Mitigating Supply Chain Vulnerability

Abstract

Competitive pressures are forcing companies to adopt practices and supply chain structures that will produce high quality, reliable, reasonably priced products with continuously shorter lead times. In order to meet these goals, companies are utilizing flatter organizational structures and narrower supply chains. Flatter structures and narrower supply chains typically reap the benefits of reduced coordination costs and improved organizational efficiencies. However, there exists an associated burden of an increased risk of a single point of failure that could leave the supply chain unable to deliver products to the market in a timely manner. This research study develops a model of risk, called the risk assessment index, to assess the vulnerability of different supply chain structures. It is determined that there exists significant trade-offs between the number of suppliers in the supplier base, product diversification, supply chain coordination, and supply chain efficiency that must be examined for a supply chain to remain competitive in a highly risky, vulnerable environment.

A comparison of supply chain vulnerability indices for different categories of firms

“…Svensson 2002, Peck 2006, Asbjørnslett 2009), analytically (e.g. Albino and Garavelli 1995, Bakshi and Kleindorfer 2009, Neureuther and Kenyon 2009 or presented normative recommendations on how to 'manage' supply chain vulnerability (e.g. Barnes andOloruntoba 2005, Stecke andKumar 2009).…”

“…Wu et al 2006, Schoenherr et al 2008, Neureuther and Kenyon 2009, Lockamy and McCormack 2010. Since 'the scientific development of a coherent supply chain management discipline requires that advances be made in the development of measurement instruments' (Chen and Paulraj 2004, p. 136), supply chain managers also need better methods of measuring the factors that determine the susceptibility of supply chains to supply chain disruptions, i.e.…”

An Adaptive Model for Assessing Supply Chain Risk

“…A comprehensive literature review on supply chain disruptions, including reference to Christopher and Juttner (2000), Choi and Krause (2006), Weber, Current, and Benton (1991), Tan (2001), Benjamin and Wigand (1995), Ellram and Billington (2001), Williamson (1975), Carley and Prietula (1994), Malone (1987), Talalayevsky (1994), Peck (2005), Barry (2004), Zsidisin, Ellram, Carter, and Cavinato (2004), Chopra and Sodhi (2004), and Ritchie and Brindlye (2007), is found in the initial research conducted by Neureuther and Kenyon (2009) and is not repeated here.…”

“…In their initial study, Neureuther and Kenyon (2009) addressed the risk associated with the design of the supply chain through the development of a risk-indexing model. The model employed several assumptions that limited its overall effectiveness.…”

“…The objective of this research is to develop an adaptive model to address the limitations noted in the Neureuther and Kenyon (2009) risk-indexing model. Specifically, the model will be modified to react to varying levels of contributions among firms within the supply chain, to react to different consequences of the sub-product groups, to react to the effects of learning over time, to react to the effects of economic change over time, and to react to the effects of multiply product lines.…”