Perspectives on Global Supply Chain Supply-Side Risk Management

Recent geo-political events, such as terrorism and political instability, and geological and climatologic disasters, have underscored the potential risks to global supply chains and their catastrophic financial impact on global companies. Disruptions can occur anywhere along the supply chain-at the inbound or supplier side, during the internal processes inside the company´s facilities, or at the outbound or customer-facing side. This paper focuses on risks to the inbound/supplier side part of the supply chain, in which parts or services move from the supplier to the manufacturer or retailer. The paper begins with a discussion of the reasons for increasing supply chain vulnerability, and then describes major threats to supply chains. Section IV discusses the way Supply Chain Risk Management is used to identify threats, assess them, and determine what actions should be taken to manage them. The paper then explains how the outcome of risk assessments can guide firms to handle risks, through forecasting, appropriate use of single or multiple suppliers, risk sharing, information sharing and collaboration with suppliers, flexible supplier relationships, and security prevention measures. The paper concludes with a discussion of research needs in the supply chain risk area