Managerial Perceptions of Supply Risk

TLDR

Business increasingly outsources production to focus on core competencies, yet this shift carries inherent supply risks. The study aims to identify inbound supply characteristics that shape managerial perceptions of supply risk and to develop a classification of these risk sources. Analysis of case studies shows that managers perceive supply risk based on how purchased items affect profitability, market dynamics, and supplier traits, and that recognizing these characteristics enables better risk‑management strategies.

Abstract

SUMMARY There has been a growing emphasis in business on outsourcing production activities and focusing on core competencies. The decision to outsource the production of goods and services, however, has inherent risk. The purposes of this article are to describe characteristics of inbound supply that affect managerial perceptions of supply risk and to create a classification of those supply risk sources. An analysis of case study data suggests that supply risk is perceived by the effect that purchased items and services have on corporate profitability, market factors, and supplier characteristics. By understanding the characteristics of supply risk, supply management professionals can implement strategies for better managing that risk.