Risk in Supply Chain Management

Winter season Project Dec' 2012

A Literature review on Risk in Supply Chain


Under the Direction of: Submitted by:

Prof. P. T. Jha Sandeep Singh

Dept. of Industrial Executive & Managing M. Tech 1st yr IIT Kharagpur 12IM60R03

Risk in supply chain

1 ) What is Risk?

Risk can be broadly defined as the opportunity of hazard, damage, loss, injury or any other unwanted consequences. A much more scientific meaning of risk was provided by the Royal Contemporary society (1992): ‘‘the probability a particular undesirable event takes place during a explained period of time, or perhaps results from a specific challenge. As being a probability or in other words of statistical theory, risk obeys all of the formal regulations of combining probabilities''. Others have developed this clinical perspective of risk, such as Mitchell (1995) and Gillet (1996). Mitchell (1995) defined risk because " the probability of loss as well as the significance of the loss towards the organization or perhaps individual”. Mitchell expressed this kind of as a formulation Risk = P (loss) X I actually (loss)

installment payments on your Why are source chains susceptible to risk?

Global source chains will be formed by a multitude of firms acting within a long and complex logistics system. The continuing mold and the specialty area of functions have made the chains susceptible to disturbances received from both inside and outside the machine. The presence of procedures outside the companies' own features has decreased, and with it a chance to identify dangers threatening these people and the complete supply cycle. Harland ou al. (2003) found that less than fifty percent of the dangers were noticeable to the key company inside the supply chains they analyzed. The risks that are identified are typically related to the companies' individual functions. In many instances, in terms of business impact, risks of dysfunction are much higher than the detailed risks (Tang, 2006). There may be therefore a need for a larger view in the supply cycle that would facilitate proper dangers identification.

The possible reasons behind this are:

• Product/Service complexity

• Outsourcing

• Globalization

• e-business

Product/Service complexity: Raising demand for product/service performance and variety, put together with more complex product/service and process technologies, has resulted in increasingly sophisticated products and services. Several dimensions of complexity affecting on source networks have been identified, which include: scale, technical novelty, amount of subsystems parts, degree of modification transformation procedure, regulatory involvement, number of actors in the network, web of п¬Ѓnancial preparations supporting the product/service, and extent of political and stake holder intervention (derived from Rush, 2001; Harlandetal., 2000; Harland, 1998). One of the effects of raising product/service difficulty is the recognition that sole п¬Ѓrms may not be excellent at everything; this gives rise to outsourcing.

Outsourcing techniques: Outsourcing consists of the use of experts to provide skills, technologies and resources to supply parts of the entire (Ford ain al., 1998; Gomes-Casseres, 1994; Knight and Harland, 2150; Lonsdale, 1999). Outsourcing not simply impacts within the organization and its particular immediate relationships, but as well changes source network composition and processes. Aggregating these types of changes; freelancing changes industry structures (Knight and Harland, 2000), changing the ‘balance' of supply markets (Walker et ing, 2001). Increased outsourcing allows access to global markets, and may cause companies to seek intercontinental sources intended for perceived ‘best in class' performance. This has contributed to source networks getting globalised.

The positive effect: Outsourcing is only one driver of the positive effect. The transnational mobility of capital, details, people, services and products is elevating, leading to ‘global entanglements' (Fombrun and Wally, 1992). Proper intent, global brands, economies of range and...

Referrals: |An scientific |Jorn-Henrik Thun, |Identify Risk |Empirical Analyze |Atkinson W. 2006

|analysis of supply |Daniel Hoeing |Probability of incident |Hypothesis |Z

|Risk Assessment in |Jyri P. G. Vilko, |Identify risk, classify, identify|Empirical study |Harland ain al. the year 2003

|multimodal Supply |Jukka M

|networks |Richard Brenchley, |risk influence, and build a supply|study/Case-studies |Harland et approach. 1999

| |Helen Walker |network risk application



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