An analysis of supply risk assessment techniques

TLDR

Purchasing organizations face supplier‑interaction risks that may be ignored, managed, or addressed, and they can assess these risks proactively or reactively. The study explores, analyzes, and derives common themes on supply risk assessment techniques. The research shows that techniques focusing on supplier quality, process improvement, and disruption reduction also provide information, align buyer‑seller goals, and reduce outcome uncertainty.

Abstract

Purchasing organizations are exposed to risk in their interactions with suppliers, whether it is recognized and managed, addressed in a cursory manner, or altogether ignored. In order to understand the supply risk that exists, purchasing organizations can proactively assess the probability and impact of supply risk in advance, or reactively discover risk after a detrimental event occurs. The purpose of this study is to explore, analyze, and derive common themes on supply risk assessment techniques. Findings from this research indicate that purchasing organizations can assess supply risk with techniques that focus on addressing supplier quality issues, improving supplier processes, and reducing the likelihood of supply disruptions. From an agency theory perspective, these risk assessment techniques facilitate the obtaining of information by purchasing organizations to verify supplier behaviors, promoting goal congruence between buying and selling firms, and reducing outcome uncertainty associated with inbound supply.