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Proactive Supply Management: The Management of Risk
Abstract
IN BRIEF
Proactive supply management is a frequently used phrase, yet no agreement exists about its precise meaning. This article argues that proactive purchasing management is risk management, a perspective that evolved from case studies of the purchasing function. To better understand risk management from the perspective of purchasing management, it is analyzed within the context of transaction cost theory and the resource dependency model. Evidence is provided from the case studies that risk management is an appropriate framework for understanding proactive purchasing management. Examples of risk management through proactive purchasing activities are presented.
... This interest has been cultivated by the continuing uncertainty for the world economy, business trends such as increased outsourcing/offshoring and advances in information technology, which have induced the development of complex global supply chains (Trkman and McCormack, 2010). While considering risk in the supply chain context, specifically in a procurement risk process, first risk should be understood regarding two theoretical perspectives: resource dependency theory and transaction cost theory (Smeltzer and Siferd, 1998). Second, in the procurement cycle, risk perception and risk allocation change in the different stages ofthe procurement process (Edquist et al., 2015). ...
... The Cronbach's alpha was 0.91 at first, so there was a probability of having multi-collinearity. The Cronbach's transaction cost Smeltzer and Siferd (1998) supplier dependence Hallikas et al. (2005) single sourcing/global sourcing Mandal (2012) unavailability of supply Shi et al. (2011) uncertain lead time Shi et al. (2011) fluctuation of input material price Shi et al. (2011) trust towards suppliers Mandal (2012) relationship quality with suppliers Mandal (2012) information sharing with suppliers Mandal (2012) supplier concentration Mandal (2012) resource dependency Smeltzer and Siferd (1998) prior evaluation of potential partners Olson and Wu (2011), Spekman and Davis (2004) transportation activities Yang et al. (2005), McKinnon (2006) agility and resilience to risk Li et al. (2017) downstream potential problems (demand-side) lack of communication Ketkar et al. (2012), Olson and Wu (2011), Spekman and Davis (2004) customer dependence Mandal (2012) trust towards customers Mandal (2012) relationship quality with customers Mandal (2012) quality requirements Lee et al. (2004) demand volatility Lee et al. (2004) agility and resilience to risk Li et al. (2017) internal organizational potential problems (procurement) internal procurement cycles Edquist et al. (2015) organizational cultural Ketkar et al. (2012) bargaining power Li and Cui (2013) agility and resilience to risk Li et al. (2017) external SC external SC potential problems (environmental factors) regulatory restrictiveness Conway et al. (2006), Dihel and Shepherd (2007) exchange rate risk Cruz (2013) social risk Cruz (2013) public policy-makers Edquist et al. (2015) political risk Zsidisin et al. (2004) volatile labor markets Zsidisin et al. (2004) General Agreement on Trade in Services Brown (2017) product product potential problems seasonality Johnson (2001) volatility of fads Johnson (2001) new product adoptions Johnson (2001) short product life cycles Johnson (2001) technological changes Ojala and Hallikas (2006), Nagurney et al. (2005) Aghajanian: Industrial Engineering & Management Systems Vol 17, No 4, December 2018 alpha yielded 0.896, by eliminating four variables (#13, #28, #31, and #12). Multi-collinearity was not felt to be an issue. ...
... The Cronbach's alpha was 0.91 at first, so there was a probability of having multi-collinearity. The Cronbach's transaction cost Smeltzer and Siferd (1998) supplier dependence Hallikas et al. (2005) single sourcing/global sourcing Mandal (2012) unavailability of supply Shi et al. (2011) uncertain lead time Shi et al. (2011) fluctuation of input material price Shi et al. (2011) trust towards suppliers Mandal (2012) relationship quality with suppliers Mandal (2012) information sharing with suppliers Mandal (2012) supplier concentration Mandal (2012) resource dependency Smeltzer and Siferd (1998) prior evaluation of potential partners Olson and Wu (2011), Spekman and Davis (2004) transportation activities Yang et al. (2005), McKinnon (2006) agility and resilience to risk Li et al. (2017) downstream potential problems (demand-side) lack of communication Ketkar et al. (2012), Olson and Wu (2011), Spekman and Davis (2004) customer dependence Mandal (2012) trust towards customers Mandal (2012) relationship quality with customers Mandal (2012) quality requirements Lee et al. (2004) demand volatility Lee et al. (2004) agility and resilience to risk Li et al. (2017) internal organizational potential problems (procurement) internal procurement cycles Edquist et al. (2015) organizational cultural Ketkar et al. (2012) bargaining power Li and Cui (2013) agility and resilience to risk Li et al. (2017) external SC external SC potential problems (environmental factors) regulatory restrictiveness Conway et al. (2006), Dihel and Shepherd (2007) exchange rate risk Cruz (2013) social risk Cruz (2013) public policy-makers Edquist et al. (2015) political risk Zsidisin et al. (2004) volatile labor markets Zsidisin et al. (2004) General Agreement on Trade in Services Brown (2017) product product potential problems seasonality Johnson (2001) volatility of fads Johnson (2001) new product adoptions Johnson (2001) short product life cycles Johnson (2001) technological changes Ojala and Hallikas (2006), Nagurney et al. (2005) Aghajanian: Industrial Engineering & Management Systems Vol 17, No 4, December 2018 alpha yielded 0.896, by eliminating four variables (#13, #28, #31, and #12). Multi-collinearity was not felt to be an issue. ...
The review of the related literature pointed to a significant gap in procurement risk management area, and this paper
tried to identify and fill this gap in order to develop a new risk model, and improve the literature review. A hybrid
procurement risk management model based on four main stages namely pre-identification, identification, assessment
and mitigation is proposed. For pre-identification stage, the literature was deeply reviewed to categorize it into supplyside,
buyer-supplier side and demand-side risks as well as to collect and categorize the identified risks in procurement
literature. Delphi method and a comprehensive literature review were employed for the identification stage. The explanatory
and confirmatory factor analyses were used to build and rank the risk factors and its multi-dimensional consequences
for the assessment stage. Delphi and ANP-fuzzy TOPSIS method were used to gather and prioritize the sets
of solutions for the mitigation strategy. An effective model for the procurement risks in supply chain was developed in
order to help gathering more comprehensive risks as well, to better understand and analyze the cause and consequences
of the procurement risks to drive better mitigation solutions. This paper has proposed a supply chain network
context as a holistic view for the procurement risk management. Therefore, a hybrid procurement risk management
model was proposed. By the comprehensive literature review a pre-identification step was proposed to improve risk
identification stage and a multi-dimensional risk assessment model, considering risk intricacies, circumstances of the
case and causes and consequences of the risks.
... These include the building of secondary sources and multi-sourcing, audits, the continuous improvement of supplier performance, currency hedging, collaboration, reducing the total number of suppliers and proactive risk mitigation strategies. Smeltzer and Siferd (1998) point out that the probability of firms' facing substantial risks increases when purchasing is not included in the strategic planning process. They also see that partnership as a part of proactive procurement is good risk management. ...
... Decisions regarding sources of risks and their outcomes are highly critical in nature, and thus, risk management should be considered a significant element of strategic supply management (e.g., Tsai, 2016). As Smeltzer and Siferd (1998) state, substantial risks are more likely to occur when purchasing is not included in the strategic planning process. Based on previous literature, it is assumed that the higher the level of the status of the firm's supply management, the more likely risk management and its role are highlighted in the firm. ...
... It can be stated that, if supply management has a significant status in a firm, and if its management emphasises the purchasing and supply function's strategic role, the possibilities and significance of risk management are also more likely to be recognised. The findings are in line with Smeltzer and Siferd (1998), who found that risks are more likely to occur when purchasing is not included in the strategic planning process. If the status of supply management is very low, and if it is not seen as a strategic function but as a function of operational buying and purchasing, the firm is more likely to be unable to recognise the risks related to supply, and therefore, risk management is lacking as well. ...
Purchasing and supply management can have a major impact on the success of project business. Project purchasing can cause huge problems for projects, but it can also be a major source of success. This study investigates the effect of total cost components, supply management capability and the status of supply management on risk management performance in the context of project business. A survey was conducted to collect data from companies engaged in project business in Finland. Based on the responses from 99 firms, it was found that the strategic status of supply management, supply capability, costs before and after purchasing and project duration have a significant effect on risk management. This gives a specific indication of where to focus risk management actions. Risk mitigation strategies, however, seem to be systemic in their nature in the sense that simultaneous strategies are probably needed to assure the effective flow of supply.
... These include the building of secondary sources and multi-sourcing, audits, the continuous improvement of supplier performance, currency hedging, collaboration, reducing the total number of suppliers and proactive risk mitigation strategies. Smeltzer and Siferd (1998) point out that the probability of firms' facing substantial risks increases when purchasing is not included in the strategic planning process. They also see that partnership as a part of proactive procurement is good risk management. ...
... Decisions regarding sources of risks and their outcomes are highly critical in nature, and thus, risk management should be considered a significant element of strategic supply management (e.g., Tsai, 2016). As Smeltzer and Siferd (1998) state, substantial risks are more likely to occur when purchasing is not included in the strategic planning process. Based on previous literature, it is assumed that the higher the level of the status of the firm's supply management, the more likely risk management and its role are highlighted in the firm. ...
... It can be stated that, if supply management has a significant status in a firm, and if its management emphasises the purchasing and supply function's strategic role, the possibilities and significance of risk management are also more likely to be recognised. The findings are in line with Smeltzer and Siferd (1998), who found that risks are more likely to occur when purchasing is not included in the strategic planning process. If the status of supply management is very low, and if it is not seen as a strategic function but as a function of operational buying and purchasing, the firm is more likely to be unable to recognise the risks related to supply, and therefore, risk management is lacking as well. ...
Purchasing and supply management can have a major impact on the success of project business. Project purchasing can cause huge problems for projects, but it can also be a major source of success. This study investigates the effect of total cost components, supply management capability and the status of supply management on risk management performance in the context of project business. A survey was conducted to collect data from companies engaged in project business in Finland. Based on the responses from 99 firms, it was found that the strategic status of supply management, supply capability, costs before and after purchasing and project duration have a significant effect on risk management. This gives a specific indication of where to focus risk management actions. Risk mitigation strategies, however, seem to be systemic in their nature in the sense that simultaneous strategies are probably needed to assure the effective flow of supply.
... implemented. An effort has to be made at various organizational levels to implement process improvement strategies to reduce the risk propensity, for example by forming strategic alliances (Smeltzer and Siferd, 1998;Giunipero and Eltantawy, 2004), by developing suppliers (Krause and Handfield, 1999), and by investing in setting up a supply risk management process. Despite the evolution of the supply risk management process, the management of the supply risk is still strongly related with risks arising from improper supplier selection (Smeltzer and Siferd, 1998;Giunipero and Eltantawy, 2004). ...
... An effort has to be made at various organizational levels to implement process improvement strategies to reduce the risk propensity, for example by forming strategic alliances (Smeltzer and Siferd, 1998;Giunipero and Eltantawy, 2004), by developing suppliers (Krause and Handfield, 1999), and by investing in setting up a supply risk management process. Despite the evolution of the supply risk management process, the management of the supply risk is still strongly related with risks arising from improper supplier selection (Smeltzer and Siferd, 1998;Giunipero and Eltantawy, 2004). Unless the supplier is properly selected, then strategic alliances, supplier development, and early supplier involvement become more difficult to be implemented, because of the different attitude of every supplier to collaborate and to be a successful target of a planned mitigation intervention. ...
... The recent outbreak of the COVID-19 and the resulting number of supply chain disruptions worldwide has illustrated the vulnerability of today's disaggregated and globalized value creation. Much of the literature to date on supply risk (Kraljic, 1983;Ellram, 1991;Smeltzer and Siferd, 1998;Zsidisin et al., 2000Zsidisin et al., , 2004Zsidisin, 2003;Zsidisin and Smith, 2005) and supply chain risk (Juettner et al., 2003;Christopher and Lee, 2004;Kleindorfer and Saad, 2005;Tang, 2006;Mentzer, 2008a, 2008b;Tang and Musa, 2011) has improved our understanding of the underlying phenomena. However, our practical knowledge of multi-tier supply chain risk and its managerial counterpart multitier supply chain risk management (MSCRM) is still in its infancy and needs substantive investigation (Juettner, 2005;Rao and Goldsby, 2009;Sodhi et al., 2012;Wang et al., 2016a, b). ...
... According to the content analysis, we found a few more perspectives useful for explaining the "dark" side of being dependent on vertical supply alliances. First, as an alliance strategy primarily manages a company's dependencies on direct resources in a dyadic business relationship, such as its immediate supplier, its interdependencies on the environment still exist (Pfeffer and Salancik, 1978;Smeltzer and Siferd, 1998), hence the potential multi-tier risks increase. Second, as a company's physical position in the supply chain affects demand volatility, asset intensity, profitability and technological change (Hayes and Wheelwright, 1984), and upstream suppliers suffer higher volatility and "noise" than downstream firms do (Harland, 1996b). ...
Purpose
Multi-tier supply chain risk management (MSCRM) is an evolving and dynamic field, as any defaults or glitches in supply chains can potentially harm the efficiency and competitiveness of the entire supply chain. This study aims to investigate barriers to MSCRM in the automotive and civil aircraft industries.
Design/methodology/approach
This study adopts an inductive case study research design. The case analysis includes two parts. First, the within-case analysis develops case profiles and identifies critical categories. Second, the cross-case analysis compares MSCRM patterns across the cases.
Findings
This study argues that narrow information sharing and communication covering only the immediate supply chain partners obstruct the efficiency of MSCRM. Similarly, high dependency on strategic alliances with suppliers hinders efficient MSCRM. Additionally, relying on information and communication technologies (ICT) increases companies' exposure to risks and poses another barrier to efficient MSCRM.
Research limitations/implications
Further research should be pursued to expand generalizability and test the validity of the findings using other forms of data collection and methodologies, such as large-scale surveys, experiments or secondary data across different sectors and typical supply networks.
Practical implications
This study provides empirical evidence on the obstacles faced by companies during the process of MSCRM. These findings can guide practitioners in developing initiatives to overcome these challenges.
Originality/value
This study is among the first to investigate the barriers to MSCRM in the automotive and civil aircraft industries using in-depth case studies across three tiers of the supply chain.
... Corporations have come to view procurement as a strategiclevel concern in developing competitive advantage-and organizational buying has become more sophisticated and professional (Dobler & Burt, 1996;Gadde & Håkansson, 1993;Smeltzer & Siferd, 1998). For business-to-business marketers, survival and success hinges on making effective judgments about how customers approach vendor selection decisions. ...
... The literature on procurement has focused substantial attention on the need for industrial organizations to view procurement from an integrative, whole-firm point of view (cf., Burt, 1984;Leenders & Blenkhorn, 1988;Smeltzer & Siferd, 1998). Proactive focusing is the extent to which the purchasing evaluation and selection of a source of supply focus on longrange needs of the firm. ...
For decades, there has been research on specific buying approaches and procedures used by organizational customers. Yet, there has been only limited effort to conceptualize the key higher order constructs that characterize organizational buying as a process. It is therefore useful to evaluate the simultaneous interrelationships among different aspects of the overall procurement process and how they vary with characteristics of the purchase situation. This research addresses these issues. We draw on structural equation modeling techniques and use a sample of 636 purchases to develop and test a parsimonious integrative model of interrelationships among key aspects of the procurement process. In general, our results support our model of the procurement process, including relationships among purchase importance, extensiveness of choice set, buyer power, reliance on procedural controls, a proactive focus on long-term strategic issues, search for information, and the use of formal analytical tools.
... Major research efforts have already been devoted to these changes, particularly in relation to crisis management (Asselt, Fels, Breuer, & Helsloot, 2017;Vlajic, Van der Vorst & Haijema, 2012) and supply chain risk management (SCRM) (Christopher et al�, 2002;Jiang & Yuan, 2019;Normann & Jansson, 2004;Smeltzer & Siferd, 1998). ...
... Above all, SIPD may improve the processes of both partners (Carr et al., 2008;Flynn et al., 2010;Najafi et al., 2013;Von Haartman & Bengtsson, 2015), such as procurement or manufacturing (Dowlatshahi, 1998;Jiao et al., 2008). Thus, according to the qualitative research, the supplier involvement in product development may be considered as a way to avoid or minimise various risks related to the supply chain (Smeltzer & Siferd, 1998;C. S. Tang et al., 2009;Zsidisin & Smith, 2005). ...
... Supplier reliability under uncertainty becomes an important issue because of late deliveries and quality problems (Smeltzer and Siferd, 1998). A supplier is perceived as reliable when deliveries are made according to contract and relevant information is provided timely and accurately (Selnes and Gønhaug, 2000). ...
Purpose
This paper focuses on multi-objective order allocation with product substitution for the vaccine supply chain under uncertainty.
Design/methodology/approach
The weighted-sum minimization approach is used to find a compromised solution between three objectives of minimizing inefficiently vaccinated people, postponed vaccinations, and purchasing costs. A mixed-integer formulation with substitution quantities is proposed, subject to capacity and demand constraints. The substitution ratios between vaccines are assumed to be exogenous. Besides, uncertainty in supplier reliability is formulated using optimistic, most likely, and pessimistic scenarios in the proposed optimization model.
Findings
Covid-19 vaccine supply chain process is studied for one government and three vaccine suppliers as an illustrative example. The results provide essential insights for the governments to have proper vaccine allocation and support governments to manage the Covid-19 pandemic.
Originality/value
This paper considers the minimization of postponement in vaccination plans and inefficient vaccination and purchasing costs for order allocation among different vaccine types. To the best of the authors’ knowledge, there is no study in the literature on order allocation of vaccine types with substitution. The analytical hierarchy process structure of the Covid-19 pandemic also contributes to the literature.
... This paper reviewed articles published from 1998 until the end of December 2020. The reason for this period selection is that, as far as we know, the paper by Smeltzer and Siferd (1998) is the first article published on the topic that serves as a starting point for the papers' analysis. We searched for peer-reviewed English-language articles in the following databases: Emerald, Science Direct, Taylor & Francis Online, and Wiley online library with previously determined keywords. ...
Purpose
The aim of this conceptual study is to analyze the effects of state-of-the-art research streams on supply chain risk management (SCRM) based on organizational theoretical background and direct future research toward the use of other related organizational theories. This paper seeks to provide a framework for understanding various organizational theories that can impact the understanding of SCRM.
Design/methodology/approach
A systematic literature review on articles published from 1998 to 2020 was conducted manually in the following databases: Emerald, Science Direct, Taylor & Francis Online, and Wiley online library. Among these articles, the paper by Smeltzer and Siferd (1998) is the first article published on the topic. Therefore, that serves as a starting point for the papers' analysis. A total of 109 articles have been selected and reviewed in detail.
Findings
The results of the study indicate that the articles which utilize theories in SCRM research have been mostly published in the last three years. The quantitative and case studies have been prevalently applied methods in the articles. In total, 34 theories are listed from the investigated articles. The four commonly studied theories among these are the information processing theory, transaction cost theory, contingency theory, and resource-based view.
Originality/value
This paper is the pioneer in the sense that the paper specifically and directly reviews the SCRM literature in terms of organizational theory usage. For future research, this study offers a diffusion of innovation (DOI) theory that explains the factors which can affect the adoption or diffusion of SCRM practices.
... 342 Vgl. hierzu insbesondere Smeltzer und Siferd (1998) sowie Carter und Vickrey (1989). 343 Welge und Holtbrügge (2003) S. 141 f verwenden in diesem Zusammenhang auch den Begriff länderübergreifende Verbundbeschaffung, die sie einer geographischen Konzentration der Beschaffung bzw. ...
Das vorliegende Buch behandelt allgemeingültige internationale Aspekte des Transport- und Logistikmanagements. Diese werden vor allem anhand von Beispielen und Statistiken aus Deutschland und Österreich verdeutlicht. Dem Studierenden wird mit Zusammenfassungen und Übungsfragen eine fundierte Einführung geboten, dem Praktiker, der es als Nachschlagewerk braucht, wird das Buch über ein umfangreiches Stichwortverzeichnis erschlossen. In acht Kapiteln und den wesentlichen Dokumenten im Anhang wird das Thema grundlegend dargestellt: o Einführung in das internationale Transport- und Logistikmanagement o Globalisierung als Treiber des internationalen Transport- und Logistikmanagements o Ökonomische Ansätze zur Erklärung internationaler Aktivitäten o Management der internationalen Rahmenbedingungen o Internationales Logistikmanagement o Grundlagen des Außenwirtschaftsmanagements o Grundlagen des internationalen Transportmanagements o Internationales Risiko- und Chancenmanagement
... Supply chain resilience emerged as a discipline in the 2000s following wideranging, dramatic events such as the 9/11 in the US, 3 the Indian Ocean tsunami in December 2004, and the Katrina in August 2005 (Purvis et al. 2016;Smeltzer and Siferd 1998). Indeed, several scholars consider the article by Christopher and Peck (2004) as the seminal work in this area. ...
We study a hybrid system where the demand of customers can be satisfied by both manufacturing new products and remanufacturing used products. To manage the serviceable inventory, we implement a proportional order-up-to (POUT) replenishment policy. In this context, we first analyse the system efficiency by assessing its capacity to meet customer demand in a cost-effective manner. To this end, we consider both inventory performance (i.e., the balance between inventory holding and stock-out costs) and production smoothness (by measuring the Bullwhip effect in the supply chain). Second, we investigate the system resilience to demand volatility. In particular, we explore the impact of demand shocks on the inventory and production of the closed-loop system. Interestingly, we find that tuning the POUT controller to optimise efficiency may be problematic in terms of resilience to demand shocks. In this sense, a key trade-off exists that needs to be carefully considered by supply chain managers. Linking efficiency to resilience in such supply chains thus becomes essential to strengthen the transition towards more circular economic models. All in all, our analysis, via control-theoretic and simulation techniques, provides professionals with valuable insights into how to identify the appropriate ‘formula’ for building both efficient and resilient closed-loop supply chains.
... Proactive supply management the management of risk Smeltzer and Siferd (1998).Risks with the Activities in purchasing (payment). ...
Logistics outsourcing or third–party logistics (3PL) has become one of an important strategic pillar for businesses seeking to gain competitive advantage and to improve performance efficiency. 3PL, in this research, refers to employment of external companies to perform some or all of a firm’s logistics. However, this comes with a great deal of risk elements as the firm are outsourcing a part of the business function to another business identity. The risk that could be involved can vary greatly in accordance to the complexity of the operation being outsourced. . Several studies could be found on the risks in outsourcing or in 3PL but only a few in the field of food industries, especially in Thailand. Thailand is known for its high volume of export in food-related products and the value of these products is accounted for approximately 30 billion US dollars. With this amount of export, a high profile of risk could be found but yet be analyzed in terms of logistics operations. In this research aim to identified risks in logistics outsourcing in Thai food industries. The researcher collects factors based on literature review to develop questionnaire and use Factor Analysis Method for group factors. The result are also identified group of risks have 7 groups are first, financial risks. Second, reliability risks. Third, uncontrollable risks. Fourth, political risks. Fifth, operational risks. Sixth, cost risks and transportation risks.
... Segundo [19], os riscos de fornecimento atraíram significativa atenção no campo de estudos sobre GRCS, com destaque para problemas de seleção de fornecedor. A seleção do fornecedor é uma questão crítica porque decisões ruins podem causar várias dificuldades relacionadas ao fornecimento, como atrasos nas entregas e altas taxas de defeitos [24]. Além disso, à medida que as cadeias de suprimentos se tornam globais, fatores externos, além dos internos, influenciam cada vez mais os riscos de fornecimento. ...
In the latest years, supply chain academics and practitioners have been increasingly concerned with the supplier selection problem. In this paper, a computational system based on 'Fuzzy AHP' was developed for supplier selection considering risks. Specifically, we aimed to assess the use of the Fuzzy AHP method in supplier selection and to analyze the support of the proposed system to supplier selection considering risks through a practical application in the Brazilian oil industry. For this, the main criteria, sub-criteria, and alternatives for supplier selection were identified and comparatively assessed by expert managers from the focal company. Through the Fuzzy AHP computational approach the priority weights of each item were calculated. After computing the final score for each supply alternative, supplier 1 was defined as the preferred supplier as it obtained the highest priority weight (0.848), followed by supplier 2 with the second highest priority weight (0.151). The results of the research raised important opportunities for improving supplier selection considering risks, such as decision rationalization, flexible modeling of decision variables, and automation of subjective judgments and evaluations by decision-makers. These benefits may contribute to lower purchasing costs and improve the overall assessment of supply risks, promoting supply chain competitiveness.
... According to [18], the supplier risks attracted significant attention in the studies on SCRM, with emphasis on supplier selection problems. Supplier selection is a critical issue because poor decisions can cause various supply-related difficulties, such as delays in deliveries and high defect rates [23]. In addition, as supply chains become global, external factors, in addition to internal factors, increasingly influence supplier risks [14]. ...
Supplier risks have attracted significant attention in the supply chain risk management literature. In this article, we propose a new computational system based on the 'Fuzzy Extended Analytic Hierarchy Process (FEAHP)' method for supplier selection while considering the relevant risks. We sought to evaluate the opportunities and limitations of using the FEAHP method in supplier selection and analyzed the support of the system developed through the real case of a Brazilian oil and natural gas company. The computational approach based on FEAHP automates supplier selection by determining a hierarchy of criteria, sub-criteria, and alternatives. First, the criteria and sub-criteria specific to the selection problem were identified by the experts taking the relevant literature as a starting point. Next, the experts performed a pair-wise comparison of the predefined requirements using a linguistic scale. This evaluation was then quantified by calculating the priority weights of criteria, sub-criteria, and alternatives. The best decision alternative is the one with the highest final score. Sensitivity analysis was performed to verify the results of the proposed model. The FEAHP computer approach automated the supplier selection process in a rational, flexible, and agile way, as perceived by the focal company. From this, we hypothesized that using this system can provide helpful insights in choosing the best suppliers in an environment of risk and uncertainty, thereby maximizing supply chain performance.
... H1. Supplier involvement in product development reduces a company's operational risk Smeltzer and Siferd (1998) advised early supplier involvement, reducing the supplier base, and developing long-term cooperation to deal with risks related to suppliers. Zsidisin and Smith (2005) proposed that ESI reduces the risk of suppliers' technical and organizational problems, suppliers' capacity constraints and even disasters at supplier facilities. ...
Nowadays, the aspects of managing risks and building resilience are crucial for maintaining the continuity of business processes. Therefore, it is highly valuable to recognize those aspects that support such activities. The main purpose of this article is to investigate whether supplier involvement in product development (SIPD) affects the degree of supply chain risk and thus, indirectly impacts supply chain resilience. The study is based on a survey conducted among 500 manufacturing companies, from which several hypotheses have been defined and tested. This allowed the verification of a theoretical model covering the following three research areas: supplier involvement in product development, supply chain risks and supply chain resilience. In particular, the study confirmed that implementation of partnership practices during SIPD positively influences supply risk reduction, while extensive communication during SIPD minimizes operational risk for a company, i.e. risk of human failures and inadequate or failed internal processes. Subsequently, the positive impact of reduced operational risk on SCRES has also been confirmed.
The article is available here:
https://journal.oscm-forum.org/publication/article/the-impact-of-supplier-involvement-in-product-development-on-supply-chain-risks-and-supply-chain-res
... In this perspective, Sheffi and Rice [10] argue that for an enterprise to become sufficiently resilient, strategic risk management initiatives become a priority in order for it to maintain and increase its competitiveness in the marketplace. This will require building optimal levels of redundancy in materials supply via industry-wide collaboration efforts enhanced by proximal positioning within an organization's supply network, elevating firm-level readiness and responsiveness in the wake of supply chain disruption by harnessing modern technology [11], [12], [13], and proactive purchasing planning [14]. A cursory investigation into academic supply chain risk management (SCRM) highlights a lack of tested empirical case studies within the literary domain as the few available have concentrated mainly on conceptual and descriptive analysis using risk models that are still at the early stages of development [15], [6]. ...
This paper discusses the risk mitigation strategies of some Nigerian companies that make and/or import and distribute their products in the North Eastern part of the country where the Boko Haram (BH) religious insurgency has been very active. The aim of the study is to understand how some of the affected companies adopted mitigating strategies to remain resilient in the region during the peak of the Boko Haram insurgency (between 2012 and 2015). A secondary aim of this study is to add to the body of knowledge on supply chain risk management practices in a developing economy. A qualitative research methodology involving case studies of four companies operating in the region was adopted. The findings indicate the sectional risk mitigating strategies adopted by the companies to contain the disruptions included a combination of the various options of risk avoidance, retention, reduction and transfer. Based on the findings obtained from the study, there is the need for companies to consider the conceptualization and implementation of supply chain risk management structure, policies and processes to guide against any form of risk in their operating areas.
... This field's theoretical development has its roots in purchasing and sourcing, and it has over time moved towards Supply Chain Management and a focus on whole supply chains (Kırılmaz and Erol 2017). At the same time, the field has moved from a predominantly operational focus to a focus on strategic issues (Spekman, Kamauff et al. 1994, Anderson and Katz 1998, Bozarth, Handfield et al. 1998, Lidegaard, Boer et al. 2015 and proactivity (Smeltzer and Siferd 1998). The procurement field has become increasingly market-driven (Oumlil and Williams 1989) -both marketing forward and in reverse Banting 1991, Biemans andBrand 1995). ...
... Selling environments are becoming tougher, as the frontline sales force often face stressful customer interactions with long B2B sales cycles, along with increasingly complex product and services offerings (Ingram et al., 2005). In the buyer organizations too, the decision-making units or buying centers during organizational buying are largely responsible for joint decision-making (Hunter et al., 2006;Smeltzer and Siferd, 1998;van Weele, 2010) involving significant investments and complex technologies (Anderson et al., 2009). These buying centers often act as a key source of influence on organizational buying behaviors. ...
Purpose
In the context of an emerging market, this paper empirically investigates the direct as well as the indirect impact of natural reward strategies (NRS) on the sales performance of B2B sales force. It also investigates the mediating impact of salesmanship skills on the NRS–sales performance linkage.
Design/methodology/approach
Structural equation modeling (using AMOS 18 software) is used to analyze the data collected, using a survey questionnaire from a sample of 317 B2B salespersons of a single media firm in India.
Findings
Results indicate that NRS are influenced primarily by a salesperson’s emotion regulation abilities, while salesmanship skills partially mediate in the NRS–performance relationship.
Research limitations/implications
The study results are based on convenience sampling, which may limit the theoretical generalization of the results across all emerging markets.
Originality/value
It is one of the earliest studies in the B2B sales literature that integrates multiple theoretical perspectives from job-demands-resources theory, self-regulation theory, motivation and skills theory and social cognitive theory. These theories have been synthesized; then they have been used to develop and test the impact of emotional regulation on NRS components of self-leadership among salespersons, and its subsequent direct impact on sales performance, as well as mediating impact via salesmanship skills.
... In SCM, supplier selection is a critical issue because poor decisions can cause various supply related difficulties such as late deliveries and high defect rates (Smeltzer and Siferd 1998). In addition, supplier selection is a critical factor in achieving long-term competitive advantage (González, Quesada, and Mora Monge 2004;Spekman 1988;Önüt, Kara, and Işik 2009). ...
According to a study conducted by PwC and the Business Continuity Institute in 2013, 75% of companies experience at least one major supply chain disruption a year and majority of the disruptions were caused by supply-related problems. With an increasing emphasis on upstream risk, risk management in supplier selection has become a critical issue faced by companies. Although previous studies proposed different methods and tools for effective and efficient supplier selection, only few approaches have attempted to incorporate risk mitigation strategies in supplier selection decisions. Our study aims to fill this gap by considering a wide range of quantitative and qualitative risk factors in supplier selection and evaluates the efficacy of alternative risk mitigation strategies in this context. Moreover, we suggest that both upstream and downstream strategies should be utilized simultaneously rather than relying on a single type of strategy. We further suggest that it is critical to align upstream and downstream risk mitigation strategies to reduce risk. We employ multi-objective optimization-based simulation in developing a decision model and consider data from an automotive parts manufacturer to demonstrate the application of our approach.
... The first situation is related to a specific product where the market has many buyers but a single or few suppliers are available and these suppliers control the market (Shou et al., 2013). This creates buyer dependencies which allow suppliers to exert power and increases buyer exposure to risk (Smeltzer & Siferd, 1998). The second situation is related to commodity products, ...
Supply chain management refers to managing a serial chain of businesses which typically consists of retailer, distributor, manufacturer and supplier. However, the businesses in each tier also interact with other channels in the supply chain. These interactions are called parallel interactions and they can directly affect the traditional, serial interactions of a single supply chain. Serial and parallel interactions in a supply chain increase levels of complexity and uncertainty. As a result, it is important to move analysis from dyadic to supply chain network perspective to understand the issues better. The main objective of this study is to investigate parallel interaction issues and how it affects supply chain performance. An empirical study has been conducted in the food industry in Indonesia with inter-related companies. A two stages semi-structured interviews, with top executives from sampled companies have been conducted. The result of analysis helps to clarify previous studies and provide a better understanding of parallel interaction as a genuine source of uncertainty at supply chain level. Three strategies were also identified to effectively manage the issues caused by parallel interaction.
... However, when an organization reduces its supplier base, it relies on fewer suppliers for critical materials, and this increased dependency increases the risk of a supply interruption (Cousins, 1999;Smeltzer & Siferd, 1998). Also, the amount of trust that is required to support a strong strategic relationship with a supplier is significant, and true long-term strategic alliances between buyers and suppliers are uncommon in practice (McCutcheon & Stuart, 2000). ...
The recent increase in demand for regionally produced food has resulted in a need for more efficient distribution methods. To connect regional food producers and consumers, intermediated regional food supply networks have developed. The intermediary, known as a regional food hub, serves as an aggregation point for products and information. It may also act as a filter to ensure that the requirements of both producers and consumers are consistently met. This paper describes an empirically based agent-based model of a regional food network in central Iowa that is intermediated by a food hub. The model was used to test a variety of sourcing policies that could be implemented by the food hub manager to improve operations. Results indicate that policies that protect producers from competition may have negative consequences for consumer satisfaction.
Supply chain risk and resilience have been conceived, in the main, in terms of identifying types and sources of risk, the likelihood and impact of them being realised into losses, and the supply chain’s ability to plan for, mitigate and respond in the event of a disruption to return to a prior ‘normal’ state. An economic, focal-firm perspective has dominated SCM research. Supply chain risks arise from malicious and unintended causes. Supply chain resilience can be robustness, agility or adaptive resilience occurring at micro, meso and macro levels. Supply network risk management process involves mapping the supply network, identifying risks and their location, assessing those risks, developing a risk position and scenarios, forming a collaborative supply network strategy and implementing that strategy. Dynamic, complex, contemporary, global challenges require new approaches to supply chain risk and resilience. Five themes are proposed for the future of supply chain risk and resilience research - risk and resilience with increasing supply complexity, collaborative approaches to risk and resilience, supply market risk and resilience, crisis preparation and new styles of leadership for risk and resilience.
The risk of supply chain disruptions and other forms of failures, such as sudden price shifts, has and continues to create challenges for firms managing their supply chains. Fortunately, we do not need to reinvent the wheel for managing risk and ensuring supply chain resilience. Many of the approaches and tools used in the strategic sourcing process can also be used to manage risk. This introductory chapter provides the basis and grounding for subsequently identifying various sources of risk, utilizing an array of analytic tools for assessing the significance of risk, and subsequently employing well-established approaches in the strategic sourcing process for managing risk and facilitating supply chain resilience.
The decision analysis techniques discussed in the prior chapter provide supply chain professionals insight into their risk exposure in the supply chain. This chapter takes the initial insights from analyzing risk exposure and applies them to determine viable and appropriate approaches for managing risk and ensuring supply chain resilience, starting from the strategic sourcing process.
Short-term and stochastic variations can create negative effects on the delivery capability, and companies often adopt their processes accordingly. What is then ignored is the fact that causes for variations are often self-induced and, therefore, possible to affect. Proposed actions in current literature focus mainly on continuous improvement without explicitly emphasizing that certain behaviours, rules and routines have a direct impact on variations affecting the company. In this study, a framework of causes for self-induced variations is established with proposed actions for each cause to reduce the variations. The framework is situated relative to practice for the actions applied at six manufacturing companies. This study sought to increase the understanding of self-induced variations and where companies can apply the proposed framework for an overview of 22 causes and 60 appropriate actions to support the systematic reduction of self-induced variations that can be internally or externally generated.
We study the influence of limited capacity and multiple products on the optimal sourcing decisions for a manufacturer subject to supply and demand uncertainty. The manufacturer produces two products. The component of one product is sourced from two suppliers, one perfectly reliable and the other cheaper but unreliable, failing to deliver the order with some probability. We develop a mathematical model for a single-period setting and study the associated optimality conditions. Our results show that the supplier diversification strategy is significantly different when the buyer has limited capacity. Specifically, we find that single sourcing from an expensive and reliable supplier may be an optimal procurement strategy even when a cheaper option exists. In addition, when producing multiple products, the optimal sourcing strategy may hold inventory of one component to reduce the amount of capacity idling when the supply of a different component is disrupted. We use stochastic programming to validate our single-period findings in a multi-period setting. Although carrying inventory of finished products provides another tactic to mitigate supply uncertainty in a multi-period environment, we observe the key findings from single period, like single-sourcing from an expensive but reliable supplier, remain valid.
The purpose of this study was to determine the supply chain risk management (SCRM) strategies that South African third-party logistics (3PL) service providers use to mitigate risks, the extent to which they adopt these strategies and the benefits derived thereof. An exploratory and descriptive method technique was adopted. The empirical study comprised of email surveys administered to 398 supply chain managers employed by South African 3PLs. The findings reveal that respondents place greater importance on risk identification than on the other SCRM strategies. Risk assessment attained the lowest rating, implying that 3PL providers placed the least importance on this risk assessment strategy. Risk response and risk monitoring, reporting and control are all adopted to a significantly lesser extent. The findings also revealed that 3PL providers derive significant benefits from all SCRM strategies. A limitation of this study is that not all 3PL providers affiliated with SAAFF participated. In addition, because only members of senior management were included in the study, the opinions of operational and tactical staff were not obtained. The study contributes to the current body of knowledge on SCRM by exploring how 3PL providers in a developing country, such as South Africa, assess supply chain risks, the strategies they have in place to respond to these risks, and the mechanisms in place to monitor and control SCM risks.
A virtual enterprise is a temporary relationship of participating members, which is formed for a specific objective or project and dissolved once the objective or project is fulfilled. The temporary nature of the relationship and the informal structure of the network can be the source of various challenges and risks. This chapter reviews the literature and investigates the risks associated with Virtual Enterprise Networks. It also argues that innovation is very important for managing/ mitigating risks and supports this argument by proposing a framework which defines a risk mitigation process under the perspective of supply chain innovation. This chapter also discusses ways to innovate within the virtual enterprise network and facilitating newfound innovation. The chapter ends with a brief discussion of future research areas and items of conclusion.
Purpose
The purpose of this research is to study and examine the influence of systematic supply risk management (SRM) on the buyer's firm performance, mainly focussing on the Indian electronics industry.
Design/methodology/approach
The study has framed a set of hypotheses on the risk management model. A thorough literature review and experts' opinion were considered in framing constructs and hypothesis for the model. We adopted self-administration questionnaires mainly focusing on the Indian electronics industry. The derived hypothesis is tested using partial least squares (PLS) method from 140 survey data pertaining to small, medium and large scale industries.
Findings
Study justify that constructs with high loadings for risk identification, risk assessment, risk reduction, and risk monitoring supports all hypothesized relation to better risk management. The model captures superior risk identification, risk control and risk monitoring for overall firm performance, but fails to justify with organization supply risk assessment process on overall firm performance.
Research limitations/implications
The study mainly focused on SRM process on firm performance. Study mainly focused on single survey responses and expert's perceptions on SRM practices in Indian electronics industry.
Practical implications
Research empirically justifies the effects of SRM process on organization performance. Furthermore, effective SRM practices assist decision makers framing corrective strategies to mitigate risk occurrences and their negative impact.
Originality/value
This empirical work provides a deep understanding of SRM process on the Indian electronics industry and their perception towards firm performance. Moreover, this is one of the few empirical studies addressing SRM practices in the Indian electronics industry.
The purpose of this study was to determine the supply chain risk management (SCRM) strategies that South African third-party logistics (3PL) service providers use to mitigate risks, the extent to which they adopt these strategies and the benefits derived thereof. An exploratory and descriptive method technique was adopted. The empirical study comprised of email surveys administered to 398 supply chain managers employed by South African 3PLs. The findings reveal that respondents place greater importance on risk identification than on the other SCRM strategies. Risk assessment attained the lowest rating, implying that 3PL providers placed the least importance on this risk assessment strategy. Risk response and risk monitoring, reporting and control are all adopted to a significantly lesser extent. The findings also revealed that 3PL providers derive significant benefits from all SCRM strategies. A limitation of this study is that not all 3PL providers affiliated with SAAFF participated. In addition, because only members of senior management were included in the study, the opinions of operational and tactical staff were not obtained. The study contributes to the current body of knowledge on SCRM by exploring how 3PL providers in a developing country, such as South Africa, assess supply chain risks, the strategies they have in place to respond to these risks, and the mechanisms in place to monitor and control SCM risks.
Purpose
The purpose of this study is to identify the prescribed formative elements of supply chain resilience (SCR) in literature, to compare them with the unique characteristics of high reliability organisations (HROs) and derive lessons useful for improving SCR.
Design/methodology/approach
Two systematic literature reviews are carried out as follows: one on SCR and the other on HRO, which identified 107 studies and 18 papers, respectively. The results from the review are presented, analysed and synthesised.
Findings
Findings suggest that despite significant similarities in some of the proposed formative elements for SCR and the characteristics of HROs, the strong managerial commitment exhibited in HROs is absent in SCR literature. More importantly, the most cited characteristic of HROs, which is their flexible decision making structure is pointed out as a prima lesson towards developing resilience in supply chains.
Practical implications
A decision making framework to facilitate flexible decision making for supply chains during crisis is presented. Further, practical lessons are pointed out from principles common to both streams of literature such as redundancy, human resource management, collaboration, agility, flexibility, culture and risk avoidance that can be implemented in supply chains.
Originality/value
This paper is the first study to systematically review HROs, adapt a HRO decision making framework and also apply the Cynefin framework to SCR. This, therefore, provides the basis to launch further research into the use of these theories and the role of decision-making in SCR creation.
In many organizations, the role of purchasing is in a transition from a reactive order taker, into a proactive and internally integrated business partner. Building on a Resource-Based View and Capability-Based View, this study explores how purchasing professionals' involvement and proactive efforts in sourcing processes affect sourcing project outcomes, in terms of both value creation and supply risk reduction. The authors gathered data on 112 sourcing projects from a large, private financial services company with in-depth and structured interviews with key stakeholders. A structural model deploying the research hypotheses was analyzed using the Partial Least Squares technique. The results reveal that, driven by early involvement of and responsibility granted to the purchasing professional, purchasing proactivity enhances value creation and supply risk reduction sourcing outcomes. Specifically, proactivity mediates the effect of purchasing's involvement on value creation.
This study empirically establishes the importance of purchasing proactivity, serving as critical capability of purchasing professionals. Following a dyadic logic, this impacts industrial marketers. More specifically, when purchasers build capabilities to show proactive behavior to enhance value creation and risk reduction, marketers need to develop capabilities to facilitate purchasers in their endeavors.
This thesis examined the management of supply chain risks in the maritime
transport industry in the Kingdom of Saudi Arabia. Supply Chain Risk
Management (SCRM) has quickly become of critical importance to the world
economy. Though the transport of oil from this region impacts the economies of
countries around the world, it has received too little attention from the academic
community. This thesis focused on expanding the field of SCRM by examining
how various risk assessment and management concepts and practices are
understood, interpreted and implemented throughout the region.
The majority of existing supply chain management and risk management models
have been developed and are currently rooted in the US and Europe. Therefore,
this thesis is of high significance because its major aim was to explore these
concepts and models, namely one focused on the Middle East. This approach
allowed the thesis to examine and test certain factors associated with SCRM, such
as risk categories, risk assessment and risk strategies, in maritime firms in Saudi
Arabia. The thesis thereby offers insights that were not otherwise available in
prior research. In achieving these aims, the researcher addressed three key
research questions.
The thesis was conducted by relying on the constructivist approach to data
collection. The specific qualitative methodology of the case study was employed
to collect a wide variety of useful and reliable data, including interviews, focus
groups, direct observation and historical records.
The research model included all risks present in the maritime industry in Saudi
Arabia. These risks were classified in a meaningful way to be addressed and
explained in this thesis. The findings of this study revealed the strategies that
could be used in order to deal with potential risks. It also exposed the reality of
the situation to professionals involved in risk management decisions in the
maritime industry who currently view their companies’ risks management
processes as efficient. Finally, the research model was found applicable to the
maritime firms. The conceptual model for SCRM in this thesis was a combination
iii
of four sections that helped the researcher to discover, identify, evaluate and
present techniques to reduce supply chain risk.
This thesis provides insights into the management of maritime firms risks in
supply chains. The thesis provides a new classification of risk in terms of the
maritime industry. It finds the tools that could help maritime firms to identify
risk. And it prvides the strategies that are suitable to confront risk in maritime
industry.
On the whole, there was no studies found that had researched supply chain risk
management in terms of maritime industry at Kingdom of Saudi Arabia.
Therefore, the research of supply chain risk management using this revealed
methodology is an approach to understand the risks that currently confront
maritime industry.
The objective of this article is to study how to avoid crude oil import supply disruption risk. For this purpose, we bring forward two algorithms to crude oil supply order allocation. By finding the solution with minimum percentage of disruption risk and step algorithms, we optimize 2005 china importing crude oil order allocation and gain better result.
The purpose of this paper is to develop a model to understand the relationship of supply chain risk sources, risk drivers, and risk mitigation strategies to the overall risk exposure of the firm and to validate the model empirically. An attempt has been made to determine the major contributors of supply chain risk as viewed by automotive professionals in today's competitive market. This study empirically validates the effects of the three critical constructs on overall supply chain risk exposure. The limitations of this study can be seen in the use of perceptual data from single informants and the focus on automotive firms in a single country. The detailed operationalization of the constructs sheds further light on the major risk sources, drivers, and mitigation strategies in supply chain networks. Clear evidence of proactive strategies in mitigating risks provides managers with a business case to invest in such initiatives.
The economies of countries face various risks depending on the environmental conditions. While some of these risks do not pose very serious negative effects on developed economies, they may be destructive on non-developed, underdeveloped or emerging economies. Risk management is accepted as a process for all economies. The risk management process starts with the determination of the risks, and goes on with the assessments of the risks, the determination of various strategies that may respond to the risks; and the application of the most suitable one from among these strategies. In risk management, in order to respond to the risk, emerging economies may select one of the methods like tolerating the risk (accepting it), managing it, transferring, eliminating or making use of its opportunities. In this chapter, the risk management strategies have been explained, examples are given from Turkey, which is has many characteristics of an emerging economic structure.
The purpose of this paper is to develop a model to understand the relationship of supply chain risk sources, risk drivers, and risk mitigation strategies to the overall risk exposure of the firm and to validate the model empirically. An attempt has been made to determine the major contributors of supply chain risk as viewed by automotive professionals in today’s competitive market. This study empirically validates the effects of the three critical constructs on overall supply chain risk exposure. The limitations of this study can be seen in the use of perceptual data from single informants and the focus on automotive firms in a single country. The detailed operationalization of the constructs sheds further light on the major risk sources, drivers, and mitigation strategies in supply chain networks. Clear evidence of proactive strategies in mitigating risks provides managers with a business case to invest in such initiatives.
All existent activities in supply chain are to supply market demand by providing products with maximum quality, minimum price and in due date to customers. Due to suppliers have
basic role on criteria: cost, quality, etc at access to the goals of supply chain, suppliers are a
critical component of an organization that can have effect on the performance of the organization. Because of these diverse effects, accurate and efficient techniques application seems to be necessary for suppliers evaluation and selection and order allocation to them. Thus, a wide range of techniques to examine suppliers selection problem has been proposed by several researchers. Therefore, in this paper first the suppliers selection problem and process are explained. Then, methods and some studies for the each stage of the suppliers selection process
are presented. Since suppliers selection problem often face with uncertainty and constraints for buyer and suppliers in real world, some done researches in multiple sourcing field under uncertainty environment are only studied in the last stage of the suppliers selection process. Finally, conclusion and suggestions for future research are provided.
The concept of risk management within the supply chain framework ought to involve indirect effects of disruptions. In other words, not only should it take into consideration the risk sources and their direct consequences, but also look into the indirect disruptions that may be transmitted and amplified in the supply chain structure. The transmission of disruptions means that the negative effects of risk are extended to a larger number of participants in a supply chain. If the negative risk effects are additionally magnified during the transmission, this suggests the occurrence of the amplification of disruptions. In other words, the subsequent links in a supply chain are exposed to a stronger impact of disruptions in the transmission. Thus, the supply chain management needs to apply a certain approach that enables to mitigate the negative consequences of the transmission and amplification of disruptions in supply chains. In this chapter, we review the extant literature on the essence, sources and factors of the transmission and amplification of disruptions in supply chains. In particular, we put emphasis on the issue of supply chain integration that may either drive or inhibit the transmission and amplification of disruptions. Having linked the obtained findings with the classical concepts of risk management, we develop and assess a framework of risk management that aims at mitigating the transmission and amplification of disruptions in supply chains.
The economies of countries face various risks depending on the environmental conditions. While some of these risks do not pose very serious negative effects on developed economies, they may be destructive on non-developed, underdeveloped or emerging economies. Risk management is accepted as a process for all economies. The risk management process starts with the determination of the risks, and goes on with the assessments of the risks, the determination of various strategies that may respond to the risks; and the application of the most suitable one from among these strategies. In risk management, in order to respond to the risk, emerging economies may select one of the methods like tolerating the risk (accepting it), managing it, transferring, eliminating or making use of its opportunities. In this chapter, the risk management strategies have been explained, examples are given from Turkey, which is has many characteristics of an emerging economic structure.
Eine Aufgabe innerhalb des Supply Chain Risikomanagements ist es, Risiken einzelner Elemente als auch Risiken der gesamten Supply Chain zu untersuchen. Allerdings wurde in diesem Zusammenhang eine funktionale Beschreibung der Risikostruktur in der Literatur bisher weitgehend vernachlässigt. Zur Unterstützung dieser These zeigen die Ausführungen innerhalb des Beitrages die Ergebnisse einer umfassenden Literaturrecherche zum Forschungsgebiet Supply Chain Risikomanagement auf. Dabei werden basierend auf dem aktuellen Forschungsstand zentrale Fragen für weiterführende Arbeiten identifiziert.*
In this study, we argue that contract design is a predominant strategy to set contractual expectations among supply chain partners to manage risk. We draw upon resource dependence theory and transaction cost economics to suggest that variation in risk management strategies is dependent upon both the complexity of the procured product or service, and the extent to which it is mission critical. In this preliminary study of public sector supply chains, we find evidence based on an analysis of 240,600 buyer-supplier contracts that when both mission criticality and service complexity are low, suppliers tend to bear most of the disruption risk by agreeing to fixed price contracts. When mission criticality is high, we find that the federal government is more likely to share risk with suppliers by utilizing time and materials contracts or incentive contracts. Evidence suggests that cost reimbursement and incentive contracts are preferred when service complexity is high. This article is protected by copyright. All rights reserved.
This paper presents a literature review of the issues surrounding supply chain risk management within the Malaysian food industry and identifies key risk management techniques used by the food industry. With reference to the recent cases of food contamination, food safety has gained increased focus once again and various government agencies around the globe have been involved in monitoring food safety practices in their respective countries. Although there are consultancy reports available with respect to managing food supply chain risks, there is limited academic literature with respect to research conducted on managing food supply chain risks. Hence, this paper tries to explore how supply chain risks are managed within the Malaysian food supply chains. Also, the paper presents the results from a pilot survey. The survey was conducted in an effort to explore further the understanding and perceptions that entities within the Malaysian food supply chains have regarding supply chain risks and the techniques deployed to mitigate and manage risks and disruptions. The results of the survey is related to specific food supply chain and not be generic of all food supply chains. This pilot study can provide some good insight for conducting a bigger survey with a larger sample size in the future.
The food industry plays a significant role in food supply. However, it is increasingly facing a significant number of risks to tackle. This article provides insight into sources and quantification of risk, which can restrict food operations and supply chain performance. Certainly, risks imposed by today's constantly changing global environment makes it imperative for food and agribusiness firms to develop purposeful proactive and predictive risk management for their global supply chains. We proposed the analytic hierarchy process (AHP) model to analyze sources of risks attached to the focal firm's global food operations and supply chain. The identified risks were from a review of relevant literature, expert opinions from the focal firm supply chain C-level executive, and consultants in the food industry. We grouped the identified risks into seven categories and discussed the risk mitigation strategies. We validated the proposed model using a case study involving a focal food and agribusiness firm with global presence.
Streszczenie: W artykule podjęto się zadania deskryptywnego uporządkowania wie-lu cech współczesnych łańcuchów dostaw, które znajdują odzwierciedlenie w wymie-nionych poniżej słowach kluczowych, a które weszły już do kanonów mianownictwa w zakresie łańcuchów dostaw. Rozważania nad proweniencją tych cech doprowadziły do ustalenia, że wszystkie one są wyrazem adaptacji łańcuchów dostaw do coraz bardziej wymagających warunków działania. Efekty tej adaptacji konstytuują trzy grupy cech, które wiążą się z elastycznością, wrażliwością i odpornością. Wyznaczają one jednocze-śnie trzy główne kierunki rozwoju współczesnych łańcuchów dostaw. Ich charakterysty-ka stanowi zasadniczy cel artykułu. Słowa kluczowe: adaptacyjne łańcuchy dostaw, elastyczne łańcuchy dostaw, szczupłe łańcuchy dostaw, zwinne łańcuchy dostaw, wrażliwe łańcuchy dostaw, proaktywne łań-cuchy dostaw, odporne łańcuchy dostaw. Klasyfikacja JEL: D02, L14. Abstract: This paper deals with a variety of modern supply chain features which are reflected in the given keywords and makes an attempt to arrange them in a descriptive manner. The features discussed have already entered the nomenclature in the field of supply chains. Reflection on the origin of these features led to the conclusion that they are all an expression of the adaptation of supply chains to ever more demanding operating conditions. The results of this adaptation constitute three features associated with flexibility, responsibility and resiliency. They also define three main directions of the development of supply chains. The main aim of this paper to illustrate these.
In the face of the growing rate of globalisation processes, stronger competition and increased flexibility of business lines, companies have ceased to focus exclusively on what is happening within their own organisation. They have abandoned an egocentric approach, which was based on purely market-related, transactional relationships with their environment. One may conclude that thinking in categories of a network of dependence and relationships has unquestionably become one of modern management’s key paradigms — justified in the context of the global economy. As K. Obtöj states (2002, p. 64), the time of the ‘lone gunslinger’ is drawing to an end, the future is not in aligning with single companies as much as with networks of companies that collectively influence the standards of market operations. Therefore, the supply chain should be understood as a network1 of entities delivering the product (or service) to the market, end-customer or consumer. A variety of entities are involved in delivering the product to the market; they, either individually or in cooperation, carry out diverse processes; many flows are recorded within the supply chain structure itself. A detailed description of the supply chain requires application of the following approaches (Witkowski 2010, p. 13):
subjective,
objective,
process-based.
For the entire firm to experience a consistent level of success in today's rapidly changing environment, purchasing operations and activities must be synchronized with the strategy of the firm and attuned with the variable external forces. No longer can purchasing serve the growing firm with “plain vanilla” service, utilize methods and procedures of a decade ago, and have one set of approaches for all possible tasks. As firms adapt to ever changing situations and move toward more proactive strategic modes of operation, purchasing must also progress through various stages of evolution. This article draws on extensive field interviews to present a road map outlining how purchasing can function as a productive contributor to the mission of the ever changing and increasingly sophisticated firm.
Transaction cost theorists have generally neglected to consider the implications that the invisible hand of the market mechanism can have for the risk of opportunism. In the long run, the invisible hand deletes actors whose behaviors are habitually opportunistic. Consequently, as markets move toward the state of competitive equilibrium, the risk of opportunism will be low, even for transactions supported by specific asset investments. Therefore, in many contexts the transaction cost rationale for internalization has been overstated.
Analysis of decision making under risk has been dominated by expected utility theory, which generally accounts for people's actions. Presents a critique of expected utility theory as a descriptive model of decision making under risk, and argues that common forms of utility theory are not adequate, and proposes an alternative theory of choice under risk called prospect theory. In expected utility theory, utilities of outcomes are weighted by their probabilities. Considers results of responses to various hypothetical decision situations under risk and shows results that violate the tenets of expected utility theory. People overweight outcomes considered certain, relative to outcomes that are merely probable, a situation called the "certainty effect." This effect contributes to risk aversion in choices involving sure gains, and to risk seeking in choices involving sure losses. In choices where gains are replaced by losses, the pattern is called the "reflection effect." People discard components shared by all prospects under consideration, a tendency called the "isolation effect." Also shows that in choice situations, preferences may be altered by different representations of probabilities. Develops an alternative theory of individual decision making under risk, called prospect theory, developed for simple prospects with monetary outcomes and stated probabilities, in which value is given to gains and losses (i.e., changes in wealth or welfare) rather than to final assets, and probabilities are replaced by decision weights. The theory has two phases. The editing phase organizes and reformulates the options to simplify later evaluation and choice. The edited prospects are evaluated and the highest value prospect chosen. Discusses and models this theory, and offers directions for extending prospect theory are offered. (TNM)
Burt Purchasing and Supply Management Sixth Ed
- D W Dobler
- Felding
Strategic Procurement and Competitive Advantage
- Rajagopoal S.
Influencing Factors of Strategic Purchasing and its Impact on Buyer-Supplier Relationships Ph
- A S Carr
Reconceptualizing the Determinants of Risk Behavior
- Stikin S.