Supply Chain Risk Management

Supply Chain Risk Management

According to (Trkman & McCormack, 2009) emphasise that supply chain risk management is largely influenced by supplier elements “which are defined by the market” environment and the technology instability experienced by each supplier. Risk management is a crucial part of supply chain, however there are; business or organisation should use strategies and Technics that can improve supply chain and mitigate risks (Bandaly et al., 2014). Some of the strategy used by many companies such as integrated model, often decrease the expected overall opportunity cost, of the supply chain. This can include anything from “inventory carrying costs at all stages of the supply chain, stock out cost due to unsatisfied demand for the product”. Other cost related to hedging where are demands for a product, but inventory is uncertain, as well as unsecured future of the product. Some research on the field have proved that is more important managing risk at company level. according to (Miller 1992; Carter et at., 2001) research concluded that managing risk on a company level is more effective as oppose to managing risk on a functional level.

Controversially (Fabbe-Costes & Jhare, 2008) states that the fact of having an elevated supply chain integration (SCI) does not permanently improve performance. Nevertheless, SCI is proven to be very popular with manufacturing industry, collaborating with its supply chain partners and “collaboratively manages intra- and inter-organisational processes”.

Supply Chain Risks Categories

Globalisation has become a hot topic, for many multinational companies however the complexity around the supply chain is ever greater. Therefore, businesses resilience plays a vital role as supply chain turn out to be even more volatile, and exposed to a number of risk.

Different theories exist in literature regarding the characteristic and sources of risk, numerous studies entirely consider both supplier and supply risk (Craighead et al. 2007) as well as customer and demand risk (Schwarz & Weng 2000; Qi et al. 2004). Regardless of growing responsiveness between specialists. The notions of supply chain vulnerability and its managerial counterpart supply chain risk management are still in their early stages.