Supply Chain Risk: A Handbook of Assessment, Management & Performance (International Series in Operations Research & Management Science)

347 Pages·2008·4.88 MB·English

by  George A. Zsidisin

SUPPLY CHAIN RISK
A Handbook of Assessment,
Management, and Performance
INT. SERIES IN OPERATIONS RESEARCH & MANAGEMENT
SCIENCE
Series Editor: Frederick S. Hillier, Stanford University
Special Editorial Consultant: Camille C. Price, Stephen F. Austin State University
Titles with an asterisk (*) were recommended by Dr. Price
Bouyssou et al/ EVALUATION AND DECISION MODELS WITH MULTIPLE CRITERIA: Stepping
stones for the analyst
Blecker & Friedrich/ MASS CUSTOMIZATION: Challenges and Solutions
Appa, Pitsoulis & Williams/ HANDBOOK ON MODELLING FOR DISCRETE OPTIMIZATION
Herrmann/HANDBOOK OF PRODUCTION SCHEDULING
Axsäter/INVENTORY CONTROL, 2nd Ed.
Hall/PATIENT FLOW: Reducing Delay in Healthcare Delivery
Józefowska & W(cid:266)glarz/PERSPECTIVES IN MODERN PROJECT SCHEDULING
Tian & Zhang/ VACATION QUEUEING MODELS: Theory and Applications
Yan, Yin & Zhang/ STOCHASTIC PROCESSES, OPTIMIZATION, AND CONTROL THEORY
APPLICATIONS IN FINANCIAL ENGINEERING, QUEUEING NETWORKS, AND MANUFACTURING
SYSTEMS
Saaty & Vargas/ DECISION MAKING WITH THE ANALYTIC NETWORK PROCESS: Economic,
Political, Social & Technological Applications w. Benefits, Opportunities, Costs & Risks
Yu/TECHNOLOGY PORTFOLIO PLANNING AND MANAGEMENT: Practical Concepts and Tools
Kandiller/PRINCIPLES OF MATHEMATICS IN OPERATIONS RESEARCH
Lee & Lee/ BUILDING SUPPLY CHAIN EXCELLENCE IN EMERGING ECONOMIES
Weintraub/MANAGEMENT OF NATURAL RESOURCES: A Handbook of Operations Research Models,
Algorithms, and Implementations
Hooker/INTEGRATED METHODS FOR OPTIMIZATION
Dawande et al/ THROUGHPUT OPTIMIZATION IN ROBOTIC CELLS
Friesz/NETWORK SCIENCE, NONLINEAR SCIENCE and INFRASTRUCTURE SYSTEMS
Cai, Sha & Wong/ TIME-VARYING NETWORK OPTIMIZATION
Mamon & Elliott/ HIDDEN MARKOV MODELS IN FINANCE
del Castillo/ PROCESS OPTIMIZATION: A Statistical Approach
Józefowska/JUST-IN-TIME SCHEDULING: Models & Algorithms for Computer & Manufacturing Systems
Yu, Wang & Lai/ FOREIGN-EXCHANGE-RATE FORECASTING WITH ARTIFICIAL NEURAL
NETWORKS
Beyeret al/MARKOVIAN DEMAND INVENTORY MODELS
Shi & Olafsson/ NESTED PARTITIONS OPTIMIZATION: Methodology And Applications
Samaniego/ SYSTEM SIGNATURES AND THEIR APPLICATIONS IN ENGINEERING RELIABILITY
Kleijnen/ DESIGN AND ANALYSIS OF SIMULATION EXPERIMENTS
Førsund/HYDROPOWER ECONOMICS
Kogan & Tapiero/ SUPPLY CHAIN GAMES: Operations Management and Risk Valuation
Vanderbei/LINEAR PROGRAMMING: Foundations & Extensions, 3rd Edition
Chhajed & Lowe/ BUILDING INTUITION: Insights from Basic Operations Mgmt. Models and Principles
Luenberger & Ye/ LINEAR AND NONLINEAR PROGRAMMING, 3rd Edition
Drew et al/ COMPUTATIONAL PROBABILITY: Algorithms and Applications in the Mathematical Sciences
Chinneck/FEASIBILITY AND INFEASIBILITY IN OPTIMIZATION: Algorithms and Computation Methods
Tang, Teo & Wei/ SUPPLY CHAIN ANALYSIS: A Handbook on the Interaction of Information, System
and Optimization
Ozcan/HEALTH CARE BENCHMARKING AND PERFORMANCE EVALUATION: An Assessment using
Data Envelopment Analysis (DEA)
Wierenga/ HANDBOOK OF MARKETING DECISION MODELS
Agrawal & Smith/RETAIL SUPPLY CHAIN MANAGEMENT: Quantitative Models and Empirical Studies
Brill/LEVEL CROSSING METHODS IN STOCHASTIC MODELS
~A list of the early publications in the series is found at the end of the book~
SUPPLY CHAIN RISK
A Handbook of Assessment,
Management, and Performance
edited by
George A. Zsidisin
Bob Ritchie
123
Editors
George A. Zsidisin Bob Ritchie
Bowling Green State University Lancashire Business School
Bowling Green, OH University of Central Lancashire
USA United Kingdom
ISSN: 0884-8289
ISBN: 978-0-387-79933-9 e-ISBN: 978-0-387-79934-6
DOI: 10.1007/978-0-387-79933-9
Library of Congress Control Number: 2008930187
©2009 by Springer Science+Business Media, LLC
All rights reserved. This work may not be translated or copied in whole or in part without the
written permission of the publisher (Springer Science+Business Media, LLC, 233 Spring
Street, New York, NY 10013, USA), except for brief excerpts in connection with reviews or
scholarly analysis. Use in connection with any form of information storage and retrieval,
electronic adaptation, computer software, or by similar or dissimilar methodology now know or
hereafter developed is forbidden.
The use in this publication of trade names, trademarks, service marks and similar terms, even if
the are not identified as such, is not to be taken as an expression of opinion as to whether or not
they are subject to proprietary rights.
Printed on acid-free paper
springer.com
To my beautiful wife Laural, for her love and patience with me, and my three
wonderful sons, Nick, Lucas and Blaise, who teach me every day the importance
of life.
George A. Zsidisin
To my wonderful wife and soul-mate Celia whose patience, support and love make
each day worth living.
Bob Ritchie
Contents
Acknowledgements..............................................................................................xvii
Chapter 1: Supply Chain Risk Management – Developments, Issues
and Challenges.....................................................................................1
George A. Zsidisin and Bob Ritchie
1.1 Introduction...................................................................................................1
1.2 Background to SCRM..................................................................................2
1.3 Supply Chain Risk........................................................................................3
1.4 Structure of the Handbook............................................................................5
1.4.1 Risk Analysis, Assessment and Tools...................................................5
1.4.2 Supply Chain Design and Risk.............................................................7
1.4.3 Supply Chain Risk Management...........................................................8
1.4.4 Supply Chain Security........................................................................10
1.5 Background of ISCRiM and Handbook.....................................................11
1.6 Future Developments in SCRM.................................................................11
SECTION ONE - RISK ANALYSIS, ASSESSMENT AND TOOLS.................13
Chapter 2: Assessing the Vulnerability of Supply Chains..................................15
Bjørn Egil Asbjørnslett
2.1 Introduction.................................................................................................15
2.1.1 Background.........................................................................................16
2.1.2 Objective.............................................................................................16
2.1.3 Approach – Mission-Oriented.............................................................17
2.2 Concepts and Definitions............................................................................18
2.2.1 Search for Effectiveness and Efficiency.............................................19
2.2.2 Vulnerability Analysis versus Risk Analysis......................................21
2.3 Vulnerability of Supply Chains..................................................................21
2.3.1 The mission of Logistics and SCM.....................................................21
2.3.2 Resilience in Supply Chain Systems and SCM..................................22
2.3.3 Factors Contributing to Vulnerability and Resilience........................23
2.4 Vulnerability Analysis................................................................................23
2.4.1 Flow Sheet of the Analysis.................................................................23
2.4.1.1 Step One: Definition of Scope of Work...................................25
2.4.1.2 Step Two: Description of Context............................................25
2.4.1.3 Step Three: Taxonomy Development.......................................26
2.4.1.4 Step Four: Scenario Development............................................27
viii Contents
2.4.2 Documenting Scenarios in the Analysis.............................................28
2.4.2.1 Step Five: Criticality Ranking..................................................29
2.4.2.2 Step Six: Scenarios of Importance...........................................29
2.4.2.3 Step Seven: Potential for Reducing Likelihood and
Consequence.............................................................................30
2.4.3 The Second Round..............................................................................32
2.5 Summary.....................................................................................................32
References.........................................................................................................32
Chapter 3: Risk Management in Value Networks...............................................35
Jukka Hallikas and Jari Varis
3.1 Introduction.................................................................................................35
3.2 Value Networks..........................................................................................36
3.2.1 Business Ecosystem Health and Risks................................................37
3.2.2 Value Creation and Risk Management in Networks...........................39
3.3 Connecting Industry Change with Risk Analysis.......................................43
3.3.1 Trend Analysis on Network Level: Case ICT-Industry......................44
3.3.2 Future Drivers and Scenario Creation.................................................45
3.4 Risk Profiles of Interconnected Actors.......................................................47
3.5 Discussion...................................................................................................51
References.........................................................................................................52
Chapter 4: Predicting and Managing Supply Chain Risks..................................53
Samir Dani
4.1 Introduction.................................................................................................53
4.2 Uncertainty and Risk..................................................................................54
4.3 Risks in the Supply Chain..........................................................................55
4.4 Supply Chain Risk Management................................................................56
4.5 Proactive Supply Chain Risk Management................................................58
4.6 Predicting Supply Chain Risks...................................................................59
4.6.1 Tools for Risk Prediction....................................................................59
4.6.1.1 Data Mining.............................................................................59
4.6.1.2 Failure Mode Effect Analysis (FMEA)...................................61
4.7 The Predictive – Proactive Methodology...................................................62
4.8 Conclusion..................................................................................................64
References.........................................................................................................64
Chapter 5: Assessing Risks in Projects and Processes........................................67
Barbara Gaudenzi
5.1 Introduction.................................................................................................67
5.2 Managing Uncertainty and Risks in Projects and Processes......................70
5.2.1 Project and Process Objectives...........................................................71
5.2.2 Project and Process Management.......................................................71
5.2.3 Stakeholder Interests...........................................................................72
5.2.4 Performance Measurement.................................................................72
Contents ix
5.3 Risk Assessment.........................................................................................74
5.3.1 Step 1...................................................................................................76
5.3.2 Step 2...................................................................................................76
5.3.3 Step 3...................................................................................................77
5.3.4 Step 4...................................................................................................78
5.3.5 Step 5...................................................................................................78
5.4 Some Risk Factors in Processes and Projects.............................................79
5.5 Conclusions.................................................................................................80
References.........................................................................................................81
Chapter 6: Risk Management System – A Conceptual Model............................83
Arben Mullai
6.1 Introduction.................................................................................................83
6.2 Variations in Terms and Definitions..........................................................84
6.3 A Unified Concept of the Risk Management System................................85
6.4 Main Elements of the Risk Management System.......................................86
6.5 Risk Analysis..............................................................................................88
6.5.1 Preparing/Setting Up...........................................................................88
6.5.2 Analysis Process..................................................................................89
6.5.3 Conclusions and Recommendations...................................................91
6.6 Risk Evaluation...........................................................................................91
6.6.1 Select Criteria......................................................................................91
6.6.2 Compare Risks....................................................................................92
6.6.3 Rank Risks..........................................................................................93
6.6.4 Develop Strategies and Measures.......................................................93
6.7 Risk Management.......................................................................................94
6.7.1 Identify Options..................................................................................94
6.7.2 Decision-Making.................................................................................95
6.7.3 Planning...............................................................................................95
6.7.4 Implement...........................................................................................96
6.7.5 Follow-Up and Monitoring.................................................................96
6.8 Risk Communication..................................................................................96
6.9 Re-Assessment – A Continuous Cyclic Process........................................98
6.10 Summary...................................................................................................98
References.........................................................................................................98
Chapter 7: Using Simulation to Investigate Supply Chain Disruptions............103
Steven A. Melnyk, Alexander Rodrigues, and Gary L. Ragatz
7.1 Introduction...............................................................................................103
7.2 Understanding Supply Chain Disruptions: Background..........................104
7.3 Modeling Supply Chain Disruptions: A Framework................................106
7.3.1 The Triggering Event........................................................................106
7.3.2 The Simulation Model......................................................................110
7.4 Parameters and Experimental Factors......................................................111
7.4.1 Experimental Factors........................................................................111
7.4.2 Performance Measures......................................................................112
x Contents
7.5 Generating and Analyzing Simulation Data.............................................113
7.6 Classical Statistical Analysis of Simulation-Based Experimental Data...114
7.7 Intervention Analysis: Evaluating the Transient Response......................116
7.8 Outlier Detection......................................................................................117
7.9 Dealing with Replications: Time Series Considerations..........................117
7.10 Other Applications..................................................................................118
7.11 Methodological Triangulation................................................................118
7.12 Concluding Comments...........................................................................119
References.......................................................................................................120
SECTION TWO - SUPPLY CHAIN DESIGN AND RISK................................123
Chapter 8: Single Versus Multiple Sourcing: A Supply Risk
Management Perspective.................................................................125
Constantin Blome and Michael Henke
8.1 Introduction...............................................................................................125
8.2 The Decision of Single and Multiple Sourcing........................................126
8.3 Evaluation of the Single and Multiple Sourcing Decision
from a Risk Perspective............................................................................128
8.4 Integrating Supply Risk Management into an Enterprise
Risk Management System........................................................................133
References.......................................................................................................134
Chapter 9: The Role of Product Design in Global Supply Chain
Risk Management............................................................................137
Omera Khan, Martin Christopher, and Bernard Burnes
9.1 Introduction...............................................................................................137
9.2 Trends in the Textile and Clothing Industry.............................................138
9.3 The Trend to Global/Off Shore Sourcing.................................................139
9.4 Research Method......................................................................................141
9.5 Case Study of Marks and Spencer: Part One............................................143
9.5.1 Company Introduction......................................................................143
9.5.2 A Shift to Global Sourcing................................................................144
9.5.3 Central Procurement.........................................................................145
9.5.4 The Impact of Changed Supplier Relationships...............................145
9.6 Case Study: Part Two..............................................................................146
9.6.1 Intelligent Risk Taking......................................................................146
9.6.2 Consolidation of the M&S Supply Chain.........................................147
9.6.3 Internalising the Design Process to Manage Supply Chain Risk......148
9.7 The Hidden Risks of Off Shore Sourcing.................................................149
9.8 Strategies for Managing Risk in a Global Market....................................150
9.9 Conclusions...............................................................................................151
References.......................................................................................................152