. Wadsworth, Erridge, A. European union public Belmont, CA.

Effectively managing vertical supply relationships: opportunities. European Business Review 5, — Supply Chain Manage- Fombrun, C. Global entanglements: the structure of ment: an International Journal 4 4 , — In: Pucik, V. Trust and Power. Wiley, Chichester. Total strategies for company-wide risk control. Competitive Organisation.

Wiley, New York. Financial Times, May 9. Ford, D. Qualitative Data Analysis: an Turnbull, P. Managing Business Relationships. Expanded Sourcebook, 2nd Edition. Oaks, CA. Gillett J. Corporate risk-returns relations: Pharmaceutical Industry.

Interpharm Press Inc. Academy of Management Gomes-Casseres, B. Group versus group: how alliance networks Journal 39 1 , 91— Harvard Business Review 72 4 , 62— Mitchell, V. Organisational risk perception and reduction: a Grandori, A. Inter-firm networks: antecedents, literature review.

British Journal of Management 6, — Organisation Studies 16 2 , — Norrman, A. Supply Chain risk management: Guba, E. Visit emeraldpublishing.

Answers to the most commonly asked questions here. To read the full version of this content please select one of the options below:. Other access options You may be able to access this content by logging in via your Emerald profile. Rent this content from DeepDyve. Rent from DeepDyve. If you think you should have access to this content, click to contact our support team. Contact us. Please note you do not have access to teaching notes.

Other access options You may be able to access teaching notes by logging in via your Emerald profile. Abstract Purpose — Sharing of risk benefits supplies network collaborations.

Findings — The study finds that dynamics of risk in network systems depend not only on the typology of networks, but also on the functional role of each collaborator inherent in the network through agreements on supply and incentives, and supply performance.