Supply Chain Risk 2009

Supply Chain Risk The dark side of supply chain mangement Guest lecture, LOG 711, 18.11.2009 Jan Husdal

Jan Husdal ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Outline ,[object Object],[object Object],[object Object],Source: www.cargolaw.com The lecture is meant to highlight some of the current literature on supply chain risk and to suggest further reading materials. You will not know everything there is to know about supply chain risk after the lecture, but you will know where to find it.

Supply chain risk? Loss of goods Insurance? Loss of vehicle Replacement? Delayed delivery Brand reputation? Injured personell Hiring and training? Weather conditions Detour?

Supply Chain Trends > Consequences ,[object Object],[object Object],[object Object],[object Object],[object Object],Christopher, M. (2005) Managing risk in the supply chain . In: Christopher, M. (Ed.) Logistics and Supply Chain Management. 3rd ed., Prentice Hall, pp. 231-258.

Supply Chain Risk - Piracy http://www.icc-ccs.org/

Supply Chain Risk – an example http://news.bbc.co.uk/2/hi/africa/7692408.stm

Why is supply chain risk important? ,[object Object],[object Object],World Economic Forum (2008) Hyper-optimization and supply chain vulnerability: an invisible global risk? In: Global Risks 2008 – A Global Risk Network Report, REF: 090108, World Economic Forum, Switzerland. http://www.weforum.org/pdf/globalrisk/report2008.pdf

Local event – Global consequences (1) www.autonews.com

[object Object],[object Object],[object Object],[object Object],Norrman and Janson (2004) Ericsson’s proactive supply chain risk management after a serious sub-supplier accident . International Journal of Physical Distribution and Logistics Management, Vol 34, No 5, pp. 434-456 Local event – Global consequences (2)

The Ericsson/Nokia fire Mukherjee, A. (2009). The Fire That Changed an Industry. In The Spider's Strategy: Creating Networks to Avert Crisis, Create Change, and Really Get Ahead (pp. 3-15). Upper Sadle River: FT Press. Eglin, R. (2003). Can suppliers bring down you firm ? Times Online, November 23, 2003. http://www.ftpress.com/articles/article.aspx?p=1244469 http://business.timesonline.co.uk/tol/business/career_and_jobs/senior_executive/article1022636.ece

Why Supply Chain Risk? Supply chain risk research has grown in importance in the last 10 years and has resulted in many frameworks and concepts of risk categories and risk mitigation measures, but there is yet to be a consensus on which framework that best captures different types of supply chain risks. Oke, A., & Gopalakrishnan, M. (2009). Managing disruptions in supply chains: A case study of a retail supply chain . International Journal of Production Economics, 118 (1), 168-174 .

The risk concept ,[object Object],[object Object],[object Object],[object Object],[object Object]

What is risk (1)? ,[object Object],[object Object],[object Object],[object Object],[object Object],Aven, T. (2002) Foundations of Risk Analysis : A Knowledge and Decision-Oriented Perspective, John Wiley & Sons.

What is risk (2)? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Kaplan, S., Garrick, B.J. (1981). On the quantitative definition of risk . Risk Analysis, 1 (1), 11-27. Kaplan, S. (1997). The words of risk analysis . Risk Analysis, 17 (4), 407-417. Paulsson, U. (2007). On Managing Disruption Risks in the Supply Chain – the DRISC Model . Unpublished PhD, Lund University, Lund.

Risk analysis ,[object Object],Norman, A. and Lindroth, R. (2004) Categorization of Supply Chain Risk and Risk Management . In: Brindley, C. (Ed.) Supply Chain Risk. Ashgate, pp. 14-27.

Risk categorization schemes ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

High-Impact Low Likelihood ,[object Object],[object Object],[object Object],Taleb, N M, Goldstein D G & Spitznagel, M W (2009) The Six Mistakes Executives Make in Risk Management. Harvard Business Review 87(10), 78-81 Cohen, Morris A, & Kunreuther, Howard (2007). Operations Risk Management: Overview of Paul Kleindorfer’s Contributions Production and Operations Management, 16(5), 525-541

Supply-Demand-Operational-External ,[object Object],[object Object],[object Object],[object Object],Peck, H. (2003) Supply Chain Resilience . UK Department of Transport/ Cranfield University, Cranfield, UK. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Organization-Network-Environment ,[object Object],[object Object],[object Object],[object Object],Jütner, U., Peck, H. and Christopher, M. (2003) Supply Chain Risk Management: Outlining an Agenda for Future Research . International Journal of Logistics: Research and Applications, Vol. 6 , No. 4, pp. 197-210.

Extending Organization-Network-Environment ,[object Object],[object Object],[object Object],Peck, H. (2005). Drivers of supply chain vulnerability : an integrated framework. International Journal of Physical Distribution & Logistics Management, 35(3/4), 210-229. Peck, H. (2006). Reconciling supply chain vulnerability, risk and supply chain management . International Journal of Logistics: Research and Applications, 9(2), 127-142.

Supply Chain Risk Jütner, U., Peck, H. and Christopher, M. (2003) Supply Chain Risk Management: Outlining an Agenda for Future Research . International Journal of Logistics: Research and Applications, Vol. 6 , No. 4, pp. 197-210. Supply Chain Risk can be viewed as a 4-fold construct: Risk sources . Consequences (impacts) of the risk sources. Risk drivers that turn risks into consequences. Strategies to address the risks.

Proactive versus Reactive Asbjørnslett, B E and Rausand, M (1997) Assess the vulnerability of your production system . Report NTNU 97018. Norwegian University of Science and Technology NTNU, Department of Production and Quality Engineering, Trondheim, Norway. Tomlin, B. (2006) On the Value of Mitigation and Contingency Strategies for Managing Supply Chain Disruption Risks . Management Science, Vol. 52, No. 5, pp. 639-657 Ritchie, B. and Brindley, C. (2004) Risk Characteristics of the Supply Chain – A Contingency Framework . In: Supply Chain Risk. Ed. Brindley, C. , Ashgate Publishing, pp. 28-42,197-202 Mitigative actions address risk sources. Contingent actions address risk consequences.

Types of supply chain risk 1/3 ,[object Object],[object Object],[object Object],[object Object],[object Object],Manuj, I. and Mentzer, J. T. (2008) Global Supply Chain Risk Management . Journal of Business Logistics, Vol. 29 , No. 1, pp. 133-155

Types of supply chain risk 2/3 ,[object Object],[object Object],[object Object],[object Object],[object Object],Manuj, I. and Mentzer, J. T. (2008) Global Supply Chain Risk Management . Journal of Business Logistics, Vol. 29 , No. 1, pp. 133-155

[object Object],[object Object],[object Object],[object Object],[object Object],Types of supply chain risk 3/3 Manuj, I. and Mentzer, J. T. (2008) Global Supply Chain Risk Management . Journal of Business Logistics, Vol. 29 , No. 1, pp. 133-155

Supply Chain Risk Management ,[object Object],1 Paulsson, U. (2004) Supply Chain Risk Management . In : Brindley, C. (ed): Supply Chain Risk. Ashgate Publishing Limited, pp.79-99. 2 Kajüter, P. (2003) Risk Management in Supply Chains . In: Seuring, S Müller, M., Goldbach, M., Schneidewind, U. (eds.) Strategy and Organization in Supply Chains, Physica, Heidelberg, pp. 321-336.

Risk Management Strategies (1) Avoid Transfer Reduce Retain Exploit DeLoach, J (2000) Enterprise-Wide Risk Management: Strategies for Linking Risk & Opportunity. Financial Times Management/ Prentice Hall. The classic Four (Five) Exploit

Risk Management Strategies (2) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Khemani, K. (2007) Bringing Rigor to Risk Management. Supply Chain Management Review 11(2), 67-68.

Robust supply chain strategies Tang, C. (2006) Robust strategies for mitigating supply chain disruptions . International Journal of Logistics: Research and Applications, 9 (1), 33-45 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],http://www.youtube.com/watch?v=K6XxcBTanZw

[object Object],[object Object],[object Object],The difference between Robustness , Flexibility , Agility and Resilience (1) Frequently used terms (1) Figure in: Husdal, J. (2010) A Conceptual Framework for Risk and Vulnerability in Virtual Enterprise Networks . In: S. Ponis (Ed.) Managing Risk in Virtual Enterprise Networks. Hershey: IGI. In Press.

[object Object],[object Object],[object Object],[object Object],The difference between Robustness , Flexibility , Agility and Resilience (2) Frequently used terms (2) Goranson, T. (1999). The Agile Virtual Enterprise . Westport, CT: Quorum Books. Asbjørnslett, B. (2008). Assessing the Vulnerability of Supply Chains . In G. A. Zsidisin & B. Ritchie (Eds.), Supply Chain Risk: A Handbook of Assessment, Management and Performance . New York: Springer.

High Impact events – ”Wildcards” ,[object Object],[object Object],[object Object],http://www.youtube.com/watch?v=Zqo4MidIK28

Quantitative and Qualitative Risk ,[object Object],[object Object],[object Object],[object Object],Knemeyer, A., Zinn, W., & Eroglu, C. (2009). Proactive planning for catastrophic events in supply chains . Journal of Operations Management, 27 (2), 141-153

Proactive planning for catastrophic events ,[object Object],[object Object],[object Object],[object Object],[object Object],Knemeyer, A., Zinn, W., & Eroglu, C. (2009). Proactive planning for catastrophic events in supply chains . Journal of Operations Management, 27 (2), 141-153

Loss estimation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Knemeyer, A., Zinn, W., & Eroglu, C. (2009). Proactive planning for catastrophic events in supply chains . Journal of Operations Management, 27 (2), 141-153

Loss Mitigation vs. Risk Mitigation ,[object Object],[object Object],[object Object],[object Object],Knemeyer, A., Zinn, W., & Eroglu, C. (2009). Proactive planning for catastrophic events in supply chains . Journal of Operations Management, 27 (2), 141-153

The cost-benefit of risk mitigation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Figure in: Husdal, J. (2005) The vulnerability of road networks in a cost-benefit perspective . Paper presented at TRB2005, the Transportation Research Board Annual Meeting 2005, Washington DC, USA, 9-13 January 2005.

Supply Chain Disruptions (1) Sheffi, Y. (2005) The Resilient Enterprise - Overcoming Vulnerability for Competitive Advantage , Cambridge: MIT Press Warning? What happens to supply chain performance during an unforeseen event?

Supply Chain Disruptions (2) ,[object Object],[object Object],Mc Manus, S. et al (2007) Resilience Management – A Framework for Assessing and Improving the Resilience of Organisations . Research Report 2007/01, Resilient Organisations, New Zealand. www.resorgs.org.nz Resilient organizations

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Supply Chain Design vis-a-vis supply chain disruptions Craighead, C. W., Blackhurst, J., Rungtusanatham, M. J. & Handfield, R. B. (2007) The Severity of Supply Chain Disruptions: Design Characteristics and Mitigation Capabilities . Decision Sciences, Vol. 38, No. 1, pp. 131-156. Factors (risk drivers) that can aggravate or lessen supply chain disruptions:

Supply Chain Vulnerability 1/2 ,[object Object],[object Object],[object Object],Mc Manus, S. et al (2007) Resilience Management – A Framework for Assessing and Improving the Resilience of Organisations . Research Report 2007/01, Resilient Organisations, New Zealand. www.resorgs.org.nz

Supply Chain Vulnerability 2/2 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Preparing for Evil , Harvard Business Review, April 2003, pp. 109-115 Christopher, M. (2005) Managing risk in the supply chain . In: Christopher, M. (Ed.) Logistics and Supply Chain Management. 3rd ed., Prentice Hall, pp. 231-258.

Manage supply chain risk 1/2 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Christopher, M. (2005) Managing risk in the supply chain . In: Christopher, M. (Ed.) Logistics and Supply Chain Management. 3rd ed., Prentice Hall, pp. 231-258.

Manage supply chain risk 2/2 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Christopher, M. (2005) Managing risk in the supply chain . In: Christopher, M. (Ed.) Logistics and Supply Chain Management. 3rd ed., Prentice Hall, pp. 231-258.

Summary ,[object Object],[object Object],[object Object],[object Object]

Supply Chain Risk 2009

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