Supply Chain Risk. Business Continuity. Transport Vulnerability. Resilience. Articles and papers. Books and book chapters. Reports and whitepapers. And more.
Resilience Adviser or Scaremonger? What am I really? That is what started to ask myself after I came across an article written by Frank Furedi the other day. In the article, Furedi, a Professor of Sociology at the University of Kent, highlights the issue of vulnerability-driven policies and how possibilistic (worst likely) risk thinking has dethroned probabilistic (most likely) risk thinking. Why is it that we fear so much?
And the overemphasis on possible risks rather than probable risks is exactly what Furedi tackles head-on in this article Precautionary Culture and the Rise of Possibilistic Risk Assessment. Written in 2009, it is probably or possibly (pun intended) even more valid today than it was back then.
The shift from probabilistic to possibilistic risk management characterises contemporary cultural attitudes towards uncertainty. This shift in attitude is paralleled by the growing influence of the belief that future risks are not only unknown but are also unknowable.
Future risks – to many people – are not only uncertain, but also unknowable. So, while probable, but uncertain risks is something we can learn to live with, possible and unknown risks – and even worse: unknowable risks – are almost too much to bear.
The shift towards possibilistic thinking is driven by a powerful sense of cultural pessimism about knowing and an intense feeling of apprehension about the unknown. The cumulative outcome of this sensibility is the routinisation of the expectation of worst possible outcomes. The principal question posed by possibilistic thinking, ‘what can possibly go wrong’, continually invites the answer ‘everything’. The connection between possibilistic and worse-case thinking is self-consciously promoted by the advocates of this approach.
One of the defining features of our times is that anxiety about the unknown appears to have a greater significance than the fear of known threats. This constant feeling of anxiety is typical of today’s risk society, a society I wrote about risk society in a post 5 years ago: According to sociologist Anthony Giddens a risk society is increasingly preoccupied with the future (and also with safety), thus generating the notion of ubiquitous risk in whatever direction we look. The German sociologist Ulrich Beck defines it as a society that while hailing technology and innovation at the same time seeks to deal with the hazards and insecurities induced and introduced by technology and innovation itself. In other words, we’re more concerned with whatever possible bad that comes with the good than trying to assess how bad the bad really is, if at all.
Time and again the public is informed that the most dreadful dangers are not just ones that we cannot predict or anticipate but ones about which we cannot say anything because they are literally unknown. […] The traditional association of risk with probabilities is now contested by a growing body of opinion that believes that humanity lacks the knowledge to calculate them.
So instead of applying all our science and all our knowledge to close in on the most probable risks, the much easier solution is to home in on all possible risks, or better, on the most feared risks. It’s a vicious circle, because the less we know about a risk, the more we fear it, and the more we fear it, the more we want to deal with it, without investigating it, because it could happen any time, probable or not.
The future of the world appears to be a far darker and frightening one when perceived through the prism of possibilities rather than probabilities. Probabilities can be calculated and managed, and adverse outcomes can be minimised. In contrast, worse-case thinking sensitises the imagination to just that – worst cases.
Worse-case thinking, so Furedi, encourages society to adopt fear as of one of the dominant principles around which the public, its government, and institutions should organise their life. Insecurity is institutionalised and worst-case scenarios are thought of as so normal that people feel defenceless and vulnerable to a wide range of future threats.
Furedi describes this overemphasis on possible threats instead of probable threats as “the devaluation of knowledge and the enthronement of ignorance”. We are ignorant because we prefer not to know about (the probability of) the risks, they are simply there, that is enough for us. Worst case risks are what drives our policies, not the actual risk.
And I?
Furedi does have point. In my attempts to convince my own management that we need to have crisis management plans and conduct emergency drills I must admit that I often resort to worst case scenarios. That said, the realisation is dawning on me that crisis management plans and drills need to be based on (f)actual and probable threats, not on fear alone.
Reference
Furedi, F. (2009) Precautionary Culture and the Rise of Possibilistic Risk Assessment. Erasmus Law Review 2(2), 197-220. DOI: 10.553/ELR221026712009002002005
What are the Top of the Pops of Supply Chain Resilience papers? That could be the fitting title for A Citation Analysis of the Research on Supply Chain Resilience where Christian Wankmüller and Gottfried Seebacher analyse current and past literature and manage to find the 8 most cited and influential papers on supply chain resilience.
Below is a list of what they found to be the eight most cited papers in supply chain resilience research. Six of these have been reviewed on this blog, so I’ve done my homework well so to speak.
Unsurprisingly, it is Christopher and Peck (2004) that appears to be the most cited paper, 19 times since its publication. More surprising – to me – is Ponomarov and Holcomb (2009), a paper I haven’t heard about at all. Sheffi (2001) I have read, but never gotten around to review.
Critique
This is a good paper that is well-written and quantitative literature reviews like this one are always interesting. While the work and research leading up to papers like this one is perhaps boring and tedious and not building a new frontier or going where no man has gone before in this field of research, the result may be very rewarding to the reader like me who may find papers he has never heard of. And indeed, I did find new papers here that I must read.
However, if there is to be one bad apple that spoils the barrel it is the fact that not all literature from the above figure is mentioned in the references of this paper. Perhaps the authors thought that these were papers of less importance and not worth mentioning, I don’t know, but for the sake of accuracy I think they should have been mentioned. Fortunately I do know several of these “omitted” papers, but others I don’t, and finding them by the name of the author(s) and year of publication alone isn’t always easy.
Reference
Wankmüller, C. and Seebacher, G. (2015) A Citation Analysis of the Research on Supply Chain Resilience. Paper presented at the 22nd EurOMA Conference, June 26th – July 1st, 2015, Neuchatel, Switzerland
Capability is an important measure in addressing vulnerabilities and in assessing resilience. Is there a way to quantitatively describe what capability entails? That is what Hanna Lindom, Henrik Tehler, Kerstin Eriksson and Terje Aven try to do, in a paper called The capability concept – On how to define and describe capability in relation to risk, vulnerability and resilience. And as the name implies, it’s not just about capability.
Background checks are worth doing
I came across this paper while doing some “background checks” – as I like to call it – on the paper I reviewed the other day. By background check I mean reading the references and/or other papers that could shed some same or different light on the issues in the paper in review. And because in that paper capability was highlighted as an important issue in supply chain risk management I began investigating the concept of capability and found this paper here. A very interesting paper, and definitely an Aven-ish paper, even though he only appears as the fourth author.
Definitions of capability
The concept of capability is used frequently in scientific literature. However, despite the fact that researchers
and practitioners frequently use the concept of capability, they rarely seem to define it. So say the authors. Nonetheless, in their extensive literature review they manage to find no less than 13 different definitions or descriptions of capability:
Looking more closely at these definitions, the authors put forward five trends: that capability equates to resources, that resources are an important part of capability, that capability is related to ability, that capability is related to capacity, and that capability is something that affects a goal.
Capability explained
Building on Aven’s definitions of risk, vulnerability and resilience the authors describe capability in a very same manner, and this is where the paper really is the most Aven-ish:
Capability is the uncertainty about and severity of the consequences of the activity given the occurrence of an initiating event and the performed task.
Capability = (CT U | A T)
This is definitely not an easy definition to follow if you haven’t read Aven’s other definitions first, so let me recapitulate those.
Risk is the uncertainty about and severity of the consequences of an activity.
This relates risk to the familiar definition of risk as a combination of probability and impact, where probability is not seen seen as a deterministic value but as a value that is uncertain and must be taken into account as such.
Vulnerability is the uncertainty about and severity of the consequences of the activity given the occurrence of an initiating event A.
This links vulnerability to risk, saying that a given vulnerability depends on a given risk, but only manifests itself when triggered by an event, meaning that one cannot be generally vulnerable, but only vis-a-vis a certain risk and only triggered by a certain event related to that certain risk.
Resilience is the uncertainty about and severity of the consequences of the activity given the occurence of any type of A.
This links resilience to vulnerability, saying that resilience constitutes the sum of vulnerabilities (or perhaps non-vulnerabilities) in relation to whatever trigger. While one cannot be generally vulnerable, one can be generally resilient.
Going back to the definition of capability can thus be interpreted as the uncertain effect a certain task has that is performed in relation to a vulnerability. There is no general capability, only a certain capability in relation to a certain vulnerability, depending on how a certain task addresses this vulnerability.
Capability explored
Going back to the paper, the authors develop an excellent case example of how capability can be understood the way they have defined it.
In the case example they take the reader through a set of various scenarios where they develop a stepwise determination of capability given the success or failure of the previous step, thus demonstrating that capability is inextricably linked to a task with an uncertain outcome (success or failure).
Conclusion
I started out by saying that this is a very Aven-ish paper, and it is. What is so Aven-ish are the abstract definitions that twist your mind and must be thought through and dissected word by word, and put back together again. I must admit that I in the beginning of my blogging career and academic endeavours stayed away from Aven’s papers because they were hard to grasp and intellectually challenging for a qualitative researcher like me. That said, maybe I have matured or maybe Aven has become more pragmatic over the years (albeit I doubt he has), because his papers have gotten easier to read and understand since I first started to read them. As to the topic of capability I now know a lot more about it.
Reference
Lindbom, H., Tehler, H. , Eriksson, K. , Aven, T. (2015) The capability concept – On how to define and describe capability in relation to risk, vulnerability and resilience. Reliability Engineering & System Safety (135), 45-54. DOI: 10.1016/j.ress.2014.11.007
Does supply chain risk management SCRM need another model? Perhaps. That’s what a group of academics from Tunisia and France thought when they presented their conference paper this autumn. In it they suggest a new integrated conceptual model called “SCRIM”that incorporates the characteristics of the supply chain in the risk management process, thus allowing for a better understanding of the dynamics of different risk management strategies.
A tip-off
A couple of weeks I was given a heads-up by one of the authors that they had written a paper called Towards an Integrated Model of Supply Chain Risks: an Alignment between Supply Chain Characteristics and Risk Dimensions and would like my opinion on it. Written by Arij Lahmar, Francois Galasso, Habib Chabchoub and Jacques Lamothe, the paper turned out to be more interesting than I first thought, and the more I read it the more I liked it.
Virtual Enterprises revisited
What also intruiged me into taking a closer look at the paper was not so much the title, but the place where it was presented, namely the IFIP WG 5.5 Working Conference on Virtual Enterprises. Observant readers of this blog may remember that I 5 years ago wrote a book chapter titled A Conceptual Framework for Risk and Vulnerability in Virtual Enterprise Networks, where I extended Supply Chain Risk Management into the realm of Virtual Enterprise Networks. I’ve seen that chapter mentioned as a reference in some of the papers presented at IFIP conferences earlier, and I first thought this would be such an example, too. It was not; it was something quite different.
SCRM versus SCRIM
As the title implies, at the heart of the SCRIM model is the alignment of risk dimension with suply chain characteristics. Here risk specifics and supply chain specifics are used to develop key risk indicators that lead to the design of a response that is specific to the supply chain and the risk in question. The possible response is then checked against capabilities to decide the best risk mitigation strategies and actions, in a sort of Plan-Do-Check-Act manner:
From my point of view this conceptual model appears sound. The left side is the traditional SCRM and ISO 31000 process, the right side is the new concept. The figure could have been a bit more descriptive, though, because the steps on the right side did not become fully clear to me until I saw the other figure in the paper. That figure is a class model detailing the parameters identified through the literature:
However, agin, this figure too has a few shortcomings. While the model claims to be taken from an extensive literature review – and judging from the extensive reference list it indeed is – the paper does not explicitly state which references that have contributed to which part of the figure.
For one instance, as risk strategies they suggest the classic four: Reduce, Retain, Avoid and Transfer, but where does this idea come from? For another instance, capability is seen as important part of the risk treatment process, and I agree, but the concept of capability is poorly described in the paper.
Conclusion
Essentially this is a good paper that needs some revision of references and citations and consistent use of the terms involved. It also needs fuller definitions of the concepts that are introduced.
That said, this paper does develop a new conceptual model that brings SC in more direct contact with RM, and SCRIM is indeed a fitting name for the model. The model and parameter description is perhaps still not complete in all parts, but with some more refinement this could definitely bring SCRM a huge step forward.
Reference
Lahmar, A., Galasso, F., Chabchoub, H., Lamothe, J. (2015) Towards an Integrated Model of Supply Chain Risks: an Alignment between Supply Chain Characteristics and Risk Dimensions. In: L. Camarinha-Matos, F. Bénaben, W. Picard (Eds.) Risks and Resilience of Collaborative Networks, Proceedings of the 16th IFIP WG 5.5 Working Conference on Virtual Enterprises, PRO-VE 2015, Albi, France, October 5-7, 2015 DOI: 10.1007/978-3-319-24141-8_1
Antagonistic threats against supply chains are a special and limited array of risks and uncertainties that are demarcated by three key words: deliberate (caused), illegal (by law) and hostile (negative impact). In this paper, following up on Daniel Ekwall’s PhD thesis, Dafang Zhang, Payam Dadkhah and Daniel Ekwall suggest a suitable model of how to handle the risks and achieve security in a systematic and scientific way, where robustness and resilience play a major role.
Revisiting an old friend
I came across Daniel Ekwall some seven years ago when I found his PhD thesis that combined theories from criminology with theories from logistics and supply chain management to examine cross-over points or antagonistic gateways between legal and illegal logistics. In his thesis, Ekwall contended that there are basically two types of threats to logistics, theft/sabotage and smuggling. The theft/sabotage problem is directly aimed towards the logistics activities, while smuggling abuses the logistics system for illegal purposes. This paper takes this issue a small step further.
Finding myself
I guess I should have paid closer attention to Ekwall’s research and writings, because then I would have discovered this paper earlier and then I would have seen that which I now – if I may be a little presumptious here – can call my legacy within supply chain risk research, namely my illustration on the differences of robustness and resilience:
Back to the article in review, what the authors attempt to do – and succeed at, I must say – is to take current concepts and models of supply chain risk management, and adding supply chain security, not as a separate concept, but as a part of overall supply chain (risk) mangement. While most of the reviewed literature and quoted figures they highlight was quite familiar to, one figure taken from one book was new to me. This clear separation of suply chain risk and supply chain vulnerability and how they link up with risk management and decision-making is much in line with my own way of thinking:
On second thought, dwelling on why tis figure hasn’t caught my attention before, I suddenly realised that I had indeed reviewed the book it was taken from: Supply Chain Risk Management – Vulerability and Resilience in Logistics by Donald Waters. Admittedly, the reviw was done in 2008. Looking back at the review I did almost 8 years ago, I must have thought the book to be of too little academic value to me at that time.
Safety Net
Anyway, I’m sorry for digressing again, what the authors are investigating are what specific supply chain assets that are susceptible to antagonistic threats, and how supply chain security measures can apply robustness and resilience. They illustrate this with a focal model of Robustness and Resilience:
This model shows the relationship between strategies for robustness and strategies for resilience, as seen from a company perspective and from a security provider perspective.
In the company and transportation network perspective, every components of the supply chain should become robust and resilience. The robust strategy is to handle small risks ahead of the event, and manage regular fluctuations like some low impact with high likelihood accidents. Resilience strategy can help the companies adapt, improvise and overcome those disturbance and disruptions greater than the robust can handle. It helps the companies to survive after suffering from big risks and changes.
The right side of the model is further developed into what the authors call a “safety net” of services: site security, transportation security, emergency services, consultation services, and collaboration:
Site security is about protecting every node in the transferral of goods in the transportation network, e.g. warehouses, terminals, factories, and ports. Transportation security is about protecting the transportation as such, e.g. the vehicles en-roue and during parking, as well as the drivers. Emergency services provide a quick response in addition to security operations. Security providers can also act as professional consultants, and lastly, security providers are also likely to collaborate with other organisations to improve their own (and the others’) service level and the overall capability to thwart any security threats.
Conclusion and critique
Akward English sentences and lack of flow aside (see citation above), this article does have some good points. Supply chain security appears to be overlooked in supply chain risk management. However, supply chain security can add to the robustness and resileince of the overall supply chain, providing a “safety net” of services that protects, secures and enhances the overall supply chain operation.
The company versus security provider model brings together both sides of the perspective in a way that does create a consistent groundwork for building robustness and resilience. The safety net model extends beyond the supply chain and identifies the assets that need to be protected and how they can be protected.
However, after finishing reading my first thought was that there should have been a conclusion after the authors’ chosen conclusion, because the article seems to stop abruptly, leaving loose ends that could have been wrapped up a bit more, at least from an academic perspective.
That said, for a logistics and transportation manager this paper is well worth reading.
Reference
Zhang, D., Dadkhah, P. Ekwall, D. (2011) How robustness and resilience support security business against antagonistic threats in transport network. Journal of Transportation Security 3 (4) 201-219 DOI: 10.1007/s12198-011-0067-2
Transport network resilience has 10 properties. So says PamelaMurray-Tuite in her 2006 article A Comparison of Transportation Network Resilience Under Simulated System Optimum and User Equilibrium Conditions. I had completely forgotten about these 10 properties, until I came across them again in an 2013 article on Safeguarding critical transportation infrastructure by Joseph S.Szyliowicz. However, there’s more to the story than just this…
Too many posts to remember
The reason for looking deeper into Szyliowicz’ paper in the first place was that I had searched academic literature databases for references of my papers to see whether any of the papers I had written was making an impact. In Szyliowicz’ paper I found that he had cited a blog post I wrote in 2011, about The UK Transport Network Resilience…and I. Looking it it up, I discovered that I had mentioned Murray-Tuite’s ten properties in my own blog post 4 years ago. So why did I forget about them? Too many posts to remember, perhaps. Besides I never mentioned Murray-Tuite as a reference in the post or as a worthy paper in my literature review list, otherwise I might have remembered her, I guess. I only copied Murray-Tuite’s definitions from the report I was reviewing in that blog post.
Not her own
Anyway, upon re-reading the article by Murray-Tuite I realised the ten properties were not all her creation, but taken from other authors. Six out of ten came from a 2003 paper on Urban Hazard Mitigation: Creating Resilient Cities by David Godschalk. Ouestions of originality aside, she does deserve credit for taking the concept of resilience from the realm of urban planning and adopting it to the realm of transport planning. Moving ideas from one realm to another is not always straightforward. Murray-Tuite also deserves solid credit for describing and quantifying four of these properties with regard to transport networks.
Ten properties of resilience
According to Murray-Tuite, the ten properties of resilience in transport network are redundancy, diversity, efficiency, autonomous components, strength, adaptability, collaboration, mobility, safety, and the ability to recover quickly.
Redundancy – the transport system contains a number of functionally similar components which can serve the same purpose and hence the system does not fail when one component fails (for example, a number of similar routes are available with spare capacity). Diversity – the transport system contains a number of functionally different components in order to protect the system against various threats (for example, alternative modes of transport are available). Environmental Efficiency – a transport system which is environmentally efficient will be more sustainable, and capacity is less likely to be constrained due to environmental reasons. Autonomy – the components of the transport system are able to operate independently so that the failure of one component does not cause others to fail (for example, can the transport system operate safely in the event of a power cut?). Strength – the transport systems ability to withstand an incident (for example, how extreme a flood event can the system cope with?). Adaptability – or flexibility, can the transport system adapt to change and does it have the capacity to learn from experience (for example, an area-wide traffic management system can adapt to differing traffic conditions). Collaboration – information and resources are shared among components and/or stakeholders (for example, contingency plans in the event of an emergency and the ability to communicate with system users). Mobility – travellers are able to reach their chosen destinations at an acceptable level of service. Safety – the transport system does not harm its users or expose them, unduly, to hazards. Recovery – the transport system has the ability to recover quickly to an acceptable level of service with minimal outside assistance after an incident occurs.
In the opriginal paper, if it can be put that way, Godschalk actually lists seven properties of resilience. The seventh, interdependence, was apparently not found applicable by Murray-Tuite. I wonder why, because Godschalk defines this property as such
Interdependent: with system components connected so that they support each other
In my opinion a resilient transport network should definitely be interdependent in the way that Godschalk describes it.
On another sidenote, Godschalk also refers to the Victoria Policy Institute website as one of his references. However, given the year Godschalk wrote his paper, that website and their TDM Encyclopedia was probably still in its infancy.
The resilient city
One paragraph that really struck a cord with me is where Godschalk describes his view of the ideal resilient city:
Resilient cities are constructed to be strong and flexible, rather than brittle and fragile. Their lifeline systems of roads, utilities, and other support facilities are designed to continue functioning in the face of rising water, high winds, shaking ground, and terrorist attacks. Their new development is guided away from known high hazard areas, and their vulnerable existing development is relocated to safe areas. Their buildings are constructed or retrofitted to meet code standards based on hazard threats. Their natural environmental protective systems are conserved to maintain valuable hazard mitigation functions. Finally, their governmental, non-governmental, and private sector organizations possess accurate information about hazard vulnerability and disaster resources, are linked with effective communication networks, and are experienced in working together.
In some way that is exactly what I am trying to do in my day job as a Resilience Adviser, with the lifeline system of roads being the starting point.
Resilience and redundancy
Going back to Szyliowicz, his paper focuses on the various facets of resilience, although most of the paper is spent on what the US has done or not done or perhaps should have done since 9/11 to increase resilience in the transport infrastructure. That said, I do sense that he is ever so slightly inclined towards redundancy as a key ingredient in resilience. Moreover, he credits me with quoting transit planning consultant Bob Bourne for saying that
‘‘Redundancy is not favored by policy makers and can add to costs. However, a system with excess capacity will perform well in times of crisis and will provide additional service during normal times.’’(cited in Husdal, 2011).
On a final note, Godschalk in his paper references Harold D. Foster and his book The Ozymandias Principles: Thirty-one Strategies for Surviving Change. That book features no less than 31 dimensions of resilience, divided by social, physical, environmental, operational, economic, systems and time dimension. It’s not an easy book to get one’s head around, but one day I will present the book on this blog
Reference
Murray-Tuite, P. (2006) A Comparison of Transportation Network Resilience Under Simulated System Optimum and User Equilibrium Conditions. Proceedings of the 38th Conference on Winter Simulation, Monterey, CA, USA — December 03 – 06, 2006 DOI: 10.1109/WSC.2006.323240
Szyliowicz, J. (2013) Safeguarding critical transportation infrastructure: The US case. Transport Policy, Volume 28, Pages 1-122 (July 2013) DOI: 10.1016/j.tranpol.2012.09.008
What is the potential future for supply chain risk management? That is what Abhijeet Ghadge, Samir Dani, and Roy Kalawsky try to answer in their 2012 paper on Supply chain risk management: present and future scope. This paper, so they write, examines supply chain risk management (SCRM) from a holistic systems thinking perspective by considering the different typologies that have evolved as a result of earlier research. Based on this they outline future requirements and research opportunities in SCRM.
Systematic Literature Review – SLR
What fascinates me with this paper is the systematic literature review (SLR) methodology the authors employed to evaluate and categorise a literature survey of quality articles published over a period of ten years (2000-2010). This is very similar to a literature review on organisational resilience that I wrote about a few weeks ago. However, what really strikes me is how this paper visualises the results, clearly identifying which research strands – or rather: clusters – that exist:
Based on the clusters, the following typologies were identified for further data screening of papers on supply chain risk management.
Based on type of risk: organizational risk, network risk and other risks comprising of environmental (man-made and natural disasters), political/social and exchange rate risks.
Based on management level: mitigation strategies are operational, tactical or strategic.
Based on research methodology: qualitative and quantitative research methodologies.
Based on risk management process: risk identification, assessment and mitigation and/or control.
Based on approach to SCRM: the risk mitigation approach could be either proactive or reactive.
In the end seven distinct research areas were found as possible starting grounds for future research:
Behavioural perceptions in risk management
Research on developing practices for unbiased or rational decision making is unexplored area in SCRM approach demands research.
Sustainability factors
It is inferred from this research that sustainability factors (economic, environmental and social) will have a larger influence on how SC are designed in the future.
Risk mitigation through collaboration contracts
It was evident during the analysis that, supplier default risk, quality risk and management risk within SC network are underexplored.
Visibility and traceability
Risk mitigation (proactive management or reactive risk response) can be greatly improved if information is readily available, is timely and accurate.
Risk propagation and recovery planning
Understanding the risk potential beyond the dyad through the chain and then the network provides an insight into how risk can propagate.
Industry impact
Although, this study is related to academic work on SCRM, it is vital to put it in the context of the impact that the work creates within industry.
Holistic approach to SCRM
Holistic SCRM is found to be lacking in current literature and systems approach has the potential to guide in that direction.
Conclusion
This is a paper well-worth considering if plan on doing any research within supply chain risk management.The seven distinctive research factors along with the key references within those will provide researchers with ample options for hypotheses for future work. I for one am likely to link up with the sustainability factor, something I haven’t blogged about for a long time, not since Carter and Easton (2011) Sustainable supply chain management: evolution and future directions.
Reference
Ghadge, A., Dani, S., and Kalawsky, R. (2012) Supply chain risk management: present and future scope. The International Journal of Logistics Management, 3 (23) , pp.313 – 339 DOI: 10.1108/09574091211289200
What is supply chain risk really? That is what Iris Heckmann, Tina Comes and Stefan Nickel try to answer in their article titled A critical review on supply chain risk – Definition, measure and modeling, published in 2015. In this paper, existing approaches for quantitative supply chain risk management are reviewed by setting the focus on the definition of supply chain risk and related concepts. What they found may actually surprise you. Or not.
Supply Chain Risk is still undefined
Supply chain risk is still a very new field of research in a historical perspective, still lacking some common ground and still taking off in different directions, still not having a universal and agreed-upon definition of supply chain risk. From that point of view the authors boldly state that “This review overcomes a hole in the literature which regards the lack of a clear definition of risk within the context of supply chain risk management.” Having dealt with supply chain risk one way or the other for a decade now I first thought they might have bitten off more than they can possibly chew, but as I read on I realised that they are on the way to something, definitely yes.
Deja-vu
In parts this paper reads like a cross-section of this blog, citing articles and reports I am quite sure they must have found here. That said, they also have a vast number of references that are completely unknown to me. What I can see though is that the authors have done an extremely thorough job in collecting and reviewing not only the core literature on supply-chain risk, but they have also managed to link and connect more peripheral literature that deals more indirectly with supply chain risk. What I think this papers shows is how the combined strength (i.e. research interests) of three authors can work together in creating the fullest possible overview of supply chain risk literature.
Risk – a historical recap
Something I really enjoyed reading was the historical recap of how risk was used and understood from the very beginning, starting with the old Greek rhisikon, describing the need to avoid difficulties at sea. Already then, more than two thousand years ago, risk had some connection to (sea-faring) commercial activities. In the 14th century Northern Italian traders adopted the term for describing the danger of losing their ships, and here
risk expresses the fear that economic activities lead to the loss or devaluation of an important asset or a decrease in the performance of the business.
Risk in today’s supply chains is perhaps not very far from this century-old definition of risk? That may be, but, along with the advancement of mathematical theories in the 17th century, risk became increasingly connected to probability theory and the probability of events and outcomes. That is how we most often understand risk today, in mathematical numbers. However, supply chain risk literature seems to be very little concerned with probability theory. Perhaps that is why what the authors lament most of all is “a lack of a clear and adequate quantitative measure for supply chain risk that respects the characteristics of modern supply chains”. My counter-question is, why do we need that? The answer is in my last paragraph below.
Supply Chain Risk – analysed, analysed and analysed
The authors do an excellent job in research, classifying and sorting the past and present supply chain risk literature, really giving new insights into where some of literature fits in. Going into details here would take it to far. All I can say is that the literature is reviewed and scrutinised from every possible angle I can think of, and more. I must say that I now have a much fuller understanding and wider perspective of all facets of supply chain risk.
Supply Chain Risk
Towards the end the authors come of with this definition of supply chain risk:
Supply chain risk is the potential loss for a supply chain in terms of its target values of efficiency and effectiveness evoked by uncertain developments of supply chain characteristics whose changes were caused by the occurrence of triggering-events.
Is this a good definition of supply chain risk? It seems to comprise everything, but at the same time it appears a bit abstract and perhaps even a bit akward, i.e. academically correct, but difficult to understand in practice. That said, it’s not any worse than ISO 31000 that defines risk as “the effect of uncertainty on objectives”, which is even more abstract.
Conclusion
What this paper does show, and I must commend the authors on their efforts, is that the supply chain risk literature has a great number of vastly different definitions and modelling approaches, and reviewing all of them must have been a daunting task. Given this diversity it is no wonder then that supply chain risk still lacks a common ground for research. Perhaps then we should just let supply chain risk be what is, complex, and not fit for quantifying?
Giordano Bruno Revisited
I’m reminded of what I wrote 10 years ago, in a discourse on reliability and vulnerability in transport networks, where I discussed my proposed PhD topic and my intention to quantify reliability and vulnerability so that it could be used in a cost-benefit decision. In the end I found out that quantitative research was not my cup of tea and I decided to go with Giordano Bruno instead.
Giordano Bruno (1548-1600) was a philosopher who took the current ideas of his time and extrapolated them to new and original vistas. Bruno advocated the use of conceptualising, that is to think in terms of images. He said that to think was to speculate with images. Complex scientific correlations are often better explained in pictures than in mathematical formulae. Rather than spinning his ideas from the yarn of algebra, the cobweb of modern science, Bruno moulded pictures and manipulated visual images to interpret complex ideas.
The reason for researching supply chain risk is to make better supply chain management decisions. With Bruno in mind, decisions should not be determined by numbers alone; decisions should be fully envisioned and comprehended by the decision makers. This is only possible by speculating with images what the outcome of the decision will be. Following Bruno’s lead, leaving the mathematical world of risk and probability behind, perhaps supply chain risk research should stay as it is, diverse and rich in images and concepts, but poor in formulae. From my point of view I hope it does so,
Reference
Heckmann, I., Comes, T., Nickel, S. (2015) A critical review on supply chain risk – Definition, measure and modeling. Omega (52), 119-132 DOI: 10.1016/j.omega.2014.10.004
The resilience of infrastructure systems can be measured by two dimensions: robustness, the extent of system function that is maintained, and rapidity, the time required to return to full system operations and productivity. That is the theme in Fostering resilience to extreme events within infrastructure systems: Characterizing decision contexts for mitigation and adaptation, written by Tim McDaniels, Stephanie Chang, Joseph Mikawoz, Darren Cole, and Holly Longstaff. A very interesting paper, indeed, for more than one reason.
What influences the disruption profile?
In a previous post on transport network resilience by Mattson and Jenelius, I was struck by a figure they had taken from this paper. It was a disruption profile, used time and again by a number of researchers within resilience, vulnerability, reliability and related subjects.
In this particular paper the shape of the disruption profile is influenced by two variables: robustness and rapidity. Robustness, in turn, is influenced by mitigation, while adaptation influences rapidity. As a concept this makes sense.
More interesting than the above figure is the construct behind it, illustrated in the form of a flowchart, showing how the influence of mitigation and adaptation comes into play:
At the top of the figure is the socio-technical context. Here are the variables that affect the decisions as to how much pre-disaster mitigation that is required (e.g. by law or based on prior experience), how much that is desired (e.g. risk acceptance) or how much that is economically viable (budgetary constraints).
Following the mitigation decision, at the next level, the system’s vulnerability is determined by another set of variables: the system’s technical resilience, and the organization’s organisational resilience and how they meet the next variable, which is a particular hazard.
Combined, technical and organisational resilience determine the immediate operational capacity following an event, depending on the hazard causing the event. That is the system’s robustness.
After the immediate operational capacity has been established, adaptation decisions must be made as to how to regain full operational recovery, the speed of which is a system’s rapidity in getting back to normal.
The evaluation of pre-disaster and post-disaster decisions and actions initiates a learning process that in turn leads to a new socio-technical context.
In essence, pre-disaster mitigation fosters robustness, and post-disaster adaptation fosters rapidity.
Conclusion
This paper clearly outlines a conceptual framework where resilience, a combination of both rapidity and robustness, is a result of ex-ante and ex-post decisions. Albeit resilience in common thinking more often than not is linked to how an organisation copes with an event ex-post, much of the groundwork for the coping process is laid ex-ante.
Reference
McDaniels, T., Chang, S., Cole, D., Mikawoz, J., Longstaff, H. (2008) Fostering resilience to extreme events within infrastructure systems: Characterizing decision contexts for mitigation and adaptation. Global Environmental Change 2 (18), 310–318
Maritime transport is a vital backbone of today’s global and complex supply chains. Unfortunately, the specific vulnerability of maritime supply chains has not been widely researched. This paper by Øyvind Berle, Bjørn Egil Asbjørnslett and James B Rice puts it right and presents a Formal Vulnerability Assessment of a maritime transportation system. This is not the first maritime paper that Asbjørnslett has contributed to on this blog, and he keeps up the good work he started in 2007, when he presented Coping with risk in maritime logistics at ESREL 2007.
Maritime transport – a forgotten part of supply chains?
I guess it is true that maritime transport or sea transport is an overlooked part of supply chains, even on this blog. In my more than 500 posts the word “maritime only occurs in 20 of them. Well, perhaps not so forgotten, but maybe such an obvious part of today’s supply chains that it is not looked at specifically, and just assumed to be part of the wider picture. Considering Norway’s maritime and seafaring tradition, it is not surprising to see Norwegian researchers taking up this particular question. One of the authors, Asbjørnslett, is part of the Marine System Design research group at the Department of Marine Technology at NTNU in Trondheim, Norway, where he among other topics is involved in research related to risk taxonomies in maritime transport systems, risk assessment in fleet scheduling, and studies of vessel accident data for improved maritime risk assessment.
The invisble risk?
It is interesting to see what starting point the authors use in their introduction, namely the 2008 Global Risk Report by the World Economic Forum. In my post on Supply Chain Vulnerability – the invisible global risk I highlighted that report, which listed the hyper-optimization of supply chains as one of four emerging threats at that time, and as the authors put it:
[…] risks in long and complex supply chains are obscured by the sheer degree of coupling and interaction between sources, stakeholders and processes within and outside of the system; disruptions are inevitable, management and preparation are therefore difficult […]
Akin to the infamous “Butterfly effect”, even a minor local disruption in my supply chain could have major and global implications not just on the company directly linked to the supply chain, i.e. me, but also on other businesses. Or conversely, some other company’s disruption may affect me severely, even though I in no (business) way am connected to said company.
Issues and questions
With that in mind the authors set out to address these particular issues they found in their preliminary observations:
I1—respondents have an operational focus; in this, they spend their efforts on frequent minor disruptions rather than the larger accidental events.
I2—stakeholders do know that larger events do happen, and they know that these are very costly, yet they do not prepare systematically to restore the system.
I3—maritime transportation stakeholders find their systems unique. As a consequence, they consider that little may be learnt from benchmarking other maritime transportation system’s efforts in improving vulnerability reduction efforts.
I4—there seems to be little visibility throughout the maritime transportation system.
which led them to to propose these research questions:
RQ1—what would be a suitable framework for addressing maritime transportation system vulnerability to disruption risks?
RQ2—which tools and methods are needed for increasing the ability of operators and dependents of maritime transportation to understand disruption risks, to withstand such risk, and to prepare to restore the functionality of the transportation system after a disruption has occurred?
I like this introduction, clearly identifying a direction and purpose of the paper.
FSA – Formal Safety Assessmement
In order to solve the research questions the authors transfer the safety-oriented Formal Safety Assessment (FSA) framework into the domain of maritime supply chain vulnerability, and call it Formal Vulnerability Assessment (FVA) methodology. FSA – for those of you who don’t know, including me – is a structured and systematic methodology, aimed at enhancing maritime safety, including protection of life, health, the marine environment and property, by using risk analysis and cost benefit assessment:
What might go wrong?
= identification of hazards (a list of all relevant accident scenarios with potential causes and outcomes) How bad and how likely?
= assessment of risks (evaluation of risk factors); Can matters be improved?
= risk control options (devising regulatory measures to control and reduce the identified risks) What would it cost and how much better would it be?
= cost benefit assessment (determining cost effectiveness of each risk control option); What actions should be taken?
= recommendations for decision-making (information about the hazards, their associated risks and the cost effectiveness of alternative risk control options is provided).
While not fully the same, this assessment follows in essence the ISO 31000 risk management steps of risk identification, risk analysis, risk evaluation and risk treatment, a framework that I am very familiar with.
Deconstructing the maritime transport network
What I like in particular is how they deconstructed the maritime transport network, divided the land from the sea and looked at how a vessel interacts with a port that in turn interacts with other modes of transport:
It’s a figure that reminds of my last project I took part in during the autumn of 2011 while still in academia, where we investigated Customer and Agent Initiated Intermodal Transport Chains, and looked at barriers and incentives to competition and collaboration in intermodal transport. I’m not sure the figure would have helped if I had known about it, but it would have made a few things a bit clearer. Kudos to Berle et al. for coming up with it.
Kaplan and Garrick
It is rare to find papers like this that use Kaplan and Garrick’s definition of risk:
Risk may be defined as a triplet of scenario, frequency and consequence of events that may contribute negatively (in this case to the transportation system’s ability to perform its mission. A hazard is a source of potential damage; Kaplan and Garrick describe risk as hazards divided by safeguards. In this, risks cannot be completely removed, only reduced.
I do like this definition of risk, because risk can be seen as incompletely described unless all three elements are in place. An untrained individual or business entity often stops short after the first, or maybe the second question, without fully considering the third. In risk management, addressing the impacts is an important issue, which is why the consequences need to be considered along with the likelihood and source of risk. In this paper, developing a method for assessing the vulnerability i.e. consequences, and deconstructing the maritime transport network, i.e. scenario, this definition of risk makes a lot more sense than any other definition of risk.
Failure modes
Another interesting idea in the paper is the concept of failure modes, taken from the book System Reliability Theory: Models, Statistical Methods, and Applications, written by two Norwegian professors (from NTNU, again, no surprise). Failure modes are used to investigate and understand how the maritime transport system is able to handle unexpected hazards and threats and low-frequency high impact scenarios:
Failure modes are defined as the key functions and capabilities of the supply chain, loss of any such would reduce or remove the ability of the system to perform its mission.
The concept of “mission” is important here, because it emphasizes what vulnerability in a systems perspective is, namely the inability to function and deliver (whatever the system is supposed to deliver):
The critical ways a transportation system may fail can be summed up as the loss of capacity to supply, financial flows, transportation, communication, internal operations/capacity and human resources, which may be described as follows: supply capacity is the ability necessary to source provisions needed for the element to perform its function; for a factory, this is inbound materials, utilities and electricity. Financial flows cover the ability to access capital and liquidity/cash flow. Transportation is the ability to move materials, including those presently at work. Communication would include enabling technology, and is vital for transparency in the supply chain. Internal operations entail the organization’s processing capacity (e.g. converting materials into a good). Quality issues reducing outputs fall into internal operations. Loss of human resources singles out the human factor explicitly from internal operations—what are the personnel needs for the supply chain functions?
The concept of failure modes is an idea the authors developed in a previous paper, Failure modes in ports – a functional approach to throughput vulnerability, a paper which I will review as soon as I get a copy of it. I think the failure modes concept captures the idea of what could go wrong in the maritime supply chain, as seen from a systems perspective:
Hazards and Mission
This is where it gets interesting. In order to transfers the FSA into a FVA, the FVA hazard focus is shifted towards the FVA mission focus. For example, the question of what can go wrong is turned into the question of which functions/capabilities should be protected (to ensure the functionality of the maritime transport system). The same is done for the other questions. Where the FSA looks at measures to mitigate most important risks the FVA looks at measures to restore functions/capabilities. This kind of parallel or similar thinking shows how easy it may be to transfer a concept from one domain into another domain.
Case example – LNG
The FVA is put to test in practice, using LNG (Liquid Natural Gas) shipping as their case. At first I thought there must be better examples, but the issue is that
[…] this analysis is relevant to study energy import dependencies, as current LNG supply chains are optimized to the level that much of the system storage and flexibility can be found in the shipping element, lacking on-shore infrastructure […]
and therefore, definitely a case worth studying.
Conclusion
Not only do the authors develop a conceptual framework for assessing the vulnerability of maritime transport networks, the successfully transfer the maritime Formal Safety Assessment (FSA) framework into the domain of maritime supply chain vulnerability and demonstrate that the approach works. It is not done according to IMO’s own standard, the FSA, thus extending vessel safety to port safety and supply chain safety. I think that this will help this approach gaining acceptance within the wider maritime community. The paper is well-written and well-structured, but I could have wished for a bit more about the FSA. Never having heard about it I had to do some research to find what this was all about. All in all, the paper is a showcase example of how easy it can be to transfer concepts from one domain to another domain, exemplifying a cross-fertilization of research strands.
Reference
Berle, Ø., Asbjørnslett, B.E. and Rice, J.B. (2011) Formal Vulnerability Assessment of a maritime transportation system. Reliability Engineering and System Safety (96) 6, 696–705 DOI: 10.1016/j.ress.2010.12.011
Organisational Resilience Literature. “What to read, and what not to read”. That could be the popular title of this paper. Written by Alessandro Annarelli and Fabio Nonini their paper on Strategic and operational management of organizational resilience: Current state of research and future directions classifies and sorts more than 70 articles along two axes: static versus dynamic resilience and single organisations versus supply networks or industries.. Essentially, this paper will help you decide which papers that fall into which of these four quadrants and which papers you should read depending on your research interests.
Comprehensive
According to the authors, they did “a systematic literature search and co-citation analysis to investigate the specific research domains of organizational resilience and its strategic and operational management to understand the current state of development and future research directions”. More than 400 papers out of thousands of documents were selected and narrowed down to 70 or so core papers, clearly showing the dominating trends within research into organisational resilience.
1.Theoretical foundations and applications, e.g. Christopher and Peck (2004)
2. Implementation, improvement and measurement of resilience, e.g. Sheffi and Rice (2005)
3. Models for resilience.
4. Other theoretical perspectives.
(The linked papers have been reviewed on this blog)
What to read, or not
In addition, the authors used multidimensional scaling(MDS) to produce a graphic that represents conceptual proximity, or similarity, between publications. This is what I found to be the most interesting part about this paper, because I now can find the most related or otherwise different literature, just by looking at the figure below and going to the reference list in the paper. That is very helpful, indeed.
Annarelli and Nonino (2015)
It’s quite interesting to see where some of the papers that have been reviewed on this blog fall and what papers that are closely related and that I have not yet discovered, which means that I have a lot of work to do in terms of possible reviews on this blog.
Future research
Finally the authors describe 7 areas of future research
Theory testing on design, implementation, and improvement processes to enhance organizational resilience.
Measurement of organizationalandoperationalresilience.
Resilience in Small Medium Enterprises.
Restoration models for the supply chain and operational processes.
Impact of introducing information systems on organizational resilience.
Anticipatory innovation to enhance processes’ resilience.
Strategic approach and dynamic capabilities for becoming a resilient organization.
and why these are the important issues that warrant further investigation.
Conclusion
This paper’s reference list contains more than 200 items. Combined with the sorting and review done in the paper this is very valuable resource for any researcher of organisational resilience.
Reference
Annarelli, A., & Nonino, F. (2015). Strategic and operational management of organizational resilience: Current state of research and future directions Omega DOI: 10.1016/j.omega.2015.08.004
Why is it that some infrastructure projects in sparsely populated regions of Norway receive more funding than other projects in more densely-populated regions where the potential benefit/cost ratio would be much better? That is the question asked by Thor-Erik Sandberg Hanssen and Finn Jørgensen in their recent article on Transportation policy and road investments. The article hits the nail on the head on the topic of how Norways is spending – or perhaps “wasting” money on its infrastructure.
Return of investment
What the authors found was that the reason for spending so much money on some projects was not that the politicians were particularly concerned about the people in these constituencies, but rather that they perceive high political returns for investing in these constituencies. Definitely pork barrel spending in practice. However, it is not so much done intentionally, but as a result of the skewed representation of the electorate in the Norwegian parliament, where less-populated counties with regional road investment projects are overrepresented compared to the more central and well-populated areas and cities.
Deja-vu
This article brought back memories to a blogpost of mine from 2009, Why does the world’s richest country have the world’s worst roads?, where I reflected on a similar paper. Here the conclusion was that the politically attractive projects win over the economically attractive, simply because is not the planning authorities or the central government who decides which national roads to build, but the local politicians, voting for “their” roads in parliament budget discussions. Adding to the misery is that investment or funding decisions are made on a year-to-year basis, thus frequently setting aside any long-term strategies that may exist.
How road investments are done in Norway
The article provides a brief overview of how Norwegian roads are planned and financed.
Road planning and investment in Norway
Which roads that should receive funding are presented in the National Transport Plan(NTP) by the Norwegian Ministry of Transport and Communications. This plan is produced every four years, and covers a period of ten years and aims to provide a base for decision making. The words that need to be stressed here are “aims to be”, because although the plan is ratified by the parliament every four years, it is still only intentional, it is not a binding budget document. Following ratification by parliament, the Norwegian Public Roads Administration then prepares an action plan. However, this action plan still needs yearly funding, and is where local politicians can have great influence.
Politicians know that allocating nationally financed projects to their home districts is an effective way to win votes
Why? Well, every potentisal voter is someone who is out and about driving every day, and everybody enjoys having a good road to drive on, and given the state of much of Norway’s crumbling infrastructure it is not surprising then that good roads win votes easier than other political issues. Voters are just simple-minded, aren’t they?
What factors are the most influential for investment decisions?
To decide whether political representation in the parliament is indeed a driving factor the authors looked at a number of variables and hypothesize that
roads with longer improvement stretches receive more money, because there are economies of scale to be reaped
roads with a high average traffic volume receive more money
roads with a high predicted traffic growth will receive more money
These are variables indicating the present and future importance of the road
roads with many sharp horizontal curves receive more money (to improve road standard)
roads that are narrower than 6 metres receive more money (explanation: roads narrower than 6 metres do not have a middle separation line in Norway and are considered sub-standard)
roads with avalanche problems receive more money
roads with lower speed limit receive more money, implying that higher speeds reduce travel time and make roads more efficient
These are variables that are linked to the standard of the road
roads with many fatalities and serious injuries receive more money
roads with noise nuisance issues receive more money
These are variables that are linked to external costs
roads in sparsely populated constituencies receive more money
This is the core variable, suggesting that regardless of everything else, this is what matters most. But is that really the case?
Conclusion
Based on their findings the authors conclude that
the importance of the road matters, but there are neither economies of scale nor diseconomies of scale in Norwegian road investments, suggesting not so much pork barrel spending after all
the narrowness of the road is the most important factor when it comes to road standard, suggesting that widening narrow is more visible than straightening curves or reducing avalanche problems or increasing speed limits, and hence offer higher political returns, and thus some pork barrel spending
traffic safety improvements or noise nuisance reductions have no influence on road investments, suggesting that they are simply overlooked by politicians in their final decision making
parliamentary representation in the electoral district where the road is located influences the amount of money spent significantly, indeed suggesting pork barrel spending
Critique
While this paper is home turf and thus easy to feel at home wit,h I find it hard to see the conclusions from the hypotheses, because the hypotheses are not stated as such explicitly (e.g. H1, H2, H3, etc.), but are stated within the description of the variables (“we assume that…”, “we hypothesize that…”). I would have helped the conclusion if the hypotheses had been stated in listed order, making it easier for the reader to grasp what relationships the authors are actually trying to investigate.
Nonetheless, the authors’ point is still valid: The main critique of the Norwegian procedures for road investments, as highlighted the 2009 paper, is still valid.
Norwegian politicians invest more money in roads in regions overrepresented in the Parliament because the expected political return is higher as fewer voters in these regions to be persuaded for the politicians to win a seat in Parliament.
Well, unless we reform our election system, which I doubt will ever happen, this is a problem we will have to deal with until the end of time. And that is why Norwegian roads always have been, currently are and forever will be, a patchwork of high-standard and sub-standard roads.
Reference
Sandberg Hanssen, T., & Jørgensen, F. (2015). Transportation policy and road investments Transport Policy, 40, 49-57 DOI: 10.1016/j.tranpol.2015.02.010
I’ve been away from academia for the last three years, and in my efforts to catch up with the latest research in transport-related vulnerability and resilience I decided to start with the most recent papers, and track my way backwards using the references cited as a potential guideline. This paper by Lars-Göran Mattsson and Erik Jenelius on Vulnerability and resilience of transport systems – A discussion of recent research seemed like a good start. What first struck me with this paper not the extesive reference list, but a figure the authors used.
Not the first time
The reason why the figure struck me is that from time to time there are similar figures that appear in a number of different papers, and as a researcher I am always intrigued to find the original source and who came up with this figure in the first place. I first saw this figure it in 2007 when I reviewed Youssi Sheffi’s book The Resilient Enterprise. There they describe what they call a “disruption profile”, which looks something like this:
Sheffi 2004
Going back in time 20 years, a very similar figure was used in Rausand and Einarssons paper from 1997 on An Approach to Vulnerability Analysis of Complex Industrial Systems, showing how an accidental event produces a consequence scenario, a disruption that tests the systems survivability:
Einarsson and Rausand 1997
Similarly, Mattson and Jenelius use a figure they call “Effects of decision-making on resilience”, which relates to same subject, but has a different approach:
Mattsson and Jenelius 2015
Obviously all figures address the same issue, that is the effect of disruptive events on system function (Mattson an Jenelius) or supply chain performance (Sheffi). The difference is that while Sheffi integrates mitigation and adaption in the shape of his one curve, Mattson and Jenelius specifically show how much mitigation and adaption contribute to changing how the curve bends.
So, while the principle behind the figure may not be original, the way that Mattson and Jenelius put it to use in their paper is definitely ground-breaking, because it clearly shows how mitigation can lessen the impact of an event and how resilience can be an expression of how the organisation returns to normal after an event.
Mitigation and adaptation
Now, mitigation and adaptation are two very intriguing concepts here. Essentially, risk management is all about mitigation, whereas adaptation lays the groundwork for resilience. In my world, where risk management is very much based on the bow-tie principle, mitigation is primarily concerned with the left side of the bow-tie, reducing the likelihood of events occurring. I called it mitigative actions and contingent actions respectively.
Bow-tie
Mitigation, where I come from, is mostly concerned with prevention. However, as I am now gradually discovering, mitigation addresses the whole bow-tie, both the causes on the left side and the consequences on the right side. Resilience then, looks further to right of the bow-tie, and how the organisation tries to deal with the long-term impacts of an event. That is a new point of view that I hadn’t thought about, or rather, I had thought about it, but I haven’t able to put it into a figure as brilliantly as Mattsson and Jenelius have done in this paper. It appears to me now that the bow tie is only about preparedness, response, and recovery. By adding adaptation to those three we also add resilience.
First a vulnerability analysis, then resilience
The authors go on to discuss the current literature on resilience and settle for Hollnagel’s four cornerstone definition: knowing what to do, what to look for, what to expect, and what has happened. Vulnerability analysis is an important prerequisite for adequate proactive actions.
Mattsson and Jenelius (2015) Resilience
Resilience, so Hollnagel, can be defined as:
the intrinsic ability of a system to adjust its functioning prior to, during, or following changes and disturbances, so that it can sustain required operations under both expected and unexpected conditions
the degree of ability that an object has to withstand the effects of an (unwanted) event and to resume its original condition or function after that event.
Here the negativity of vulnerability (as in susceptibility to fail) is defined in a positive way, by saying that the better the ability to withstand, the lesser the vulnerability. So actually, my definition of vulnerability in a sense is not too far from Hollnagel’s definition of resilience. Another new discovery for me.
Conclusion
This is a very interesting paper that combines a qualitative introduction with a quantitative argumentation when it comes to exemplifying their discourse. The paper also contains a number of promising references related to resilience that I plan to discuss in a later post.
Reference
Mattsson, L-G., Jenelius, E (2015) Vulnerability and resilience of transport systems – A discussion of recent research. Transportation Research Part A 81 (2015) 16–34. DOI:10.1016/j.tra.2015.06.002
Both shippers and motor carriers are impacted by travel time variability, but they react differently to it. While carriers focus on the immediate and short-term impact and how to solve the situation, .i.e how to deliver on time if still possible, shippers focus more on the strategic and long-term impact and on how to avoid the situation, i.e. how to prevent this from happening again. This is what Kelly Pitera, Anne Goodchild and Edward McCormack looked at in their recent paper titled Examining the Differential Responses of Shippers and Motor Carriers to Travel Time Variability. Here they describe the disparity in concerns and the strategies shippers and motor carriers are likely to engage in to address time travel variability.
Today is my last day at work as Researcher at Møreforsking Molde. It is a sad day, because I am leaving a very exciting field, namely supply chain risk, but also a joyous day, because I am returning to a field I left 5 years ago, namely transport vulnerability. From here I head off into a new direction, as announced earlier, where I will be Senior Adviser in Societal Security and Emergency Preparedness issues to the South Region of the Norwegian Public Roads Administration. To mark the switch from supply chain risk to transport vulnerability – which has always been a minor part of this blog but will now become the major part – here is paper devoted to that very topic.
How to estimate the disruption risk exposure in a supply chain? That is the question asked by Ulf Paulsson, Carl-Henric Nilsson and Sten Wandel in their paper titled Estimation of disruption risk exposure, building on what Paulsson wrote in his PhD on the same subject. Here they develop a model that links disruption risk to disruption source, covers all flow-related disruption risks in the total supply chain from natural resources to delivered final product, seen from the angle of an individual focal unit in the supply chain. The model classifies the risk exposure into 15 different risk exposure boxes, of which 12 have ‘expected result impact’ and three have ‘known result impact’, providing what they call a total negative result impact.
How to handle a supply chain disruption?
one of the ideas from this article that I like very much are the different alternatives for handling a supply chain, basically only two: to act or not to act, that is the question.
These two options start from the very first signs of disruption: To act: close down the supply chain, or not to act: keep the supply chain running.
The same goes for pre-event measures, or mitigative measures as I like to call them. Here, to act means trying to prevent disruptions from happening, while not to act mens either to accept the disruption and its consequences despite possible actions that could be taken, or to accept the disruption because it can neither be influenced as to probability nor as to consequence.
Similarly, when it comes to post-event measures, or contingent measures as I would call them, there is again the option of acting or handling internally or not acting or passing on the event and it s consequences.
Going with the flow
Another interesting though from this paper is the supply chain flow, and where the purpose of handling supply chain disruptions is to regain a stable flow in both incoming, outgoing and internal flows.
Furthermore, regaining a stable flow after a supply chain disruption also implies short-term stability or market patience while the disruption is handled and long-term stability or market confidence after an event has been handled.
Total expected result impact
Combining the disruption handling options, the types of flows and the chain of events creates twelve possible combinations of impacts which must be added in order to obtain the total expected result impact:
This splits the disruption impacts into individual units while at the same time keeping the full picture intact.
Conclusion
What I like about the model developed in this paper is that addresses the entire supply chain from supplier until end customer. It is a holistic and generic model for estimating disruption risks in the supply chain flow in a systematic and structured manner. The model presents, as far as I can see, the most complete estimation of disruption risks, it includes incoming and outgoing flows and it separates between mitigative and contingent handling of disruptions, thus balanacing proactive and reactive risk management.
Reference
Paulsson, U., Nilsson, C., & Wandel, S. (2011). Estimation of disruption risk exposure in supply chains International Journal of Business Continuity and Risk Management, 2 (1) DOI: 10.1504/IJBCRM.2011.040011
Supply Chain Risk Management is a area that has seen a significant growth in recent years. However, there is diverse perception of research in supply chain risk because these researchers have approached this area from different domains. A recent article on Researchers’ Perspectives on Supply Chain Risk Management, written by Manmohan S Sodhi, Byung-Gak Son and Christopher S Tang, presents a study of this diversity from the perspectives of operations and supply chain management scholars. In their study they identify three gaps: a definition gap, a process gap and a methodology gap, and they suggest how these gaps can be closed.
What is risk, and how can it be expressed? Should risk be defined through probabilities or should risk be defined through uncertainties? That is what Eyvind Aven and Terje Aven are attempting to explain in their paper On how to understand and express enterprise risk. In the paper, they claim that different international standards, such as the AS/NZS 3460 Risk Management Standard, the COSO ERM framework and the ISO 31000 Risk Management Standard do not provide adequate guidance on these issues and lack the necessary precision. Thus, they establish their own framework, where risk has two main components, namely 1) the impact of events and consequences (outcomes), and 2) the associated uncertainties (probabilities). Continue reading →
Are business schools bad for business? I recently came across a very interesting article by the late Sumatra Ghoshal, who blamed business schools for the demise in management practices because they have become obsessed with teaching maximizing shareholder value at the expense of everything else. In Bad Management Theories are Destroying Good Management Practices he claims that business schools have gone astray because they teach ideology more than they teach theory, let alone good management practices. Are business schools really that bad?
What happens when theory meets practice? Theory fails and practice wins? In academia, more often than not, developing new groundbreaking theories is what is worth pursuing, because it is academically challenging, let alone meriting, despite these theories being practically irrelevant or not offering real(business)-life implications. Nowhere is the outcome of this research-versus-practice debate more important than in the supply chain realm. So say Stanley E Fawcett and Matthew A Waller in Making Sense Out of Chaos: Why Theory is Relevant to Supply Chain Research, an editorial in the Journal of Business Logistics, where they share their vision on how theory’s explanatory power should lead to better decision making, and not be seen as something apart from practice.
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