A hybrid approach for quantifying supply chain risk and prioritizing the risk drivers

2018 ◽  
Vol 29 (3) ◽  
pp. 533-569 ◽  
Author(s):  
Pradeep Kumar Tarei ◽  
Jitesh J. Thakkar ◽  
Barnali Nag
Keyword(s):  
Supply Chain ◽  
Risk Mitigation ◽  
Risk Index ◽  
Hybrid Approach ◽  
Significant Risk ◽  
Petroleum Products ◽  
System Quality ◽  
Content Type ◽  
Risk Quantification ◽  
The Impact

Purpose The purpose of this paper is to identify various risk and sub-risk drivers that affect the supply chain (SC) performance and to propose a framework to quantify the overall SC risk index by considering the importance of each risk and sub-risk drivers and their mutual interactions. Design/methodology/approach A hybrid method based on decision-making trial and evaluation laboratory and analytical network process has been proposed to develop the risk quantification framework. A case study of Indian petroleum supply chain (PSC) has been illustrated to explain the proposed method. Findings The results of this study found that transportation/logistics (delivery system), quality of the petroleum products, crude supply, customer’s order and legal/political regulations are the most significant risk drivers of a typical PSC. It is also found that the Indian PSC possesses a risk score of 34 percent. Research limitations/implications The quantification of risk in operational measure provides an unblemished representation of the overall SC risk. Unlike the existing financial measure, it takes complex subjective operational effectiveness like product quality, customer satisfaction, etc., into consideration. Identifying the high-prioritized risks helps the decision and policy makers to merely focus on the most prominent risk drivers, and reduce the impact of overall SC risk. Planning a risk mitigation strategy at a given level of risk is however beyond the scope of this research. Originality/value The paper develops a risk quantification framework in the context of a PSC.

A quantitative risk assessment methodology and evaluation of food supply chain

2017 ◽  
Vol 28 (4) ◽  
pp. 1272-1293 ◽  
Author(s):  
Rishabh Rathore ◽  
Jitesh J. Thakkar ◽  
Jitendra Kumar Jha
Keyword(s):  
Risk Assessment ◽  
Supply Chain ◽  
Food Supply ◽  
Social Issues ◽  
Risk Index ◽  
Mitigation Strategies ◽  
Quantitative Risk Assessment ◽  
Food Supply Chain ◽  
Content Type ◽  
Risk Quantification

Purpose The food supply chain is exposed to severe environmental and social issues with serious economic consequences. The identification and assessment of risk involved in the food supply chain can help to overcome these challenges. In response, the purpose of this paper is to develop a risk assessment framework for a typical food supply chain. Design/methodology/approach An integrated methodology of grey analytical hierarchy process and grey technique for order preference by similarity to the ideal solution is proposed for developing a comprehensive risk index. The opinion of the experts is used to illustrate an application of the proposed methodology for the risk assessment of the food supply chain in India. Findings Valuable insights and recommendations are drawn from the results, which are helpful to the practitioners working at strategic and tactical levels in the food supply chain for minimising the supply chain disruptions. Research limitations/implications The risk quantification for the case organisation is primarily based on inputs collected from the experts working for Indian food supply chain, and so the generalisation of the results is limited to the context of developing countries. However, the generalisability of the proposed risk quantification methodology and key insights developed in the food supply chain will assist practitioners in policy making. Practical implications The risk priorities established by this research would enable an implementation of systematic risk mitigation strategies and deployment of necessary resources for leveraging the efficiency of food supply chain. Originality/value Specifically, this research has delivered a risk quantification framework and strengthened the inquiry of risk management for the food supply chain.

Risk propagation and its impact on performance in food processing supply chain

2016 ◽  
Vol 11 (2) ◽  
pp. 660-693 ◽  
Author(s):  
Atanu Chaudhuri ◽  
Samir K. Srivastava ◽  
Rajiv K. Srivastava ◽  
Zeenat Parveen
Keyword(s):  
Supply Chain ◽  
Performance Measures ◽  
Food Processing ◽  
Service Providers ◽  
Risk Mitigation ◽  
Interpretive Structural Modeling ◽  
Content Type ◽  
Business Cases ◽  
And Performance ◽  
The Impact

Purpose The purpose of this paper is to identify various risk drivers which affect a food processing supply chain and to create a map of how those risk drivers propagate risks through the supply chain and impact important performance measures. Design/methodology/approach This study involves experts from food processing companies to elucidate the contextual relationships among the risk drivers and between risk drivers and performance measures. This is used to quantify the relationships and to determine the indirect and overall relationships applying Fuzzy Interpretive Structural Modeling. Findings Three categories of risk drivers which Indian food processing companies need to pay maximum attention to minimize risks are identified. These are supplier dependency and contracting, supplier variability, visibility and traceability and manufacturing disruptions. Analysis shows that collaborating with suppliers and logistics service providers, developing mutually beneficial contracts with them while ensuring that adequate technology investments are made can significantly mitigate risks and consequently improve margins and lead to revenue growth. Research limitations/implications This study has been carried out with experts from large food processing companies in India, and hence, the results cannot be generalized across other types of food processing companies. Practical implications The proposed methodology can help understand the interrelationships between supply chain risks and between those risks and performance measures. Thus, it can help a food processing company to create business cases for specific supply chain risk mitigation projects. Originality/value This study is one of the earliest to create a comprehensive risk propagation map for food processing companies which helps in quantifying the impact the risk drivers have on each other and on performance measures.

scholarly journals An enactment theory model of supplier financial disruption risk mitigation

2017 ◽  
Vol 22 (5) ◽  
pp. 442-457 ◽  
Author(s):  
Marcos Paulo Valadares de Oliveira ◽  
Robert Handfield
Keyword(s):  
Supply Chain ◽  
Information Exchange ◽  
Risk Mitigation ◽  
Financial Ratios ◽  
Financial Health ◽  
Supply Chain Disruptions ◽  
Content Type ◽  
Supply Disruptions ◽  
Disruption Risk ◽  
The Impact

Purpose The purpose of this study is to examine supplier financial risk through the lens of Enactment Theory, to explore the role of transparency and communication on buyers’ perceptions of supplier default risk. The authors develop a theoretical model proposing that buyer communication with suppliers leads to preemptive actions that may prevent supplier financial default and fewer supply disruptions. The results suggest that reducing equivocality in buyers through communication with suppliers leads to understanding of financial factors not captured through third-party financial indicators, leading to proactive risk mitigation activities that prevent disruptions during recessionary economic cycles. This research proposes that transparency and communication reduces equivocality in buyers, spurring them to take contractual actions that reduces, financial default in key suppliers, which leads to fewer supply disruptions. Design/methodology/approach Survey data collected from 175 firms in the North America and Brazil during a period of the global recession is used to test the impact of communication with suppliers on supply chain disruptions in periods of economic crisis. This relationship is mediated by proactive contract renegotiation and supplier financial health, supporting a model grounded in Enactment Theory. Findings Results show that buyers who regularly assess and develop an understanding of their key suppliers’ financial conditions are more likely to re-negotiate contracts that revise payment terms, leading to improved supplier working capital and fewer supply chain disruptions. Research limitations/implications Validation of industry-specific financial ratios and figures could provide a richer set of insights and some quantitative measures for establishing baseline on what levels of financial ratios actually result in disruptions. However, future research should consider using a cross-sectional sample and, in addition, a qualitative approach to capture risk from a greater variety of industries and supply chain dynamics. Originality/value The notion of effective communication flows as a means for reduction of supplier disruption risk is aligned with Enactment Theory views that emphasize the benefits of risk reduction. Equivocality is reduced in buyers through information exchange and formal assessments in complex environments. This research suggests that while such communication does not have a direct effect on supply disruption risk, it is mediated through proactive buyer actions to improve supplier financial health and contract re-negotiation mechanisms that may preempt financial distress. These are important lessons learned that provide guidelines for supply chain executives in future economic recessions that may occur in the coming years.

Supply chain risk mitigation strategies during COVID-19: exploratory cases of “make-to-order” handloom saree apparel industries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vishwas Dohale ◽  
Priya Ambilkar ◽  
Angappa Gunasekaran ◽  
Priyanka Verma
Keyword(s):  
Supply Chain ◽  
Risk Mitigation ◽  
Apparel Industry ◽  
Mitigation Strategies ◽  
Supply Chain Risk ◽  
Content Type ◽  
Make To Order ◽  
Risk Mitigation Strategies ◽  
Multiple Case ◽  
The Impact

PurposeThis study attempts to identify the supply chain risks (SCRs) induced during the COVID-19 disruption in an Indian handloom saree industry and determine suitable risk mitigation strategies (RMSs) to overcome the impact of the epidemic disruption.Design/methodology/approachThis work determined 11 SCRs through an extensive literature review in the context of the handloom apparel industry and validated through the experts. Further, a multiple case-based approach is used in this research. Within case and cross-case analyses of four relevant Indian handloom “make-to-order” saree manufacturing firms are conducted to determine the severity of the SCRs considering the pandemic situations to identify appropriate strategies to mitigate the shock of SCRs.FindingsThis study identified the critical SCRs in the context of the Indian handloom “make-to-order” saree industries that emerged during the COVID-19 and proposed a risk mitigation strategy matrix (RMSM) to address the SCRs based on their criticality and predictability dimensions.Research limitations/implicationsThe study provides a novel contribution to the body of knowledge on supply chain risk management (SCRM) in the form of the RMSM tool. Supply chain managers from the different sectors can extend the proposed RMSM to overcome the SCRs. Multiple case analyses facilitate supply chain professionals working in handloom apparel industries to benchmark and adopt the proposed RMSs in their firm.Originality/valueThis research is one of its kind that carried exploratory investigation of the handloom apparel industry cases to assess and determine the strategies for mitigating the SCRs caused during a pandemic outbreak.

Examining the role of stakeholder pressure and knowledge management on supply chain risk and demand responsiveness

2014 ◽  
Vol 25 (1) ◽  
pp. 202-223 ◽  
Author(s):  
David E. Cantor ◽  
Jennifer Blackhurst ◽  
Mengyang Pan ◽  
Mike Crum
Keyword(s):  
Risk Management ◽  
Knowledge Management ◽  
Supply Chain ◽  
Structural Equation ◽  
Risk Mitigation ◽  
Equation Modeling ◽  
Supply Chain Risk Management ◽  
Supply Chain Risk ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this paper is to contribute to the supply chain risk management literature by examining how stakeholders place pressure on the firm to engage in risk management activities. Design/methodology/approach – This paper utilizes a survey approach to test the nomological model. The analysis was carried out using structural equation modeling techniques. Findings – The results demonstrate that stakeholders place pressure on the firm to mitigate risk and that knowledge management (KM) and joint planning activities with suppliers serve as mediating roles in the model. The process-oriented model reveals that these factors influence the firm's ability to be responsive to customer demand. Originality/value – The research represents one of the first papers to empirically test how stakeholder theory and KM contributes to risk mitigation activities. Additionally, the paper shows the impact of KM factors on risk mitigation activities. The paper attempts to explain from both a theoretical and empirical perspective how and why firms are engaging in risk mitigation activities and how the impacts demand responsiveness.

scholarly journals Measuring the financial effects of mitigating commodity price volatility in supply chains

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Barbara Gaudenzi ◽  
George A. Zsidisin ◽  
Roberta Pellegrino
Keyword(s):  
Supply Chain ◽  
Risk Mitigation ◽  
Price Volatility ◽  
Commodity Price ◽  
Price Risk ◽  
Costs And Benefits ◽  
Content Type ◽  
Advantages And Disadvantages ◽  
Commodity Price Volatility ◽  
The Impact

Purpose Firms can choose from an array of approaches for reducing the detrimental financial effects caused by unfavorable fluctuations in commodity prices. The purpose of this paper is to provide guidance for effectively estimating the financial effects of mitigating commodity price risk volatility (CPV) in supply chain management decisions. Design/methodology/approach This paper adopts two prominent and complementary methodologies, namely, total cost of ownership (TCO and real options valuation (ROV), to illustrate how commodity price risk mitigation strategies can be analyzed with respect to their effect on costs and performance. The paper provides insights through a case study to demonstrate the application of these methods together and establish the benefits and challenges associated with their implementation. Findings The paper illustrates advantages and disadvantages of TCO and ROV and how these approaches can be adopted together to contribute to effective purchasing decisions. Supply chain flexibility is a key capability but requires investments. Holistically measuring the financial effects of flexibility investments is imperative for gaining executive management support in mitigating commodity price volatility. Research limitations/implications This study can provide supply chain professionals with useful guidance for measuring the costs and benefits related to developing strategies for mitigating commodity price volatility. TCO provides a focus on the costs associated with the commodity purchasing process, and ROV enables the aggregation of all the costs and benefits associated with the use of the strategy and synthesizes them into the net value estimate. Originality/value The paper provides a comparison of different but complementary approaches, specifically TCO and ROV, for analyzing the effectiveness of CPV risk mitigation decisions. In addition, these two methods allow supply chain professionals to evaluate and control the financial effects of CPV risk, particularly the impact of mitigation on firm’s cash flows.

The push effect of risks on supply chain performance: service-oriented firms

2019 ◽  
Vol 25 (7) ◽  
pp. 1734-1758
Author(s):  
Huy Truong Quang ◽  
Yoshinori Hara
Keyword(s):  
Supply Chain ◽  
Risk Mitigation ◽  
Mitigation Strategies ◽  
Content Type ◽  
Demand Chain ◽  
Road Map ◽  
Competitive Model ◽  
Service Oriented ◽  
Risk Mitigation Strategies ◽  
The Impact

Purpose The purpose of this paper is to examine the push effect of risk on supply chain (SC) performance, a new concept in the SC risk body of literature, at service-oriented firms. Design/methodology/approach Two models were compared: first, contains relationships between risks that show the mechanism of the push effect, i.e. the theoretical model. The other, only exists in direct effects of risks on SC performance, i.e. the competitive model. Findings Test results proved that the mechanism of the push effect can increase the degree of impact of each and all risks on outputs. By the push effect, risks can explain up to 65 percent variance of SC performance compared with 52 percent of the model without push effect. Moreover, the research found two kinds of the push effect: positive – increasing the impact of “pushed” factors on outputs and vice versa for negative. Research limitations/implications The mechanism of the push influence will be broken if mutual interaction among risks was minimized. Practitioners and managers can apply the resultant model as a “road map” in their context to achieve this purpose. Originality/value Vargo and Lusch (2008) argued that service-oriented firms will be a new trend since the modern-day industry tends to more focus on customer demand. SC management gradually shifted toward demand chain management that organizations will not make and sell units of output but producing customized services to customers (Walters, 2008). This transformation has led to the emergence of new risks, the impact of risk on the SC also varies and the mismatch of the current risk mitigation strategies (Lusch et al., 2007). Dealing with these changes is the purpose of this research.

An empirical examination of firm financial performance along dimensions of supply chain resilience

2017 ◽  
Vol 40 (3) ◽  
pp. 254-269 ◽  
Author(s):  
Xun Li ◽  
Qun Wu ◽  
Clyde W. Holsapple ◽  
Thomas Goldsby
Keyword(s):  
Supply Chain ◽  
Financial Performance ◽  
Three Dimensions ◽  
Empirical Examination ◽  
Content Type ◽  
Supply Chain Resilience ◽  
Critical Dimensions ◽  
Firm Financial Performance ◽  
Supply Chain Agility ◽  
The Impact

Purpose This paper aims to investigate the impact of three critical dimensions of supply chain resilience, supply chain preparedness, supply chain alertness and supply chain agility, all aimed at increasing a firm’s financial outcomes. In a turbulent environment, firms require resilience in their supply chains to prepare for potential changes, detect changes and respond to actual changes, thus providing superior value. Design/methodology/approach Using survey data from 77 firms, this study develops scales for preparedness, alertness and agility. It then tests their hypothesized relationships with a firm’s financial performance. Findings The results reveal that the three dimensions of supply chain resilience (i.e. preparedness, alertness and agility) significantly impact a firm’s financial performance. It is also found that supply chain preparedness, as a proactive resilience capability, has a greater influence on a firm’s financial performance than the reactive capabilities including alertness and agility, suggesting that firms should pay more attention to proactive approaches for building supply chain resilience. Originality/value First, this study develops a comparatively comprehensive definition for supply chain resilience and explores its dimensionality. Second, this study provides empirically validated instruments for the dimensions of supply chain resilience. Third, this study is one of the first to provide empirical evidence for direct impact of supply chain resilience dimensions on a firm’s financial performance.

Clients’ means of influence on mortgage valuation in Nigeria

2015 ◽  
Vol 33 (4) ◽  
pp. 367-385 ◽  
Author(s):  
Chukwuma C. Nwuba ◽  
Uche S. Egwuatu ◽  
Babatunde M. Salawu
Keyword(s):  
Risk Mitigation ◽  
Hierarchical Linear Model ◽  
Firm Characteristics ◽  
Cross Sectional Survey ◽  
Cross Sectional ◽  
Content Type ◽  
Mortgage Valuation ◽  
Research Designs ◽  
Client Pressure ◽  
The Impact

Purpose – The purpose of this paper is to investigate client influence on mortgage valuation in Nigeria to establish and rank the means of influence clients employ, and the impact of firm characteristics on client influence. Design/methodology/approach – A combination of cross-sectional survey and focus groups research designs was adopted. Questionnaire structured on five-point Likert format was used to collect data from a sample of valuation firms in five Nigerian cities. Descriptive statistics, χ2, and moderated hierarchical linear model were used for data analysis. Findings – Clients’ means of influence on valuation are more of subtle approach than threat or coercion. The most prevalent means are respectively, plea for assistance, promise of continued retainership on banks’ valuer panels, and disclosing the loan amount. Client influence differs across cities; firm characteristics have no influence on client pressure. Practical implications – The research provides basis for valuation bodies to review practice rules and standards and seek for legislation for valuer independence. It can serve as material for teaching and training in professional ethics. Social implications – Biased valuations jeopardises credit risk mitigation process with potential for destabilising banks, finance sector, and consequences for the economy. Originality/value – The study provides empirical evidence of the nature of client influence across several major Nigerian cities. In contrast to existing Nigerian studies that focus on single cities, the study covers several cities. It therefore provides a broad basis for problem-solving and decision-making.

Market orientation, innovation commercialization capability and firm performance relationships: the moderating role of supply chain influence

2017 ◽  
Vol 32 (7) ◽  
pp. 913-924 ◽  
Author(s):  
Jeen-Su Lim ◽  
William K. Darley ◽  
David Marion
Keyword(s):  
Supply Chain ◽  
Firm Performance ◽  
Market Orientation ◽  
Innovation Management ◽  
Strategy Formulation ◽  
Content Type ◽  
Positive Effects ◽  
The Impact ◽  
Moderating Role

Purpose The study aims to explore supply chain influence (SCI) on the linkages among market orientation, innovation capabilities and firm performance (FP), using the resource-based view as a theoretical backdrop. Design Survey data from 182 top managers who are involved in strategy formulation and innovative direction of their companies was collected and analyzed using moderated multiple regression analysis. Findings Results revealed a moderating role of the SCI in that the proactive market orientation (PMO) and FP relationship is stronger when SCI is high, and innovation commercialization capability (ICC) and FP relationship is stronger when SCI is low. Practical implications Firms pursuing high PMO strategy must collaborate with supply chain function to achieve the full effect of PMO. Additionally, as supply chain is critical to meeting customers’ needs, these firms should allow supply chain to exert greater influence to enjoy the positive effects of PMO in addition to ensuring full integration into marketing strategy implementation. Also, firms with high ICC need to limit SCI to maximize the benefit of ICC on FP, just as innovation management needs to be cognizant of other functional areas. Originality/value The study investigates the potential moderating role of SCI on the relationships among market orientation, ICC and FP. The study fills a gap in the understanding of the nature and role of supply chain in the marketing–supply chain interaction, and the impact on FP.

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