Revisiting Supply Chain Risk by George A. Zsidisin & Michael Henke

Author:George A. Zsidisin & Michael Henke
Language: eng
Format: epub
ISBN: 9783030038137
Publisher: Springer International Publishing

2 Supply Chain Risk Management: Limitations and Opportunities for Research

Supply chain risk management is essentially a decision-making process whereby managers evaluate the sources of supply chain risk and make decisions on whether to accept an assessed risk or implement strategies to reduce the probability and/or potential consequences of its occurrence (Manuj and Mentzer 2008; Norrman and Jansson 2004). Over the years, the literature has offered various risk management strategies, such as multiple sourcing (Hendricks et al. 2009), risk sharing (Nishat et al. 2006) and flexible transportation (Tang 2006), that may reduce the probability and/or firm’s exposure to supply chain disruptions . These mitigation approaches have significant value in practice, including improved supply chain resilience , yielding higher supply base reliability (Tang 2006), lower system costs (Aqlan and Lam 2015), higher service levels (Wu et al. 2007) and shorter time to recovery (Sheffi and Rice 2005). However, a successful application of such strategies depends on the competence of supply chain managers and their ability to make crucial decisions when facing risk (Ambulkar et al. 2016).

To assist managers in such decision-making tasks, supply chain practitioners and scholars have developed risk management tools and frameworks (Kleindorfer and Saad 2005; Ritchie and Brindley 2007). The majority of these frameworks have made explicit and implicit assumptions on the nature of risk assessment and individuals’ decision rules (Bendoly et al. 2006; Gino and Pisano 2008; Loch and Wu 2007). The accuracy of these assumptions has been questioned by behavioural research in analogous fields such as finance and recently by the supply chain risk literature. Our aim in the next two sections is to challenge these assumptions from a behavioural point of view and propose some avenues for future research.

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