Managing Supply Risk-Supply Side Perspective - Abstract Number 015-0501 Managing Supply Chain Risk A Supply-Side Perspective Daniel Kern

Managing Supply Risk-Supply Side Perspective - Abstract...

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1 Abstract Number: 015-0501 Managing Supply Chain Risk: A Supply-Side Perspective Daniel Kern Friedrich-Alexander-University of Erlangen-Nuremberg, Lange Gasse 20, 90403 Nuremberg, Germany; e-mail: [email protected]; +49 911 5302-454 Roger Moser European Business School (EBS), Rheingaustrasse 1, 65375 Oestrich-Winkel, Germany; e-mail: [email protected]; +91 9902760938 Evi Hartmann Friedrich-Alexander-University of Erlangen-Nuremberg, Lange Gasse 20, 90403 Nuremberg, Germany; e-mail: [email protected]; +49 911 5302-444 Marco Moder Friedrich-Alexander-University of Erlangen-Nuremberg, Lange Gasse 20, 90403 Nuremberg, Germany; e-mail: [email protected]; +49 911 5302-444 POMS 21 st Annual Conference Vancouver, Canada May 7 to May 10, 2010
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2 Managing Supply Chain Risk: A Supply-Side Perspective ABSTRACT Supply chain risk management has gained significant attention in the field of operations management. In the past, research focused on initiatives that made supply chains leaner, resulting in efficient but vulnerable operations. In our study, we develop a model for upstream supply chain risk management. We collected survey data of 162 companies for the empirical analysis. In a path analytic model we link the risk management activities risk identification, risk assessment and risk mitigation to risk performance. Many studies have stressed the importance of an iterative risk management process that is constantly adapted to the changing environment. Therefore, we include the effect of a continuous improvement process on the risk management activities. The data provides support to all our hypotheses confirming risk management’s contribution to risk performance. In times of economic crisis, our results provide managers with an even stronger argument to invest in supply chain risk management initiatives. Keywords: supply chain risk management; continuous improvement, structural equations model
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3 1. Introduction The recent past has seen a growing interest in supply chain management topics within the field of operations management research (Kouvelis, Chambers, & Wang, 2006). Outsourcing, reduction of inventories and increasing inter-firm cooperation are only a few initiatives that helped to make supply chains leaner and more efficient. However, Kleindorfer and Saad (2005) argue that extreme leanness results in a cost-efficient but fragile supply chain. In absence of risk, a lean process may outperform whereas in a world of uncertainty an efficient but susceptible supply chain with a high risk exposure might even threaten the other operations of a company. In fact, the impact of supply chain disruptions on company performance has increased over the past few years (Hendricks & Singhal, 2005). Single sourcing (Hendricks & Singhal, 2005; Tomlin, 2006), low inventories (Craighead, Blackhurst, Rungtusanatham, & Handfield, 2007; Hendricks & Singhal, 2005; Schmitt & Singh, 2009), increased product complexity (Hendricks & Singhal, 2005) and a growing importance of purchasing as a value creation function (Zsidisin, Panelli, & Upton, 2000) allow only little margin for error and leave supply chains highly vulnerable. At the
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