Supply chains risks can also be analyzed in a specific industry context and this is exactly what Agrell et al. (2004) did with telecom supply chains. They used a three tier SC (2nd tier supplier, EMS, OEM) to include the selection, coordination and motivation of independently operating suppliers in the model.
Stress tests are an acknowledged method to test systems under extreme conditions. The method is not only used in engineering (eg. Great picture of a Boing wing stress test (Guardian Eyewitness)), but also in business, most notably and in the banking industry. But can this method also be used to test supply chain designs?
We already know that supply chain disruptions can be quite costly, and have not only direct but also indirect effects (eg. on stock prices). So do all supply chain disruptions have the same effect on the focal company? Of course not, but what are the driving factors that influence the impact?
In their conceptual note Craighead et al. (2007) analyse the factors of the impact supply chain disruptions.
Supply Chain Risk Management started from the need to better control the risks within Supply and Demand Networks. The processes in (Corporate) Risk Management have been developed and convene in the classic, cyclic processes:
Everybody concerned with the task of developing risk mitigation strategies has a list in his mind of different factors influencing a company’s exposure to risk and if you think about it: those factors are probably related.
Example: The number of suppliers for one component can have a huge impact on risk, but the necessity of a high number of (redundant) suppliers may itself be affected by the trust you built with your main supplier. Both trust and having multiple suppliers affect supply chain risk by themselves, but they are also related.
At the moment I am looking for gaps in my reading up to now and I found that I have not read much about information risks. It also seems that those risks are not (yet?) in focus, neither in research nor business. So I was happy to find “Information risks management in supply chains: an assessment and mitigation framework” by Faisal, Banwet and Shankar.
Today I will write about the implications of the risk understanding by managers covered in Part 1 of this series. After observing the mentioned factors on how managers perceive risks the authors categorize their conclusions in three areas.
Today I finally read one of the most cited articles on subjective risk in general. In 1987 March and Shapira set out to shake up the existing theories on the perception and processing of risks by managers. Accordingly, they aggregated the information from various surveys on this topic.
Today I read a rather old article from 1995 about “Organizational Risk Perception and Reduction: A Literature Review” by Vincent-Wayne Mitchell, now at the Cass Business School in London. I present it here since I think most of the concepts and strategies are still valid.
How to shrink the “Uncertainty Circle” is the topic of a paper I read today. It has been written by Rachel Mason-Jones and Denis R. Towill and can be downloaded here free of charge.
