Practitioner Views on Supply Chain Risk Management

Daniel Dumke — Mon, 18 Apr 2011 11:14:00 +0000

In 2005 Uta Jüttner was researcher at the Cranfield University, UK, especially renowned for several minds working on supply chain risk management, like Martin Christopher or Denis Towill.

Key in understanding this field of research is to make an inquiry into how supply chain risks are managed in business environments. Jüttner first laid grounds for this by some conceptual work, I introduced here a while ago

Methodology

Jüttner used an exploratory, quantitative survey. They selected 1700 members of the UK Chartered Institute for Logistics and Transport (CILT), with a response rate of 8% 137 managers replied to the survey request.

Furthermore six focus group discussions were held, with seven or eight members.

Those methods were used to answer the following questions:

How well are supply chain risks recognized across a network?

What is the current state of practice in SCRM?

What are the perceived critical issues of SCRM implementation?

Figure 1: Industry Position of the Participants (Jüttner 2005)

Participants

Figure 1 shows the industry of the participants, whereas figure 2 shows the position within the supply chain.

Figure 2: Position within the Supply Chain (Jüttner 2005)

Results

The participants in the focus groups emphasized the importance of the network effects of supply chain risk sources. This importance was also reflected in the survey, where there was a statistically significant correlation between the effects of specific risk sources (like the foot and mouth disease outbreak) and the effect on ones own organization, the suppliers and customers. So those risks are not only affecting one supply chain partner, but often the whole network.

The next analysis focusses on the current state of the practice in SCRM – tools an processes, depth of understanding and business continuity planning. Jüttner concludes:

The findings do not reveal whether this leaning towards less formalised processes and tools is caused by a lack of understanding and/or from a lack of time commitment and discipline emphasised in the following quote. […] The results also show that among the organisations surveyed, a joint approach to managing risks does not seem to be widespread.

The research also reveals some critical issues in supply chains, which can be found in figure 3.

Figure 3: Critical Issues in Supply Chain Risk Management (Jüttner 2005)

Conclusion

As in many other studies like this one by Zsidisin, Jüttner’s study shows that supply chain risk practices are mostly understood but not very often used. These issues are also reflected in the open research question, with which the article concludes:

What are the motivators or inhibitors for companies to share risk related information?

Which risks are accepted by companies as shared supply chain risks?

How can the risk performance trade-offs in supply chain strategies be analysed and minimised?

How can the implementation of SCRM processes be organised within and across companies?

Reference:

Jüttner, U. (2005). Supply chain risk management: Understanding the business requirements from a practitioner perspective The International Journal of Logistics Management, 16 (1), 120-141 DOI: 10.1108/09574090510617385

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Research Issues for Managing Supply Chain Disruptions

Daniel Dumke — Thu, 06 May 2010 06:37:00 +0000

What do professionals in the domain of supply chain management think about disruptions? How do they prepare for them, how do they act when a disruption occurs?

Blackhurst et al. (2005) answer these questions in their work about “An empirically derived agenda of critical research issues for managing supply-chain disruptions”.The authors are using three different empirical methods to achieve this goal empirically: Case study, surveys and focus groups.

Disruptions

As you would expect from a theoretical article they start with the question: What are disruptions anyway? They can show themselves in different forms: eg. transportation delays, natural disasters, part shortages, quality issues. The common theme is, that disruptions are costly and can trigger stock-outs, which leads to the inability to meet customer needs.

Other authors like Hendricks and Singhal (2003) show that supply chain disruptions can cause huge cost.

And disruptions are on the rise due to global sourcing, which increases the potential for disruptions and the movement towards increased responsiveness, higher levels of agility and lower inventories.

Results

The empirical study results in the following three steps to master supply chain disruptions.

Disruption discovery
Visibility and predictive analysis are most important to discover disruptions, the update of risk measures therefore has to be more dynamic (up to real-time) to be useable.
Disruption recovery
Recovery starts with damage control, it should be build on a model to understand hwo disruptions will affect the supply chain
Supply chain redesign
The goal for redesign is to include all relevant (hidden?) costs of a global supply chain and to aim for a flexible and robust supply chain optimization

Conclusion

The article builds a framework to think about disruptions within a supply chain. As the title already suggests this article only points at the issues researchers are/should be working at the moment. And there is still a lot of work to do.

Reference:

Blackhurst, J., Craighead, C., Elkins, D., & Handfield, R. (2005). An empirically derived agenda of critical research issues for managing supply-chain disruptions International Journal of Production Research, 43 (19), 4067-4081 DOI: 10.1080/00207540500151549

Hendricks, K., & Singhal, Vinod (2003). The effect of supply chain glitches on shareholder wealth Journal of Operations Management, 21 (5), 501-522 DOI: 10.1016/j.jom.2003.02.003

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