Purchasing organization involvement in risk assessments, contingency plans, and risk management: an exploratory study

Abstract

Purchasing organizations use various strategies and techniques to minimize the chance and impact of detrimental events occurring in the supply base. Supply risk assessments are a necessary first step in managing those risks. An analysis of in-depth interviews with purchasing professionals from nine companies indicates that purchasing organizations often create contingency plans, and implement process-improvement and buffer strategies in response to perceived supply risks discovered in assessments. Even though risk assessments, contingency plans, and risk management efforts are generally acknowledged as being important, many of those interviewed believed that there was not enough done in their organizations to mitigate supply-related risks.

Development of a risk-oriented strategic sourcing (ROSS) framework for the construction and electronics manufacturing industries

“…While the appropriate consideration influences strategic risks, leads to a competitive advantage and affects business performance (Anderson and Katz, 1998;Clarke and Varma, 1999;Harland et al, 2003;Hallikas et al, 2004;Blackhurst et al, 2005), the consideration and evaluation of risks should be mandatory in sourcing. However, many companies lack the real implementation and preparation provided by contingency plans (Zsidisin et al, 2000;Chopra and Sodhi, 2004;Li and Barnes, 2008;Meena et al, 2011). The findings are surprising because at the same time companies' exposure increased due to new risks including cyber-attacks, viruses, terror attacks and the financial crisis, particularly given the increasing globalisation trends and the use of low-cost country suppliers, leading to complex and lean supply chains (Wagner and Bode, 2006;Khan and Burnes, 2007).…”

“…The findings are surprising because at the same time companies' exposure increased due to new risks including cyber-attacks, viruses, terror attacks and the financial crisis, particularly given the increasing globalisation trends and the use of low-cost country suppliers, leading to complex and lean supply chains (Wagner and Bode, 2006;Khan and Burnes, 2007). It seems that companies are unprepared for such risks, or need to trade-off between the cost and rewards of risk management if a risk never occurs (Zsidisin et al, 2000;Chopra and Sodhi, 2004).…”

“…Seven companies had not yet established a risk management programme, while the other three work informally on risk management. The results are presented in Considering the research by Zsidisin et al (2000), only three out of nine companies performed a risk management assessment, while Jüttner (2005) discovered that 40% of companies do not have risks plans for their supplier. The findings of this research project show a slight improvement to 50%, but this is still lagging behind what is expected, despite the possibility that companies are trading off between risks and benefit (Chopra and Sodhi, 2004).…”

“…and event risk (reputation, legal and regulatory, disaster and political). Zsidisin et al (2000) reveals that only three out of nine companies performed a formal risk assessment or used contingency plans during sourcing. In many cases there was a trade-off between time and money, especially if the risk never occurred.…”

Modelos para gestão de riscos em cadeias de suprimentos: revisão, análise e diretrizes para futuras pesquisas

“…Sob esta perspectiva, os riscos referentes ao fornecimento têm sido os mais abordados por tais pesquisas. A busca por estratégias visando melhorias do processo de fornecimento, principalmente no que diz respeito a reduzir interrupções e custos, são as questões mais focadas nesta subcategoria (CAVINATO, 2004;TANG, 2006a;TOMLIN, 2006;PANELLI;UPTON, 2000;ZSIDISIN, 2003;ELLRAM, 2003;. Ainda neste contexto, cabe ressaltar os trabalhos de Svensson (2002ade Svensson ( , b, c, d, 2003a, os quais destacam a importância da colaboração entre empresas como forma de diminuir as vulnerabilidades, tanto no fornecimento de recursos como no nível de serviço aos clientes.…”