Tag Archives: supply chain risk management

SCRIM is the new SCRM

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Revised on: 2015-11-23

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

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The future of SCRM

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Revised on: 2015-10-27

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

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Near-shoring – less risk?

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Revised on: 2015-10-02

You Can’t Understand China’s Slowdown Without Understanding Supply Chains. That’s the title of a recent article written by David Simchi-Levi, the author of Operations Rules that I reviewed on this blog some time ago. Simchi-Levi believes that the slowdown is due, in part, to an acceleration of “near-shoring,” the practice of producing closer to the customer, and not as many economists would say, due to a looming economic crisis in China. That is an interesting point of view.

Bringing supply chains home

Is everything still “Made in China”? According to Simchi-Levi, the answer is No. An increasing number of companies are sourcing and producing nearer and nearer to their markets, in an effort to better manage their supply chain risks:

Global companies have realized in the last few years that strategies such as outsourcing and off-shoring have significantly increased risk because their supply chain is geographically more diverse and, as a result, exposed to all sorts of potential problems. A recent example is the explosion at a warehouse in Tianjin that ships hazardous materials, which was most likely caused by a company culture that flouted regulations. This drives companies to reevaluate their supplier and manufacturing base in order to increase flexibility and reduce risk.

The current turmoil in China will most likely accelerate the trend to near-shoring, but the impact will vary by specific industry and company.

For high tech industries (e.g., the manufacture of laptop computers and mobile phones) recreating the infrastructure in China somewhere else would be expensive and difficult to do. In contrast, it will be easier for footwear and apparel companies to move to lower-cost locations. Manufacturers of heavy products such as appliances or cars that are heavily influenced by shipment costs may find it pays to move production closer to market demand.

The bottom line: Companies need to evaluate on an ongoing basis whether the trade-offs for their particular industry have shifted enough to justify a change in their sourcing strategies.

This reminds me of a post I made in 2010, Outsourcing – Risking it all? reflecting on an article and a presentation made by Jack Barry ten years ago, where he raises some fundamental concerns about the then current trend towards global outsourcing and its consequences. Yes, it may be cutting the costs, but it is not cutting the risks.

In Global Risk: Outsourcing Services, A New Aesop’s Fable of the Ant and the Termite, a presentation he made  to the Institute for Supply Management, ISM, he reviewed his article and his thoughts behind it. If I summarise some of his slides, he said

The benefits of globalisation:
India develops my software
Ireland manages my customer service
Taiwan does my testing
Mexico performs piece labor
Germany balances my finances
Israel does my clinical research
… my supply sources are global.
>>> I have the lowest overall cost of services

The risks of globalization:
India owns my IT process and innovation
Ireland is between me and my customers
Taiwan controls my quality control
Mexico dominates my capacity curve
Germany leverages my finances
Israel has first views of my innovation
… my supply sources may be beyond my laws and conventions.
>>> I have the highest level of risk to continued operations

I guess what Barry said back then isn’t any less valid today, and you can find the full presentation for download below.

My own conclusion is that in the same way that cost-cutting is what lead companies to pursue outsourcing and offshoring in the past, risk-cutting is what now may now lead companies into sourcing and producing their goods nearer to their markets, because in sum it is less risky AND less costly. As long as labour cost and production costs were low, along with minimal logistics cost per unit, due to the sheer volume of goods that were shipped around the globe, offshoring and outsourcing made sense, but it also made supply chain risk less controllable. That realisation is perhaps finally sinking in.

Reference

Simchi-Levi, D. (2015) You Can’t Understand China’s Slowdown Without Understanding Supply Chains. Harvard Business Review. Retrieved 2015-10-02 from https://hbr.org/2015/09/you-cant-understand-chinas-slowdown-without-understanding-supply-chains

Barry, J. (2004). Supply chain risk in an uncertain global supply chain environment International Journal of Physical Distribution & Logistics Management, 34 (9), 695-697 DOI:10.1108/09600030410567469

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Supply Chain and Transport Risk

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Revised on: 2012-03-07

In our interconnected world, safety, reliability and efficiency can only be secured through collaboration between industries and government. This is the theme of a recently published report titled New Models for Addressing Supply Chain and Transport Risk. Written in collaboration with Accenture and published as an initiative of the Risk Response Network with the World Economic Forum, the report highlights the urgent need to review risk management practices to keep pace with rapidly changing contingencies facing the supply chain, transport, aviation and travel sectors.

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SCRM Research Gaps

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Revised on: 2015-09-04

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.

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Supply Chain Continuity

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Revised on: 2015-09-10

Many business owners will have come across the term business continuity, and many supply chain owners will have come across the term supply chain risk management. However, the term supply chain continuity is still a rather unexplored topic, gathering mere 45000 search results on Google, while business continuity has no less than 10 million results. But isn’t that what supply chain risk management is all about, namely supply chain continuity? Well, here’s a book that most certainly thinks so: A Supply Chain Management Guide to Business Continuity by Betty A Kildow, showing how a well-functioning supply chain is the key to a well-functioning business.
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Supply Chain Risk 2011

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Revised on: 2015-09-05

What is supply chain risk? What are typical supply chain risks? This is the 2011 version of my annual lecture on Supply Chain Risk for the MSc in Supply Chain Management and Industrial Logistics at Molde University College, Norway, held today, and this is the fourth consecutive year that I am giving this lecture. The lecture is meant to highlight some of the current literature on supply chain risk and to suggest further reading materials. It is a selection- quite an extensive selection, actually – of the more than 400 articles, books and book chapters I have piled up in my office shelves, and in a way this lecture is a broad literature review of anything connected to supply chain risk. While the main topics are the same, there are always new things I include, so even if you have seen the 2008 lecture and the 2009 lecture and the 2010 lecture on supply chain risk, this year’s is a bit different…again.

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Managing supply chain risk

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Revised on: 2015-09-08

In September and October 2009 the Economist Intelligence Unit surveyed 500 company executives with responsibility for risk management, and selected from companies across Asia-Pacific, North America and Europe, in order to understand how companies are being affected by supply-chain risk, and how they are responding to it. While colored by the them still lingering recession, and perhaps already as old as the proverbial water under the bridge,  the report titled Managing supply chain risk for reward nonetheless paints a good picture of what supply chain risks these executives think thought are were the most pressing issues in their industry. This post will highlight some of the findings from the report, even though things may have changed in the meantime…

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Supply Chain Risk Management Research

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Revised on: 2015-09-09

What are the current gaps that waiting to be closed in supply chain risk management research? Here is a paper that claims to have the answer: Identifying risk issues and research advancements in supply chain risk management, co-written by Ou Tang and S. Nurmaya Musa. Not only does this paper investigate the research development in supply chain risk management (SCRM),which has shown an increasing global attention in recent years, it also shows the incremental evolutions and advancements of SCRM discipline, and defines several sets or clusters of topics and how these have changed over the years.

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Stemming the rising tide

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Revised on: 2015-09-03

Are you are taking radically different actions than your peers when it comes to supply chain risk management? If so, Marsh Consulting thinks you are an innovator and blazing the trail for others to follow. At least, that’s what they say in their report Stemming the Rising Tide of Supply Chain Risks: How Risk Managers’ Roles and Responsibilities Are Changing. Penned by Beth Enslow and written in 2008 and well before the global financial downturn had companies think of anything but supply chain risk, this study of 110 North American risk managers by Marsh in collaboration with Risk Insurance magazine found that only 35 percent considered their companies to be “moderately effective” at managing supply chain risk, not a very uplifting figure, I must say. Having said that, the report clearly shows what “the innovators” do differently and how they have managed to “rein in” their supply chain risks, as the report says.

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3rd Supply Chain Risk Management Seminar 2011

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Revised on: 2015-09-12

Finally, here it is, the 3rd Supply Chain Risk Management Seminar 2011 to be held in Barcelona, Spain, 26-27th October this year. Ever since I first blogged about the very first seminar in 2008, I have eagerly awaited the annual conference announcements, so that I could promote it here on husdal.com. This year’s program is still in the making but some topics and speakers are already out. With Supply cost and performance risk as a result of deteriorating freight transportation infrastructure as one of the topics, a topic that is very close to my heart, it looks like a seminar I would really like to attend. But there are a lot more reasons for going to Barcelona this year than just that one topic.

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Supply Chain Risk: Product Design Changes

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Revised on: 2015-09-12

Supply Chain Risk Management has emerged as an important source of competitive advantage and an effective method of reducing vulnerability in a supply chain. One vulnerability or risk that is often overlooked are product design changes to an already existing manufacturing process. That is the topic of  a recent article  by Yong Lin and Li Zhou titled The impacts of product design on supply chain risk: a case study. This a highly recommendable article for anyone thinking of studying risk management in supply chains.

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Supply Chain Risk Management Survey

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Revised on: 2011-05-17

Effective Supply Chain Risk Management has become one of the key ways of securing competitive advantages for companies. Many students are trying to understand more about it and researching it, and based on the comments and feedback I receive on this site, many students (but also industry professionals and researchers) have found this blog a very helpful resource in their daily line of work. Today’s post is a favor towards Mrunal Korde, a MSc in Logistics and Supply Chain student at Curtin Singapore. Mrunal contacted me the other day, asking for suggestions where to post a survey on supply chain risk management that he was doing as part of his studies, and after some correspondence I agreed to help him in promoting the survey on this blog.

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Supply Chain Security Management

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Revised on: 2015-09-09

Security concerns are an issue that has gained increased importance in supply chains. While accidents do happen, and while natural disasters may be nothing more than background noise (the understatement of the year, I suppose), security breaches can have more devastating consequences. This paper, Supply Chain Security Management: an overview, by Juha Hintsa, Ximana Gutierrez, Philippe Wieser and Ari-Pekka Hameri, presents the current state of initiatives in supply chain security management, and discusses their managerial implications, highlighting the importance of interplay between various business and governmental parties.

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Call for Papers: Global Supply Chain Risk

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Revised on: 2015-09-10

Supply chain risk seems to be a topic making the rounds in the academic journals these days, and today I received news of another one. The Journal of Business Logistics (JBL) has just issued a call for papers on The scope, nature and management of Global Supply Chain Risk. According to the call, this Special Topics Forum is intended to provide outstanding visibility to high-caliber, leading-edge research in a broad range of supply chain risk management topics. Although many topics appropriate for this special forum may involve the management of logistics-related risk, (only) high-quality research in any area of global supply chain risk management will be considered for inclusion. In other words, it is really your best work that should be considered for submission.

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Blog Review: The SCRMBlog

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Revised on: 2015-09-12

It’s Friday, and there hasn’t be a blog review for a long time, so perhaps it’s time to resurrect the “supply chain blogs of note” series that some time ago I said I would do every month, but have sadly neglected. My featured blog this month is the SCRMBlog by Daniel Stengel, as it happens perhaps my fiercest competitor in the supply chain risk blogging scene, if there indeed is such a scene. Daniel’s blog has existed for not more than a little over a year, but he has already made considerable impact, and I often find him reviewing papers I haven’t heard of yet, or worse, have heard of and put on my to-do list, but not yet blogged about, meaning that he beat me to the finish line. Well, Daniel, this post is for you.

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Call for papers: Supply Chain Risk in China

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Revised on: 2011-08-04

Supply chain and operations management are increasingly global, and China has become the world’s manufacturing centre. Is China also becoming the world’s hotspot for supply chain risk? I doubt so., although most of my own posts related to China have a negative connotation. That said, the International Journal of Applied Management Science (IJAMS) has issued a call for papers for a special issue on Supply Chain and Operations Management in China. Although I used “Supply Chain Risk Management in China” as the attention grabber for this post, that is only one of many topics for articles that could be submitted to this special issue, which welcomes both theoretical concepts, empirical research and practical case studies.

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Call for papers: Global Supply Chain Risk Management

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Revised on: 2011-03-21

Are you currently planning to write or actually writing a paper on supply chain risk and wondering what would be a good journal to publish it in? Here is one for you: A special issue of Production and Operations Management titled Global Supply Chain Risk Management. The goal of this special issue is to publish high quality and relevant research on new ways to manage risk in global complex supply chain networks. Considering how interconnected and interrelated global supply chains are, its not surprising that this topic appears in one special issue after the other in one journal after the other. For supply chain risk researchers like me this is an advantage, as it is often easier to get published in a special issue than in a regular issue.

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Supply Chain Risk 2010

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Revised on: 2015-10-04

What is supply chain risk? What are typical supply chain risks? This is the 2010 version of my lecture on Supply Chain Risk for the MSc in Supply Chain Management and Industrial Logistics at Molde University College, Norway, held today, and this is the third consecutive year that I am giving this lecture. The lecture is meant to highlight some of the current literature on supply chain risk and to suggest further reading materials. You will not know everything there is to know about supply chain risk after the lecture, but you will know where to find it. Each year the lecture is improved from the previous year, and while the main topics are the same, there are always new things I include, so even if you have seen the 2008 lecture and the 2009 lecture on supply chain risk, this year’s is very different…again.

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Learning from toys – again

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Revised on: 2015-09-12

The year 2007 will be remembered as the year the toy industry was shaken by a seemingly endless stream of recalls. Can we learn something from the 2007 toy recall crisis? Is China really to blame, or are the drivers and causes of this crisis originating from much closer to home? Yes it is, says Mary B Teagarden, Professor of Global Strategy at the Thunderbird School of Global Management, in her 2009 article Learning from Toys: Reflections on the 2007 Recall Crisis, where she contends that much of blame lies with (American) businesses themselves.  Much of the focus has been on China and its contractors, but China is not solely to blame, as many of the  risk drivers come from the companies who outsourced the production, not the Chinese manufacturers.

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