On uncertainty in supply chain risk management

Abstract

Purpose – The concept of uncertainty is a relevant yet little understood area within supply chain risk management. Risk is often associated with uncertainty, but in reality uncertainty is a much more elaborate concept and deserves more in-depth scrutiny. To bridge this gap, the purpose of this paper is to propose a conceptual framework for assessing the levels and nature of uncertainty in this context. Design/methodology/approach – The aim of the study is to link established theories of uncertainty to the management of risk in supply chains, to gain a holistic understanding of its levels and nature. The proposed conceptual model concerns the role of certainty and uncertainty in this context. Illustrative examples show the applicability of the model. Findings – The study describes in detail a way of analysing the levels and nature of uncertainty in supply chains. Such analysis could provide crucial information enabling more efficient and effective implementation of supply chain risk management. Practical implications – The study enhances understanding of the nature of the uncertainties faced in supply chains. Thus it should be possible to improve existing measures and analyses of risk, which could increase the efficiency and effectiveness of supply chain and logistics management. Originality/value – The proposed conceptual framework of uncertainty types in the supply chain context is novel, and therefore could enhance understanding of uncertainty and risk in supply and logistics management and make it easier to categorise, as well as initiate further research in the field.

Supply chain uncertainty and environmental management

“…The linkage of uncertainty to supply chain management is not new in the literature (Mason-Jones and Towill, 1998;Davis, 1993) and the concept of supply chain uncertainty has been widely defined and operationalized throughout the years (Vilko et al, 2014). Several studies in the operations management and green supply chain literature have developed models incorporating business or demand uncertainty as a key contextual variable (Kocabasoglu et al, 2007;Ketokivi and Jokinen, 2006).…”

“…Is there an operating context more conducive to adopt preventive approaches as opposed to control approaches? Building on the attention-based view of the firm (ABV) (Ocasio, 1997), this paper proposes that supply chain uncertainty (Vilko et al, 2014;van der Vorst and Beulens, 2002) is an important factor in (i) allocating organizations' resources to environmental management, and (ii) the type of environmental initiatives adopted (i.e., prevention vs. control). Because environmental management can be perceived as a non-core or 'peripheral' activity (Vachon and Klassen, 2006), higher level of supply chain uncertainty increases the likelihood that limited managerial attention will be diverted away from environmental management and more towards core activities.…”

Modeling disruption in a fresh produce supply chain

“…SC risk management focuses on understanding the vulnerabilities in the SC (Wagner and Bode, 2006, Diabat et al, 2012, Simchi-Levi et al, 2015, König and Spinler, 2016, the likelihood of risks (Sanchez-Rodrigues et al, 2010, Vilko et al, 2014, Gualandris and Kalchscmidt, 2015, the consequences if something goes wrong (Craighead et al, 2007, MacKenzie et al, 2014, and how SCs can respond or recover to those disruptions (Sheffi, 2005, Tang, 2006, Chang et al, 2015b. Even if a SC focuses on minimizing its vulnerabilities, disruptions can still occur, and SC managers need to think about how to manage a disruption if it occurs.…”

Differences in security risk perceptions between logistics companies and cargo owners

“…Uncertainty, on the other hand, occurs when neither the outcome nor the probability of an event can be estimated on beforehand (Urciuoli, 2011). Vilko et al (2014) add that a better understanding of uncertainty could provide crucial information to managers and improve risk mitigation skills in supply chain organizations. Also the WEF (2012) points out that even though it is possible to identify likely types of disruptions, the precise nature of these and their impact on global supply chain and transport networks are hard to predict.…”