SUPPLY CHAIN RISK. 4y Springer. A Handbook of Assessment, Management, and Performance. George A. Zsidisin Bob Ritchie. edited by

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1 SUPPLY CHAIN RISK A Handbook of Assessment, Management, and Performance edited by George A. Zsidisin Bob Ritchie 4y Springer

2 Acknowledgements xvii Chapter 1: Supply Chain Risk Management - Developments, Issues and Challenges 1 George A. Zsidisin and Bob Ritchie 1.1 Introduction Background to SCRM Supply Chain Risk Structure of the Handbook Risk Analysis, Assessment and Tools Supply Chain Design and Risk Supply Chain Risk Management Supply Chain Security Background of ISCRiM and Handbook Future Developments in SCRM 11 SECTION ONE - RISK ANALYSIS, ASSESSMENT AND TOOLS 13 Chapter 2: Assessing the Vulnerability of Supply Chains 15 Bjorn Egil Asbjornslett 2.1 Introduction Background Objective Approach- Mission-Oriented Concepts and Definitions Search for Effectiveness and Efficiency Vulnerability Analysis versus Risk Analysis Vulnerability of Supply Chains The mission of Logistics and SCM Resilience in Supply Chain Systems and SCM Factors Contributing to Vulnerability and Resilience Vulnerability Analysis Flow Sheet of the Analysis Step One: Definition of Scope of Work Step Two: Description of Context Step Three: Taxonomy Development Step Four: Scenario Development 27

3 viii Contents Documenting Scenarios in the Analysis Step Five: Criticality Ranking Step Six: Scenarios of Importance Step Seven: Potential for Reducing Likelihood and Consequence The Second Round Summary 32 References 32 Chapter 3: Risk Management in Value Networks 35 Jukka Hallikas and Jar i Varis 3.1 Introduction Value Networks Business Ecosystem Health and Risks Value Creation and Risk Management in Networks Connecting Industry Change with Risk Analysis Trend Analysis on Network Level: Case ICT-Industry Future Drivers and Scenario Creation Risk Profiles of Interconnected Actors Discussion 51 References 52 Chapter 4: Predicting and Managing Supply Chain Risks 53 Samir Dani 4.1 Introduction Uncertainty and Risk Risks in the Supply Chain Supply Chain Risk Management Proactive Supply Chain Risk Management Predicting Supply Chain Risks Tools for Risk Prediction Data Mining Failure Mode Effect Analysis (FMEA).' The Predictive - Proactive Methodology Conclusion 64 References 64 Chapter 5: Assessing Risks in Projects and Processes 67 Barbara Gaudenzi 5.1 Introduction Managing Uncertainty and Risks in Projects and Processes Project and Process Objectives Project and Process Management Stakeholder Interests Performance Measurement 72

4 ix 5.3 Risk Assessment Step Step Step Step Step Some Risk Factors in Processes and Projects ' Conclusions 80 References 81 Chapter 6: Risk Management System - A Conceptual Model 83 Arben Mull a i 6.1 Introduction Variations in Terms and Definitions A Unified Concept of the Risk Management System Main Elements of the Risk Management System Risk Analysis Preparing/Setting Up Analysis Process Conclusions and Recommendations Risk Evaluation Select Criteria Compare Risks Rank Risks Develop Strategies and Measures Risk Management Identify Options Decision-Making Planning Implement Follow-Up and Monitoring Risk Communication Re-Assessment - A Continuous Cyclic Process Summary 98 References 98 Chapter 7: Using Simulation to Investigate Supply Chain Disruptions 103 Steven A. Melnyk, Alexander Rodrigues, and Gary L Ragatz 7.1 Introduction Understanding Supply Chain Disruptions: Background Modeling Supply Chain Disruptions: A Framework The Triggering Event The Simulation Model Parameters and Experimental Factors Experimental Factors Performance Measures 112

5 7.5 Generating and Analyzing Simulation Data Classical Statistical Analysis of Simulation-Based Experimental Data Intervention Analysis: Evaluating the Transient Response Outlier Detection Dealing with Replications: Time Series Considerations Other Applications Methodological Triangulation Concluding Comments 119 References 120 SECTION TWO - SUPPLY CHAIN DESIGN AND RISK 123 Chapter 8: Single Versus Multiple Sourcing: A Supply Risk Management Perspective 125 Constantin Blome and Michael Henke 8.1 Introduction The Decision of Single and Multiple Sourcing Evaluation of the Single and Multiple Sourcing Decision from a Risk Perspective Integrating Supply Risk Management into an Enterprise Risk Management System 133 References 134 Chapter 9: The Role of Product Design in Global Supply Chain Risk Management 137 Omera Khan, Martin Christopher, and Bernard Burnes 9.1 Introduction Trends in the Textile and Clothing Industry The Trend to Global/Off Shore Sourcing Research Method Case Study of Marks and Spencer: Part One Company Introduction A Shift to Global Sourcing Central Procurement The Impact of Changed Supplier Relationships Case Study: Part Two Intelligent Risk Taking Consolidation of the M&S Supply Chain Internalising the Design Process to Manage Supply Chain Risk The Hidden Risks of Off Shore Sourcing Strategies for Managing Risk in a Global Market Conclusions 151 References 152

6 xi Chapter 10: How Much Flexibility Does It Take to Mitigate Supply Chain Risks? 155 Christopher Tang and Brian Tomlin 10.1 Introduction Supply Chain Risks and the Role of Flexibility Supply Risks Process Risks Demand Risks Rare-but-Severe Disruption Risks Other Risks The Role of Flexibility in Mitigating Risks The Power of Flexibility: How Much Flexibility Do You Need? Supply-Cost Risk: The Benefit of Flexibility via Multiple Suppliers Supply-Commitment Risk: The Benefit of Flexibility via a Flexible Supply Contract Process Risk: The Benefit of Flexibility via Flexible Manufacturing Processes Demand Risk: The Power of Flexibility via Postponement Demand Risk: The Power of Flexibility via Responsive Pricing Concluding Remarks 170 References 172 SECTION THREE - SUPPLY CHAIN RISK MANAGEMENT 175 Chapter 11: Enterprise and Supply Risk Management 177 Michael Henke 11.1 Introduction: Enterprise Risk Management for Supply Management ERM Starting Points ERM Monitoring and Managing of Supply Risks Advances in Operationalizing Tasks for Supply Controlling and Risk Management Conclusions 184 References 185 Chapter 12: Pre-Contract Risk in International PF1 Projects 187 Simon A. Burtonshaw-Gunn 12.1 Introduction Construction Prime Contracting and the Management of Risk Risks in International PFI Projects Conclusion 195 References 197

7 xii Contents Chapter 13: Supply Chain Risk Management for Small and Medium-Sized Businesses 199 Uta Juttner andarne Ziegenbein 13.1 Introduction The Research Project Researcher-Driven Objective Project Plan Requirements for Managing Supply Chain Risks in SMEs The Four Partnering Companies Findings from the Initial Supply Chain Risk Analyses Requirements for the Practical SCRM Methodology Evaluating Existing Supply Chain Risk Management Approaches ' Scope of Analysis Objectives Implementation A Practical SCRM Approach for SME Phase 1 - Identification of Supply Chain Risks Step Defining the Supply Chain for Analysis Step Supply Chain Mapping Step Identification of Relevant Supply Chain Risks Phase 2 - Assessment of Supply Chain Risks Step 2.1 -Assessment of Supply Chain Risks and Mitigation Measures Step 2.2 -Analysis of the Supply Chain Portfolio Phase 3 - Supply Chain Risk Mitigation Step 3.1 -Identification of Mitigation Actions Step Assessment of Mitigation Actions Step Decision on Mitigation Actions and Action Plans : Conclusion 216 References 216 Chapter 14: Psychological Foundations of Supply Chain Risk Management 219 Michael E. Smith 14.1 Introduction Perception in Risk The Challenged Decision Maker The Shortcuts We Take The Number of Suppliers Issue - Reconsidered Practical Steps for Supply Management Professionals 230 References 231

8 xiii Chapter 15: Behavioural Risks in Supply Networks 235 M. Setter 15.1 Introduction Conceptual Model Research Methodology Instrument Sample and Data Collection Scale Development Results Analysis of the Measures and Model Fit Structural Model Results Discussion Managerial Implications Conclusions 244 References 245 Chapter 16: SCRM and Performance - Issues and Challenges 249 Bob Ritchie and Clare Brindley 16.1 Introduction Risk and Performance Risk - Uncertainty and Risk Management Performance Timeframe - Risk and Performance Performance and Risk Metrics Risk-Performance: Sources, Profiles and Drivers Risk Management Responses Risk and Performance Outcomes Empirical Application - Illustrative Case Case Study Supply Chain Members' Awareness of SCRM Risk Drivers - Identification, Evaluation and Prioritization Perception of the Risk/Performance Interaction Risk Management Responses Conclusions and Future Developments 267 References 269 Chapter 17: Dominant Risks and Risk Management Practices in Supply Chains 271 Stephan M. Wagner and Christoph Bode 17.1 Introduction Nomenclature and Conceptual Framework Supply Chain Risk Supply Chain Disruption and Supply Chain Risk Sources Demand Side Risks Supply Side Risks 276

9 xiv Contents Regulatory, Legal, and Bureaucratic Risk Infrastructure Risks Catastrophic Risks Supply Chain Vulnerability and Its Drivers Supply Chain Risk Management Cause-Oriented Supply Chain Risk Management Practices Effect-Oriented Supply Chain Risk Management Practices Questionnaire Development and Data Collection Results and Discussion Supply Chain Risks Supply Chain Risk Management Managerial Implications and Conclusions 286 References 287 SECTION FOUR - SUPPLY CHAIN SECURITY 291 Chapter 18: Food Supply Chain Security: Issues and Implications 293 Douglas Voss and Judith Whipple 18.1 Introduction Importance and Challenges of Food Supply Chain Security Why Firms Focus on Supply Chain Security Security Best Practices in the Food Industry Encouraging Security Enhanced Supply Chains The Impact of Security of Supplier Selection in the Food Industry Conclusion 303 References 304 Chapter 19: Supply Chain Security: A Dynamic Capabilities Approach 307 Chad Autry and Nada Sanders 19.1 Introduction Supply Chain Security Concepts.: Supply Chain Security and Security Management Supply Chain Security Orientation Securing Supply Chains Through Capability Development Building Supply Chain Continuity Through Security Management Capabilities Processes Build Security into the Process Supply Chain Visibility Sourcing Strategy Inventory Management Product and Process Redesign Demand Based Management Forecasting 320

10 xv Technology Radio Frequency Identification Specific Security Applications of Technology Human Resources Top Management Support Employee Suppliers Governmental Security Initiatives Conclusion 328 References 328 Chapter 20: Securing Global Food Distribution Networks 331 Nicole Mau and Markus Mau 20.1 Challenges in Providing Food Safety and Quality Problems in the Food Supply Chain Requirement Shift Through Globalized Procurement and BtoB-Solutions Risk Management Vertical Integration Versus Risk Management Efforts to Solve Supply Chain Security Problems A Potential Solution Setup of Supply Chain Security 341 References 344 Index 345

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