CHAPTER 14:

SUPPLY CHAIN RISK

MANAGEMENT AND
RESILIENCE
 LEARNING OUTCOMES

After completing this chapter, you should be able to

• understand the main philosophical dimensions of risk
• explain the impact of globalisation on supply chain management
• explain the focus of integrated supply chain risk management based on
the Global Supply Chain Forum (GSCF) framework
• identify typical supply chain risk categories and specific types of supply
chain risks
 LEARNING OUTCOMES continued

• describe how a firm can create a supply chain risk profile

• describe how supply chain risk management can be implemented
• explain and apply the supply chain risk management process
• compare the supply chain risk management process with the supply chain
disruption management process
• explain the capabilities and enablers of supply chain resilience.
 THE PHILOSOPHY OF RISK
Uncertainty
Figure 14.1 The presence of uncertainty in the risk equation
 THE PHILOSOPHY OF RISK continued

Uncertainty continued

Figure 14.2 The trade-off between uncertainty and time

 THE PHILOSOPHY OF RISK continued

Risk perception
Judgement
Risk seeking or risk averse
More knowledge – improved perception
Risk exposure may change level of risk perception
 SUPPLY CHAIN MANAGEMENT AND
THE RISK MANAGEMENT CONCEPT
The effect of globalisation on SCM:

Globalisation creates opportunities but also

new challenges

Supply chains are vulnerable to cross-border

disruptions:

• Influence of global links

• Changing customer needs

• More strategic planning

 SUPPLY CHAIN MANAGEMENT AND THE RISK MANAGEMENT CONCEPT continued

Typical supply chain risks

Table 14.1 Examples of supply chain risk categories
 SUPPLY CHAIN MANAGEMENT AND THE RISK MANAGEMENT CONCEPT continued

Typical supply chain risks continued

Table 14.2 Examples of external environmental risks

 SUPPLY CHAIN MANAGEMENT AND THE RISK MANAGEMENT CONCEPT continued

Typical supply chain risks continued

Table 14.3 Examples of supply chain process risks

SUPPLY CHAIN MANAGEMENT AND THE RISK MANAGEMENT CONCEPT continued

Typical supply chain risks continued

Table 14.3 Examples of supply chain process risks continued

SUPPLY CHAIN MANAGEMENT AND THE RISK MANAGEMENT CONCEPT continued

Typical supply chain risks continued

Table 14.3 Examples of supply chain process risks continued

 SUPPLY CHAIN MANAGEMENT AND THE RISK MANAGEMENT CONCEPT continued

Typical supply chain risks continued

Table 14.4 Examples of supply chain information risks

 SUPPLY CHAIN MANAGEMENT AND THE RISK MANAGEMENT CONCEPT continued

Supply chain risk profile

Potential risks can arise from the following five sources:
• Supply risk
• Demand risk
• Process risk
• Control risks
• Environmental risks
 SUPPLY CHAIN MANAGEMENT AND THE RISK MANAGEMENT CONCEPT continued

Supply chain risk profile continued

Figure 14.4 Sources of risk in the supply chain

Source: Adapted from Christopher (2016: 221)
 SUPPLY CHAIN DISRUPTION
MANAGEMENT

Phases
• Disruption detection
• Disruption reaction
• Disruption recovery
• Disruption learning
 SUPPLY CHAIN RESILIENCE
Capabilities and enablers of supply chain
resilience
• Flexibility
• Information sharing and visibility
• Redundancy
• Reduction of complexity
• Collaboration
• Agility
• Velocity
 LEAVE OUT

Section 14.3.2
Section 14.4
Section 14.5