Revisiting Supply Chain Risk (eBook)

George A. Zsidisin, Ph.D. (Arizona State University), CPSM, C.P.M., is a Professor of Supply Chain Management at Virginia Commonwealth University. Professor Zsidisin has conducted extensive research on how firms assess and manage supply disruptions and commodity price volatility in their supply chains. He has published over 80 research and practitioner articles that have been extensively cited, many of which focus on the topic of supply chain risk and continuity management. His research on supply chain risk has been funded by the AT& T Foundation and IBM, and has received numerous awards, such as from the Institute for Supply Management, Deutsche Post, Council of Supply Chain Management Professionals, and the Decision Sciences Institute. He has edited two other books: Supply Chain Risk: A Handbook of Assessment, Management, & Performance (with Bob Ritchie, 2010), Springer International Publishing; and Handbook for Supply Chain Risk Management: Case Studies, Effective Practices and Emerging Trends (with Omera Khan, 2011), J. Ross Publishing. In addition, he has published Managing Price Volatility: a Supply Chain Perspective (with Janet Hartley, 2012; second edition 2017), Business Expert Press Publishing, with translated versions in German (with Lutz Kaufmann), and Italian (with Barbara Gaudenzi). He has served as co-Director for the Supply Chain Leadership Program for the Purchasing Management Association of Canada, is one of the initial founding members of the International Supply Chain Risk Management (ISCRiM) network, and has taught and led discussions on supply chain management and risk in various Executive Education Programs and numerous companies in the U.S. and Europe. Professor Zsidisin is co-Editor Emeritus of the Journal of Purchasing & Supply Management, is the Director of the Master of Supply Chain Management program at Virginia Commonwealth University, and sits on the Editorial Review Board for several academic supply chain journals.Prof. Dr. Michael Henke is Director of Fraunhofer Institute for Material Flow and Logistics IML in Dortmund, and holds the Chair in Enterprise Logistics (LFO) at the Faculty of Mechanical Engineering at TU Dortmund University, Germany. Furthermore, he is Adjunct Professor for Supply Chain Management at the School of Business and Management of Lappeenranta University of Technology in Finland. His research focuses inter alia on Management of Industrie 4.0 and Platform Economy, Blockchain and Smart Contracts, Financial Supply Chain Management, Supply Chain Risk Management, Procurement, Logistics and Supply Chain Management. Doing this, he is combining his practical experience from entrepreneurial practice and his extensive knowledge from research. Michael Henke studied Brewing and Beverage Technology (Dipl.-Ing.) and gained his doctorate and habilitation in Business and Economics at Technical University of Munich, Germany. During and after his habilitation, he worked for the Supply Management Group SMG in St. Gallen, Switzerland. From 2007 until 2013, he was active in teaching and research as a professor at EBS European Business School.

Dedication 5
Contents 9
About the Editors 12
1 Research in Supply Chain Risk: Historical Roots and Future Perspectives 14
1 A Rich and Developing History 14
2 Shifting Toward Digitalization and Data Analytics 15
3 Structure of the Book 16
3.1 Assessing Supply Chain Risk—The First Step in Managing Supply Chain Risk 17
3.2 Creating Resiliency by Managing Supply Chain Risk 18
3.3 Incorporating Relational and Behavioral Perspectives 19
3.4 Managing Risk in Sustainable and Innovative Supply Chains 20
3.5 Emerging Typologies and Taxonomies 22
3.6 Grounding Our Understanding of Supply Chain Risk: Cases and Observations 22
4 Conclusions 23
References 24
Assessing Supply Chain Risk—The First Step in Managing Supply Chain Risk 26
2 Assessing the Vulnerability of Supply Chains: Advances from Engineering Systems 27
1 Introduction 27
1.1 Background 27
1.2 Objectives 28
2 Concepts and Definitions 28
3 Framework for Vulnerability Assessment 29
4 An Updated Toolbox 31
4.1 Epoch-Era Analysis 32
4.2 Failure Mode Methods 33
4.3 System Design Methods 36
5 Using the Toolbox in Supply Chain Vulnerability Assessment 40
5.1 Step 1: Definition of Scope of Work 40
5.2 Step 2: Description of SC/SCM Context 41
5.3 Step 3: Taxonomy Development 41
5.4 Step 4: Scenario Development 42
5.5 Step 5: Criticality Ranking 43
5.6 Step 6: Scenarios of Importance 44
5.7 Step 7: Reducing Likelihood and Consequence 44
6 Summary 45
References 46
3 Using Scenario Planning to Supplement Supply Chain Risk Assessments 48
1 Introducing a Well-Known Problem 48
1.1 Attempting to Make the Uncertain, Well … Certain 49
1.2 A Gap in Research 50
2 Scenario Planning: Accepting Uncertainty 50
2.1 Plausible Futures, not Forecasts 50
2.2 A Divergence from Other Scenario Planning Methods 51
3 The Roots of Scenario Planning 51
4 Using Scenario Planning for Supply Chain Risk Management 52
4.1 Involving the Right People 53
4.2 The Focusing Question 54
4.3 Brainstorming Influences on the Focusing Question 55
4.4 Grouping Individual Forces into Driving Forces 56
4.5 Ranking and Rating Forces 57
4.6 The Scenario Matrix 58
4.7 Writing Scenarios 58
4.8 An Alternative to the Scenario Matrix Approach 60
4.9 Identifying Signals for Action 60
5 Scenario Planning Challenges 61
6 Summary 61
References 61
4 Decision Support Systems and Artificial Intelligence in Supply Chain Risk Management 63
1 Introduction 63
2 Multiple-Criteria Decision Analysis for SCRM 65
2.1 MCDA Methods 65
2.2 Related Techniques 66
3 Mathematical Programming for SCRM 68
3.1 Modelling Uncertainty 68
3.2 Model Solving 69
4 AI Techniques for SCRM 71
4.1 Petri Nets 71
4.2 Multi-agent Systems 72
4.3 Automated Rule-Based Reasoning 73
4.4 Machine Learning 74
5 Conclusions 76
References 77
5 Resilience Assessment in Complex Supply Networks 82
1 Introduction 82
2 Supply Chain Resilience 83
3 Elements of Supply Chain Resilience 86
4 A Framework for Resilience Assessment in Supply Networks 88
4.1 Supply Chain Design 88
4.2 Supplier-Related Factors 93
4.3 Relational Competencies 96
4.4 Physical Capital Resources 99
4.5 Human Capital Resources 101
4.6 Overall Resilience Score 102
5 Conclusion and Future Research 103
References 104
Creating Resiliency by Managing Supply Chain Risk 108
6 What Value for Whom in Risk Management?—A Multi-value Perspective on Risk Management in an Engineering Project Supply Chain 109
1 Introduction: Value for Whom? 109
2 Why Do We Need a Multi-value Perspective? Insights from Literature 110
2.1 Supply-Chain Risk Management Perspectives and Perceptions 111
2.2 Value for Stakeholders in Risk Management 112
3 Empirical Study: The Multiple Value Perspectives of Risk Management for Stakeholders 113
3.1 Research Method 113
3.2 The Multiple Value Perspectives of Risk Management for Stakeholders 114
3.3 The Outcome-Related Value Perspective of Risk Management 115
3.4 The Process Quality-Related Value Perspectives of Risk Management 117
3.5 Discussion: Learnings from Empirical Studies 122
3.6 Process Regarding Multi-value Perspectives 122
4 Conclusions 126
References 127
7 Risk Management of Critical Logistical Infrastructures: Securing the Basis for Effective and Efficient Supply Chains 129
1 Introduction 129
2 Risks for Critical Logistical Infrastructures 130
2.1 Categorization and Interdependencies 133
2.2 Existing Methodology 133
3 Evaluation of Risks for Critical Logistical Infrastructures 136
3.1 Basic Assumptions 136
3.2 Evaluation Approach 137
3.3 Implementation 137
3.4 Strengths, Weaknesses, and Extensions 138
4 Summary and Outlook 140
References 141
8 Procedure Model for Supply Chain Digitalization Scenarios for a Data-Driven Supply Chain Risk Management 144
1 Introduction 144
2 Research Overview 145
3 Model Development 147
3.1 Focus Definition and Selection of Evaluation KPIs 148
3.2 Evaluation of the Risk Situation 149
3.3 Definition of Requirements for Future Supply Chain Risk Management 151
3.4 Scenario Development 152
3.5 Scenario Assessment 153
3.6 Concept Creation 157
4 Conclusion 157
References 158
9 Preparing for the Worst 162
1 Preparing for the Worst 162
2 Real Options: The Value of Preparation 163
2.1 Options’ Valuation 163
2.2 Four Common Categories of Real Options for Preparation 164
3 Redundancy 164
3.1 A First Line of Redundancy: Extra Inventory 164
3.2 Practical Upper Limits on Inventory 165
3.3 Other Kinds of Redundancy 166
4 Flexibility 166
4.1 Flexible Manufacturing: The Option to Make Anything 167
4.2 Flexible Distribution Networks: Emergency Realignment 168
4.3 Mobile Flexible Assets 168
5 Places: Emergency Operations Centers 169
5.1 Facility Monitoring: Who’s Minding the Stores 169
5.2 The Local and the Global 170
6 Ready for the Worst: Business Continuity Plans 170
6.1 When the Going Gets Tough, the Tough Use Playbooks 171
6.2 Playbooks to the People 172
6.3 Drill, Baby, Drill 172
6.4 The Bigger Picture: From BCP to BCM to ERM 173
7 SCRM as a Real Option 173
7.1 Response Investments 174
References 174
10 The Future of Resilient Supply Chains 176
1 Introduction 176
2 Theoretical Background 177
3 Research Methodology 180
3.1 Data Collection and Analysis 180
4 Results and Discussion 182
4.1 Insights from the Academic Panel 182
4.2 Insights from the Practitioner Panel 187
5 Conclusion and Future Directions 190
References 192
Incorporating Relational and Behavioral Perspectives 194
11 Can Buyer Consortiums Improve Supplier Compliance? 195
1 Introduction 195
2 The Model 199
2.1 Independent Audits (I) 201
2.2 Joint Audits (J) 204
3 Independent Versus Joint Audits Equilibrium Comparison 207
4 Conclusions 210
5 Appendix—Proofs 211
References 213
12 Leadership in Risky Supply Chains 215
1 Dropping Old Tools 217
2 Reframing Through Divergence 219
3 Reframing Value Patterns 221
4 The Hazards of Adaptive Leadership in Dynamic Supply Chains 223
5 Conclusion 225
References 225
13 Malicious Supply Chain Risk: A Literature Review and Future Directions 227
1 Introduction 227
2 Literature Review 228
2.1 Examples of Malicious Risks 229
3 Managing Malicious Risks 231
4 Drivers of Malicious Risks 233
4.1 Micro-Drivers: Behaviorally Driven Risk 233
4.2 Meso-Drivers: Structurally Driven Risk 234
4.3 Macro-Drivers: Network Exposure 234
5 Conclusion 234
References 235
14 A Behavioural View of Supply Chain Risk Management 238
1 Behavioural Supply Chain Management 238
2 Supply Chain Risk Management: Limitations and Opportunities for Research 239
2.1 Assumption 1: Objective Assessment of Risk 240
2.2 Assumption 2: Rational Decision Rules 244
3 Conclusion 247
References 247
Managing Risk in Sustainable and Innovative Supply Chains 253
15 Resilience and Sustainability in Supply Chains 254
1 Introduction 254
2 Discussion 256
2.1 Supply Chain Resilience 256
2.2 Supply Chain Sustainability 258
2.3 Resilience and Sustainability 259
2.4 Relevance to Practice 263
3 Conclusion 264
References 265
16 Sustainability Risk Management in Supply Chain 267
1 Introduction 267
2 Sustainable Supply Chain 268
3 Sustainability Risks in the Supply Chain 269
4 Risk Management in a Sustainable Supply Chain 271
5 Case Examples of Sustainable Supply Chain Risk Management 274
5.1 Requirements for Responsibility in Purchasing 274
5.2 The Process of Responsibility Assurance in the Supply Chain 275
5.3 The Role of Risk Management in Assuring Responsibility in the Supply Chain 276
6 Discussion and Conclusions 278
References 279
17 The Relationship Between Firm Resilience to Supply Chain Disruptions and Firm Innovation 281
1 Introduction 281
2 Literature Review: Firm Innovation and Firm Resilience 282
3 Research Process 283
4 The Linkage Between Innovation and Resilience: A Dynamic Capability View 284
5 Supply Chain Resilience 285
5.1 Antecedents of Supply Chain Resilience 285
6 Firm Innovation 287
6.1 Antecedents of Firm Innovation 290
7 Organizational Capabilities to Improve Both Firm Innovation and Firm Resilience 291
8 Future Research 293
9 Conclusion 294
References 294
18 Supply Chain Virtualization: Facilitating Agent Trust Utilizing Blockchain Technology 301
1 Introduction 301
2 Risk and Virtual Supply Chains 302
3 Issues in the Management of Virtual Supply Chain Risk 303
3.1 Transparency 304
3.2 Traceability 304
3.3 Authenticity 305
4 Reducing Risk by Building Trusting Relationships 305
4.1 Three Drivers for Trusting Relationships 306
5 Opportunities for Creating Trusting Relationships Using Blockchain Technology 307
5.1 What Is Blockchain? 308
5.2 How Can Blockchain Enable Trust in Virtual Supply Chains? 308
6 Conclusion 311
References 312
Emerging Typologies and Taxonomies 314
19 Differentiating Between Supply and Supplier Risk for Better Supply Chain Risk Management 315
1 Introduction 315
2 Supply Risk 316
3 Supplier Risk 316
4 Supply Risk Management 318
5 Supplier Risk Management 319
6 Cases 321
7 Discussion and Conclusion 325
References 326
20 Categorizing Supply Chain Risks: Review, Integrated Typology and Future Research 329
1 Introduction 329
2 Defining Risk and Supply Chain Risk 330
2.1 An Overview of Supply Chain Risk Management (SCRM) Literature 331
2.2 Supply Chain Risk Identification 332
3 Research Methodology 334
4 Results 334
4.1 What Are the Most Influential Studies on the Topic of Supply Chain Risk Classification (RQ1) 334
4.2 How Has the Supply Chain Risk Classification Topic Developed Over Time? (RQ2) 342
4.3 What Are the Interactions Among Researchers that Contributed to the Topic of Supply Chain Risk Classification? (RQ3) 346
4.4 How Can Consensus Be Achieved Across the Supply Chain Risk Classification Studies Published Since 2000? (RQ4) 349
5 Conclusions 356
6 Limitations of the Study 360
7 Recommendations for Future Research 360
References 361
21 The Impact of Supply Chain Disruptions on Organizational Performance: A Literature Review 367
1 Introduction 367
2 Conceptualization of Supply Chain Risk Management 368
3 Research Methodology 370
4 The Effect of Supply Chain Disruptions on Supply Chain Performance 370
4.1 The Effect of Demand Disruption Risk on Supply Chain Performance 371
4.2 The Effect of Supply Disruption Risk on Supply Chain Performance 372
4.3 The Effect of Environmental Disruption Risk on Supply Chain Performance 372
4.4 The Effect of Control Disruption Risk on Supply Chain Performance 373
4.5 General Studies in Supply Chain Risk Management 373
4.6 Comparing the Effect of Different Sources of Risks on Supply Chain Performance 374
5 Supply Chain Disruption Risk Management: Major Themes 378
5.1 Conceptualizations of Supply Chain Risk Management 378
5.2 Impact of Supply Chain Disruptions on Organizational Performance 379
6 Supply Chain Resiliency Enhancers 380
7 Supply Chain Resiliency Enhancers: Major Findings 383
7.1 Flexibility 383
7.2 Agility 383
7.3 Collaboration 384
7.4 Redundancy 384
8 Conclusion 385
References 386
Grounding Our Understanding of Supply Chain Risk: Cases and Observations 390
22 The Management of Disruption Supply Risks at Vestas Wind Systems 391
1 Introduction 391
2 Vestas and the Wind Turbine Industry 392
3 The Management of Disruption Supply Risk 392
3.1 Disruption Risk Management Strategies 393
3.2 The Variety of Disruption Risks and the Strategies for Managing Them 394
4 Disruption Risk Management at Vestas 395
4.1 Gearboxes 396
4.2 Towers 397
5 Electronics 399
5.1 Electronics Case—Earthquake Damages to a Key Supplier’s Production Facility 400
5.2 How These Experiences Led to Changes in Electronics Disruption Management 401
6 A Framework for Disruption Risk Management 402
7 Conclusion 403
References 404
23 Foreign Exchange Risk Mitigation Strategies in Global Sourcing: The Case of Vortice SPA 405
1 Introduction 405
2 Foreign Exchange Risk Mitigation Strategies 406
3 Mitigating Foreign Exchange Risk at Vortice Elettrosociali SpA 407
3.1 Background 407
3.2 FX Risk at Vortice 407
3.3 FX Risk Exposure Analysis 408
3.4 FX Risk Mitigation Strategies 409
3.5 The Role of Functional Involvement 414
4 Conclusions 415
References 416
24 The Paradox of Risk Management: A Supply Management Practice Perspective 418
1 Introduction 418
2 Supply Management Process 419
3 Supply Risk Management 419
3.1 Risk Identification 420
3.2 Risk Assessment 420
3.3 Risk Mitigation or Treatment 421
4 Case Study Methodology and the Single-Case Design 421
4.1 Empirical Setting 422
4.2 Data Sources 422
4.3 Data Analysis 423
5 Supply Management Process in the Case Organization 424
5.1 New Supplier Selection 424
5.2 Strategic Sourcing 425
5.3 Receiving and Inspecting the Delivered Goods 425
5.4 Managing the Portfolio of Existing Suppliers 425
6 Supply Risk Management in the Case Organization 426
6.1 Financial Risk 426
6.2 Sourcing Risk 428
6.3 Performance Risk 428
6.4 Sustainability Risk 429
7 Discussion 429
7.1 How Are Risks Managed (i.e., Identified, Assessed and Mitigated) Inside a Large Global Organization? 429
7.2 Why May Risk Management in Practice Differ from the Theory and Widely Accepted Standards? 431
8 Conclusions and Future Research Directions 432
References 432
25 Risk in Complex Supply Chains, Networks and Systems 435
1 Introduction 435
2 Examples of Complex Supply Networks and Systems 436
2.1 Example A: Humanitarian Aid Supply 437
2.2 Example 2: Government Procurement 440
2.3 Example 3: Healthcare Supply Networks 442
3 A Synthesis of Risks and Their Mitigation in Complex Supply Networks and Systems 445
3.1 Supply Network Orchestration Risk 445
3.2 Supply Network Learning Risk 445
3.3 Supply Network Innovation Risk 446
3.4 An Initial Conceptual Framework for Risk in Complex Supply Networks and Systems 446
4 Reflecting on Theories 447
5 Summary 448
References 448
26 Surfing the Tides of Political Tumult: Supply Chain Risk Management in an Age of Governmental Turbulence 452
1 Introduction 452
2 Supply Chain Risk from Government Actions that Damage the Trade Environment 453
3 Omission or Inadequacy of Government Action as a Source of Supply Chain Risk 455
4 Supply Chain Risk from Outside the Central Government 456
5 Managing the Risk 457
References 459
Index 460