Quality risk in global supply network

The recent product recalls in Chinese made product and a series of product harm scandals ranging from milk powder to unsafe toy indicate that firms and consumers alike are vulnerable to quality risks in a global supply chain. Supply chains are extended by outsourcing and stretched by globalization, which greatly increases the complexity of supply network and decrease the visibility in risk and operation process. Thus, it is hard for firms to manage the product quality of such a multi-layer supply chain which has a low visibility of material origin. In this paper, we explore the issues of quality related risk in multi-tiered global supply chain, and argue that better visibility can improve firm risk management performance thus minimize the threat of product harm crisis. We also propose that adopting strategic supplier management with applying various risk management strategies on sourcing materials, could be utilized as effective mechanisms to improve performance of risk management and thus alleviate the impact of product harm risks to firms´ financial performance.