Purchasing's involvement in risk management

I already reviewed one of the articles of Zsidisin (Perception of Supply Risk). Today I had a look at an article about how the purchasing organization is involved in the supply chain risk management activities.

Exploratory Study

Zsidisin et al. did an exploratory study with semi-structured interviews with purchasing professionals in nine companies from the manufacturing industry.

Semi-structured, open-ended interviews were employed to gain an understanding of how purchasing organizations conduct supply risk assessments and incorporate contingency plans.

Findings

The analysis show that the formalization of the risk management techniques used are quite different. The most commonly used method for risk mitigation is: multiple sourcing for strategic parts. But some of the respondents also had more elaborate approaches to reduce risk, like:

• Closer relationships with suppliers
• Taking suppliers responsible for risk mitigation
• Common product platforms and industry standards

Furthermore buffer strategies are used, as of course holding safety stock, controlling stock within the whole SC or multi-sourcing strategies.
Risk management are seen as important functions, but most also stated that the priority is set very low.

Conclusion

It is interesting to see that similar patterns, like the divergence between the expressed need for risk management activities and the current state of those, arise also in talks I had with SC professionals in the last year. So compared to ten years ago not so much seems to have changed in this regard.