An integrated approach to supply chain risk analysis

TLDR

Supply chain risk management is increasingly studied, yet companies lack a risk culture and existing approaches are too generic or rely on data not routinely recorded. The study develops and intends to validate a risk identification and analysis methodology that integrates standard supply chain and risk management tools, with future work extending it to assess multiple effects of risky events. The methodology applies the Supply Chain Operations Reference Model for process analysis, the Risk Breakdown Structure and Matrix for risk identification and analysis, and uses existing performance indicators to assess risk impacts. The framework enhances risk awareness and communication, and a base case applied to a hypothetical manufacturing supply chain demonstrates its applicability. Keywords include risk management, supply chain, and performance measurement; the authors thank Lisha Chen of Politecnico di Torino for her contribution.

Abstract

Abstract Despite the increasing attention that supply chain risk management is receiving by both researchers and practitioners, companies still lack a risk culture. Moreover, risk management approaches are either too general or require pieces of information not regularly recorded by organisations. This work develops a risk identification and analysis methodology that integrates widely adopted supply chain and risk management tools. In particular, process analysis is performed by means of the standard framework provided by the Supply Chain Operations Reference Model, the risk identification and analysis tasks are accomplished by applying the Risk Breakdown Structure and the Risk Breakdown Matrix, and the effects of risk occurrence on activities are assessed by indicators that are already measured by companies in order to monitor their performances. In such a way, the framework contributes to increase companies’ awareness and communication about risk, which are essential components of the management of modern supply chains. A base case has been developed by applying the proposed approach to a hypothetical manufacturing supply chain. An in-depth validation will be carried out to improve the methodology and further demonstrate its benefits and limitations. Future research will extend the framework to include the understanding of the multiple effects of risky events on different processes. Keywords: risk managementsupply chainperformance measurement Acknowledgements The authors are grateful to Lisha Chen, M.Sc. in Management Engineering at Politecnico di Torino, for her active involvement in the research.