Translating the supply chain uncertainty into a firm new value

Abstract

In recent years, the supply chain has attracted much attention from researchers because effective management of the supply chain enables a firm to gain a competitive advantage within the marketplace. Furthermore, the development of the new technologies has created increased complexity over the management of supply chain. Nevertheless, such technologies cannot eliminate every source of uncertainty and their connected risks in the network. For this reason, in this paper, a methodology is put forward, based on the theory of real options which can be applied to protect the supply network from risks that it faces. The paper considers the increasing relevance of the supply chain on business performance. In addition, it examines the sources of uncertainty inside the supply chain for every source of uncertainty, the associated risks are identified and links among them and real options are examined. Finally, the paper concludes with an useful framework identifying the type of possible options a firm can take in order to protect it from the risks growing from every source of uncertainty.