© Vlerick Leuven Gent Management School | 1
Supply Chain Risk Managementa unique function, or simply one of the Supply Chain Manager’s tasks?
Ann Vereecke, Vlerick Leuven Gent Management School and Ghent University
Els Pandelaere, Vlerick Leuven Gent Management School
Danny Boeykens, MöBiUS
© Vlerick Leuven Gent Management School | 2
In response to the economic recession, companies
are intensifying their efforts to optimise their costs
in the supply chain, but they often overlook the
related supply chain risks. Despite some supply chain best
practices, globalisation has increased supply chain risks.
Therefore, cost optimisation should go hand-in-hand with
managing risks in the supply chain.
As risk management – and supply chain risk management
in particular – has recently come to the attention of both
researchers and practitioners, an advancement in risk
management practices can be noticed over the past few
years. However, according to several research reports, only
a small minority of companies are operating at a mature
stage of supply chain risk management.
This report summarises the results of a research study on
supply chain risk management conducted by a team of
researchers at Vlerick Leuven Gent Management School in
collaboration with our partner MöbIuS. Over 250 compa-
nies responded to our questionnaire, which assessed the
level of supply chain risk these companies were facing as
well as the level of maturity they had reached in managing
their supply chain risk.
The risk of supply chain disruptions is real
A well-known case of a supply chain disruption is the crisis
faced by Coca-Cola in Europe in mid-1999, when people fell ill
after consuming the soft drink. Coca-Cola had to recall about
30 million cans and bottles – the largest product recall in its
113-year history. For the first time, the entire inventory of
Coca-Cola’s products in Belgium was banned from sale. Soon
after that incident, France, Luxembourg and The Netherlands
also banned or restricted the sale of Coca-Cola products. It is
estimated that this product recall caused over $200 million in
expenses and lost revenue and damaged the brand image of the
trade-marked products of The Coca-Cola Company (Johnson and
Peppas, 2003).
Another noted example is the fire that destroyed a Philips
electronics component plant in New Mexico in 2000. This plant
supplied both Nokia and Eriksson. Nokia reacted promptly,
securing components from the market. Eriksson, on the other
hand, was left with supply shortages that translated into an
estimated $390 million in lost sales. The most significant
consequence of this supply chain disruption may have been the
subsequent loss of Eriksson’s market share dominance to Nokia
(Sheffi, 2007).
These cases illustrate that the risk of supply chain disruptions
is very real and that such disruptions can have large financial
implications. In fact, according to a study by Aberdeen in 2005,
a company typically has an average of 12.9 supply chain disruptions
per year, and 73% of industries worldwide have experienced a
major supply chain disruption during the last 5 years.
In 2008, more than 75% of supply chain executives stated that
supply chain risk was still increasing (Marsh, 2008), and no less
than 73% of the CEOs, CFOs and COOs were concerned about
supply chain risk (Mc Kinsey, 2008).
Clearly, supply chain risk management is a necessity. Moreover,
in a global downturn, having a supply chain that is optimised for
risk management as well as for cost management can be a source
of competitive advantage.
Over 250 companies responded to our questionnaire, which assessed the
level of supply chain risk these companies were facing as well as the level
of maturity they had reached in managing their supply chain risk.
© Vlerick Leuven Gent Management School | 3
Why supply chain risk has increased
Ironically, one of the main reasons that supply chain risk has
increased in recent years is the implementation of supply chain
best practices. Low-cost sourcing, lean supply chains, just-in-
time, and VMI have helped reduce inventories and eliminate
redundancies in the supply chain. However, these practices
have also made supply chain risk more visible: prior to their
implementation, buffers and slack in the supply chain concealed
certain risks.
Globalisation has also played a role in the increase in supply
chain risk over the past decade. Trends such as outsourcing,
global sourcing and off-shoring have increased the complexity of
the supply chain, making monitoring and control more difficult.
• More disruptions likely, • But inventory is a buffer
• Low inventory • But fewer disruptions due to greater control
High risk zone • More frequent disruptions • Low inventory buffer
Tow
ard
s a
lean S
C
with low
invento
ries
Towards a complex SC
Figure 1: Complex versus lean supply chain (Marsh, 2008)
Figure 1 shows that managing supply chain risk is an especially
critical task in companies with a lean, global supply chain.
Unless they have carefully assessed the risks and have put
mitigation strategies in place, these companies will experience
a greater degree of supply chain disruption, while having less
inventory with which to buffer disruption.
The supply chain risk research project
MöBIUS and Vlerick Leuven Gent Management School joined
forces to conduct a research project on supply chain risk
management. The project had two objectives:
The first objective was to be able to support companies in
assessing the impact of supply chain risks on their performance.
In order to reach this objective, we developed a supply chain risk
assessment tool. By means of Monte Carlo simulation, the tool
allows us to estimate the impact of events in the supply chain on
the chain’s performance.
Essentially, this tool:
> provides an assessment of the impact of disruptions on a
company’s operational and financial results.
> provides an assessment of the impact of mitigation strategies,
such as a multiple sourcing strategy or an extra safety stock,
on the company’s operational and financial results. This
assessment is based on a return on investment (ROI) analysis
of the different mitigation strategies.
> supports companies in managing their supply chain risks.
The second objective of the project was to gain an understanding
of the types and levels of risks companies face in their supply
chain, and to estimate the maturity companies demonstrate in
managing these supply chain risks. For this purpose, we develo-
ped a survey instrument. The insights gained from conducting
the survey in over 250 companies are summarised in this report.
In a later phase, we plan to use the survey as a benchmark tool
that will allow practitioners to measure their company’s supply
chain risk maturity relative to their peers.
The survey respondents
As we see in Figure 2, most of the respondents are active in
Western Europe, mainly in Belgium and France. About half of
them hold a position in supply chain management (Figure 3).
Figures 4 and 5 show that mid-sized as well as large companies
from a variety of industries are represented in the survey.
Countryrespondent
Belgium
France
Netherlands
UK
Switzerland
Other
Total
47%
26%
7%
5%
3%
12% Belgium
France
Netherlands
UK
Switzerland
Other
Figure 2: Country office base respondent
Netherlands
Switzerland
© Vlerick Leuven Gent Management School | 4
General Management 9,5
Supply Chain Management 52,2
Procurement, Purchasing, Materials or Commodity Management 6,5
Manufacturing, Operations or Quality Management 11,4
Financial Management 1,5
Risk Management 2,5
Other, please specify: 16,4
GeneralManagement
9%
SupplyChain
Management
52%
:Procurement,Purchasing,
MaterialsorCommodity
Management
7%
?Manu@acturing,OperaBons
orQualityManagement
11%
FinancialManagement
2%
RiskManagement
3% Other
16%
Figure 3: Respondent’s position
Sizeofbusinessunit
Under€100Million
€100M‐€500M
€500M‐€1000M
Over1000M37%
27%
11%
25%
Under€100Million
€100M‐€500M
€500M‐€1000M
Over1000M
Figure 4: Size of business unit
Figure 5: Respondents per industry
Classification of supply chain risk
Supply chains are often very complex. They can involve many dif-
ferent players – production units, distribution centres, suppliers
and logistics providers, and customers – all connected via flows
of goods and flows of information. Therefore, companies are
subject to multiple risk drivers, internally as well as externally,
that can cause supply chain disruptions. Disruptions can occur
at each node in the supply chain, with potential impacts on
other nodes in the chain.
Based on a literature review and on several in-depth interviews
with managers, we identified 33 different types of supply
chain risks (see Table 1). These 33 risks can be grouped into 5
categories: demand, supply, process, control and environmental
risk (Figure 6).
Figure 6: Categories of supply chain risks
Demand risk is the risk that the company will experience
demand that is not anticipated, and provisioned for, in the
chain. Examples are: dependency on a small number of large
customers, and the possibility that radically new products will
replace existing products.
Supply risk originates from suppliers that are unable to deliver
the materials that the company needs to meet its production
requirements and/or demand forecasts. Examples are: a lack of
supply capacity, or dependency on suppliers that are financially
unsound.
Process risk is associated with the variability of a company’s
operational processes, such as variations in production cost,
quality problems or the possibility of a product recall.
Control risk arises from the application of the assumptions, rules,
systems and procedures that govern how an organisation exerts
control over its processes. Examples are: unreliable planning and
control systems, the impact of introducing a new product, and a
lack of skilled employees.
€100M-€500M Over 1000 M
© Vlerick Leuven Gent Management School | 5
Environmental risk refers to possible occurrences in the environ-
ment in which the company operates. This category comprises
a high diversity of risks, which we have grouped into three
sub-categories:
> The first sub-category of environmental risk consists of the
most visible or dramatic risks, such as terrorist activities,
natural disasters and global warming.
> The second sub-category consists of the more ‘subtle’ risks
– for example, the risk that the company’s reputation will be
damaged through exposure of intellectual property or a social
responsibility issue.
> The third sub-category consists of the threat of strikes,
blockades, unreliable transportation, government actions and
regulatory changes.
Frequency of supply chain risks
The five categories indicate the kinds of issues that may occur in
the supply chain. But with what frequency do they occur?
In our survey instrument, we have asked the respondents to
score the frequency of each of the 33 potential disruptions in his
or her supply chain, on a scale from 1 to 5. A score of 1 means
that the respondent strongly disagrees that the disruption
occurs, indicating a low level of risk. A score of 5 means that
the respondent strongly agrees that the disruption occurs,
indicating a high level of risk.
Table 1 gives an overview of the 33 supply chain disruptions
and the average score for each disruption. The risk variables that
have the highest scores are: the changing economic environment,
the volatility in demand, the fluctuations in supply (prices of
materials), and the dependency on suppliers. To some extent,
the timing of the data collection (at the start of the economic
downturn) may have raised the scores of these top risk variables.
TABLE 1:
WefaceaSUPPLYCHAINriskdueto…
Average
ourdependencyonalimitednumberofkeysuppliers 3,5
unreliablesuppliers(delays,partialdeliveries,supplierscheduling
problems)
3,1
thethreatofasuddenlossofacontractwithasupplier 2,8
alackofsupplycapacityorashortageinthesupplymarket 3,2
pricefluctuationsofrawmaterials/components 3,5
SUPPLY
ourdependencyonsupplierswhoarefinanciallyunsound 2,8
thedependencyonasmallnumberoflargecustomers 3,1
thethreatofasuddenlossofcustomercontract 3,2
alowlevelofcustomerloyalty 2,7
substantialchangesindemandthatarenoteasilyforecasted 3,7
thethreatofsubstituteproducts 3,2
thethreatofnewplayersinthemarket 3,2
pricefluctuationsofendproducts 3,3
DEMAND
thedependencyoncustomerswhoarefinanciallyunsound 2,9
variationsinproductionorlabourcost 3,1
thepossibilityofqualityandreworkissues 3,2
thepossibilityofaproductrecall 3,1
PROCESS
thethreatofplantorequipmentbreakdown 3,3
unreliableplanningandcontrolsystems 3,0
ourdependencyonhavingoutsourcedactivities(suchas
manufacturing,warehousing,…)
2,9
inadequatedesignofbusinessprocesses 2,8
theimpactofnewproductintroductions 3,2
inadequateprojectmanagement 2,9
CONTROL
alackofskilledandqualifiedemployees 2,8
thethreatoftheexposureofintellectualproperty 2,8
areputationdamagecausedbycorporatesocialresponsibilityissues
(environmental,social,…)
2,7
thethreatofstrikesand/orblockades(e.g.ofports) 3,0
unreliabletransportationsuchasalackoftransportcapacityor
transportsecurity,congestion,…
2,9
thepossibilityofgovernmentactionsand/orregulationchanges 3,3
changingeconomicenvironment(recessions,stockmarket
fluctuations,…
3,8
changingenvironmentalconditions(suchasglobalwarming,solid
waste,…)
2,8
thethreatofpoliticalinstability,war,terroristactivities 2,7
ENVIRONMENTAL
thethreatofnaturaldisasterssuchasflooding,earthquakes,
hurricanes,…
2,6
Table 1: supply chain disruptions
© Vlerick Leuven Gent Management School | 6
Figure 7, displaying the information of Table 1 grouped into
the 5 categories of risk, shows that demand, supply and process
risks have the highest average frequency (3.2) and that their
scores are approximately equal. The environmental risks –
particularly the first two sub-categories – score low on average
(2.7 and 2.8). At first glance, this seems somewhat surprising,
because managers often discuss environmental risks, while our
research shows that these risks occur the least.
Figure 7: Probability of supply chain risk
The length of the boxes in the chart (Figure 7) indicates the
amount of variation in the results. When we compare these
variations, two conclusions arise: first of all, the demand and
supply categories have a high average frequency, but they have a
low degree of variation – which means that these risks are high
for most of the companies in the study. In contrast, the two en-
vironmental risk sub-categories with a high frequency also have
a high degree of variation – which means that some companies
are experiencing a high level of environmental risk and some
companies are experiencing a low level of environmental risk.
The supply chain risk manager
Given the level of risk that companies are facing in their supply
chain, we can expect them to assign the formal responsibility for
managing these risks to a dedicated supply chain risk manager.
The survey looks more closely at supply chain risk management
by asking whether the company has someone formally respon-
sible for supply chain risk management and, if so, in which
department this person is based.
Figure 8 shows that 64% of the companies have no one respon-
sible for managing supply chain risks, 27% have a supply chain
risk manager who is based in the supply chain department, and
9% have a supply chain risk manager who is not based in the
supply chain department.noriskmanager 0,64
riskmanager,notinsupplychaindepartment 0,09
riskmanager,insupplychaindepartment 0,27
noriskmanager
64%
riskmanager,not
insupplychain
department
9%
riskmanager,in
supplychain
department
27%
Figure 8: Percentage of risk managers
Based on these results, one could assume that most companies
are not yet mature at managing their supply chain risks. But
having a supply chain risk manager is only one of the aspects of
maturity in supply chain risk management, as we will see in the
next section.
64% of the companies have no one responsible for managing supply chain risks.
© Vlerick Leuven Gent Management School | 7
TABLE 2
LOW
LEVEL OF MATURITY
MEDIUM
HIGH
1 2 3 4 5
Processes
and policies
We assess supply chain risks
ad hoc and after the
disruptions have occurred.
We have both reactive and
proactive risk policies based on a
limited set of risk scenarios.
We manage all possible risk
categories consistently and
proactively via the implementation
of company-wide policies and
procedures.
Organisation We do not have a supply chain
risk manager.
We have an individual risk
manager, acting independently
from any cross- functional team.
We have a formal cross-functional
risk management team, handling
also supply chain risks.
Technology We do not use technology to
support supply chain risk
management.
We use basic local reporting tools
and spreadsheets to support supply
chain risk management.
We use an integrated platform and
system to support supply chain risk
management with customers and
suppliers.
Metrics We do not use formal supply
chain risk metrics.
We measure and track supply
chain risk metrics internally and
independently from other business
process metrics.
We have structured and
standardised tracking of supply
chain risk metrics, integrated with
the other business processes.
Table 2: Supply chain risk maturity scales
How mature are companies when it comes to managing their supply chain risks?
Risk management practices, techniques and tools have been
used extensively in the financial community for years. However,
only recently do we see these things being applied to supply
chain management.
Maturity in supply chain risk management is definitely reflected
in the degree to which the management of risk is embedded in
processes and policies and in managerial responsibilities. Mature
companies will also excel in the use of technology to support risk
management, and in the use of KPIs to measure performance
with respect to risk management (Aberdeen, 2005; IBM, 2008;
Marsh, 2008). These four dimensions of supply chain risk
maturity (see Table 2) have been operationalised in our survey
as follows:
> Processes and policies: the first dimension tests whether the
company has procedures for assessing and managing risk and
measures the degree to which these procedures are employed.
A score of 1 means the company has a reactive supply chain
risk policy and responds after the disruption has occurred. A
score of 5 means the company has a proactive supply chain
risk policy and manages all possible risks via the implementa-
tion of company-wide policies and procedures.
> Organisation: the second dimension of supply chain maturity
assesses the responsibility for managing the supply chain
risks. A score of 1 means the company has no supply chain
risk manager, whereas a score of 5 means the company has a
formal cross-functional risk management team.
> Technology: the third dimension measures the use of infor-
mation technology in managing supply chain risk and the
scope of deployment of this technology. A score of 1 means
the company does not use technology to manage supply
chain risks, whereas a score of 5 means the company uses an
integrated system with customers and suppliers.
> Supply chain risk metrics: the fourth dimension measures
to what extent the company formalises supply chain risk
performance measurement. A score of 1 means the company
does not use formal supply chain metrics. A score of 5 means
the company uses standardised metrics that are integrated
with other business processes.
Table 2 provides an overview of the scales that were used in our
survey for measuring supply chain risk maturity.
© Vlerick Leuven Gent Management School | 8
Figure 9 shows that the average company in our survey scores
below 3 on all four dimensions. Our survey thus confirms an
earlier study by Marsh (2008) that states that companies are not
highly effective at managing supply chain risks.
Mean
2,7 1 2 3 4 5
2,1 1 2 3 4 5
2,8 1 2 3 4 5
2,3 1 2 3 4 5
2,7
2,1
2,8
2,3 1
2
3
4
5 Processes&Policies
6rganisa8on
Technology
Metrics
Figure 9: Level of supply chain risk maturity
We observe that the highest score is on the Technology dimen-
sion. The average score of 2.8 indicates that the average company
is somewhere between not using any technology and using basic
local reporting tools and spreadsheets to manage their supply
chain risks.
With a score of 2.7 on Processes & Policies, the average company
in our study seems to have a more reactive, rather than a
proactive, policy.
Given the average score of 2.3 on the use of Supply Chain Risk
Metrics, we conclude that the average company uses some
supply chain risk metrics, but it is far from having an integrated
supply chain risk measurement system.
The Organisation dimension has an average score of 2.1, which
is low. This confirms our earlier findings with reference to the
supply chain risk management function: the average company in
our study does not yet have a supply chain risk manager.
However, as an average does not tell the whole story, we
performed a cluster analysis which showed that the companies
in our study can be grouped into three distinct levels of supply
chain maturity (Figure 10):
> The first group of companies scores high on all four
dimen sions. Of the 171 companies for which data are
available, 18% fall into the High Maturity category.
> The second group of companies has average scores for
three of the four dimensions, but the organisational
dimension is lagging. These companies – representing 33%
of the respondents – fall into the Systems Maturity category.
> The third group of companies, which scores low on all four
dimensions, falls into the Low Maturity category. Almost half
of the respondents (49%) fall into this category.
The main difference between the Systems Maturity companies
and the Low Maturity companies is the intensity with which the
Systems Maturity group has invested in processes, policies and
technology and, very explicitly, in the development of supply
chain risk metrics as well.
HighmaturitySystemsmaturityLowmaturity
Processes&Policies 3,93 3,05 2,09
<rganisa>on 4,37 2,04 1,32
Technology 3,4 3,58 2,06
Metrics 3,57 2,96 1,35
1
2
3
4
5
Processes&
Policies
<rganisa>on
Technology
Metrics
Highmaturity
Systemsmaturity
Lowmaturity
Figure 10: Supply chain risk maturity categories
We conclude that very few companies – only 18% – have a
high level of supply chain maturity, which makes this category
intriguing and deserving of further investigation. We could
conjecture, for example, that these companies have been subject
to a higher degree of risk than the companies in the other two
categories – and so they have been compelled to develop policies,
procedures, systems and metrics to manage this risk. We discuss
the drivers of supply chain risk maturity in the next section.
© Vlerick Leuven Gent Management School | 9
What drives supply chain risk maturity?
As only 18% of the respondents have a high level of supply chain
maturity, we look at these companies in more detail. What are
the triggers to developing on all four dimensions of supply chain
risk maturity? Is a higher level of supply chain risk a trigger for
maturity?
Figure 11 compares the level of supply chain risk across the
three maturity clusters (High, Systems and Low Maturity) we
have discussed earlier. Our results show no significant difference
in the level of risk among the three maturity clusters for the
supply risks, the demand risks, the process risks and the control
risks.
Demand Supply Process Control Environment
Highmaturity 3,2 3,41 3,41 2,98 3,28
Systemsmaturity 3,15 3,11 3,19 2,94 2,76
Lowmaturity 3,18 3,17 3,18 3 2,77
1
2
3
4
5
Demand Supply Process Control Environment
Highmaturity
Systemsmaturity
Lowmaturity
Figure 11: Supply chain risk maturity versus supply chain risk
However, we do see a clear difference in the level of environ-
mental risk across the three maturity groups. The highly mature
companies report a higher level of environmental risk than the
other two groups. As we can see in Figure 12, this higher level of
risk is observed for all three aspects of environmental risk: the
dramatic environmental risks, the risks that damage reputation,
and the third category that includes strikes and governmental
actions. This seems to suggest that it is not the demand, supply,
process and control risks that push companies to develop their
supply chain risk management, but rather the environmental
risks. This probably means that the supply chain manager takes
care of the uncertainty in supply and demand, as well as the
risks associated with the process, as this is an inherent aspect
of the supply chain management function. The environmental
risks, on the other hand, are most often managed by a risk
manager.
environment1environment2environment3
Highmaturity 3,22 3,15 3,47
Systemsmaturity 2,52 2,84 2,93
Lowmaturity 2,65 2,62 3,03
1
2
3
4
5
environment1 environment2 environment3
Highmaturity
Systemsmaturity
Lowmaturity
Figure 12: Supply chain risk maturity versus environmental risk
As we have seen, the environmental risks are the main driver
for supply chain risk management. This is also reflected in
Figure 13, which shows that companies with a higher level of
environmental risk are more likely to have someone responsible
for supply chain risk management. Riskmanager
demand supply process control ENV1 ENV2 ENV3
yes 3,27 3,24 3,32 2,91 2,97 2,95 3,27
no 3,1 3,13 3,11 2,95 2,54 2,67 2,93
1
2
3
4
5
demand supply process control ENV1 ENV2 ENV3
yes no
Figure 13: Supply chain risk manager versus supply chain risk
It is striking that, in the highly mature companies, 30% of the
supply chain risk managers are not based in the supply chain
department, whereas this percentage is only 7% in the immature
companies (see Figure 14). Maturity seems to be linked to
creating a team that focuses on risk management, or at least
takes a broader perspective on the issue, which extends beyond
the borders of the supply chain department.NotinSCdepartment InSCdepartment
HighMaturity 0,304347826 0,695652174
SystemsMaturity 0,230769231 0,769230769
LowMaturity 0,066666667 0,933333333
0%
20%
40%
60%
80%
100%
HighMaturity
SystemsMaturity
LowMaturity
InSCdepartment
NotinSCdepartment
Figure 14: Supply chain risk manager versus supply chain risk maturity
© Vlerick Leuven Gent Management School | 10
An industry perspective
Finally, let’s check whether different industries show different
levels of maturity in supply chain risk management. Figure 15
shows how the companies in the various industries in our study
are divided over the three maturity groups. Figure 16 shows
the percentage of companies in each of the industries in our
study who do and do not have someone formally responsible for
supply chain risk management.
The highest proportion of high maturity companies is found in
the textile, chemical, and automotive industries. If we include
the systems maturity companies in our interpretation, the
chemical industry stands out in terms of maturity. The textile
industry seems to have a wider range of maturity levels, with a
relatively large proportion of highly mature companies, yet also
a relatively high proportion of low maturity companies.
Interestingly, the chemical industry and the textile industry
score very differently on the organisational dimension: whereas
the chemical industry shows the highest proportion of formal
supply chain risk managers, not a single textile company in our
sample reported having a manager formally in charge of supply
chain risk management.
Somewhat to our surprise, our study found no high maturity
companies in the food and beverage industry, despite the
attention that is paid to food quality and safety. On the other
hand, this industry shows a relatively high proportion of supply
chain risk managers. This seems to indicate that supply chain
risk is taken care of by giving formal responsibility for it to one
of the managers; yet, at the same time, there is still a lot of room
for the food and beverage industry to develop an overall policy
towards supply chain risk.
HighMaturitySystemsMaturityLowMaturity
Manufactureofte67les0,285714 0,142857 0,571429
Chemicals 0,277778 0,388889 0,333333
Dutomo7ve 0,272727 0,272727 0,454545
Pharma 0,2 0,333333 0,466667
Electronicequipment0,181818 0,363636 0,454545
Plas7csandrubbers0,166667 0 0,833333
Wholesaleandretail0,153846 0,384615 0,461538
Nransportlogis7cservices0,142857 0,571429 0,285714
Machineryandequipment0,076923 0,461538 0,461538
Foodproductsandbeverages0 0,416667 0,583333
0%
20%
40%
60%
80%
100%
Manufactureof
te67les
Chemicals
Dutomo7ve
Pharm
a
Electronic
equipment
Plas7csand
rubbers
Wholesaleand
retail
Nransportlogis7c
services
Machineryand
equipment
Foodproductsand
beverages
%ofcompaniesinmaturitycategoryperindustry
HighMaturity SystemsMaturity LowMaturity
Figure 15: Industry versus supply chain risk maturity
yes no
Chemicals 0,5238095 0,4761905
Electronicequipment 0,4285714 0,5714286
Foodproductsandbeverages 0,4166667 0,5833333
DutomoEve 0,4166667 0,5833333
TransportlogisEcservices 0,4 0,6
Pharma 0,375 0,625
Wholesaleandretail 0,3333333 0,6666667
PlasEcsandrubbers 0,25 0,75
Machineryandequipment 0,1428571 0,8571429
ManufactureofteKEles 0 1
0%20%40%60%80%
100%
Chemicals
Electronic
equipment
Food
productsand
beverages
DutomoEve
Transp
ort
logisEc
services
Pharm
a
Wholesa
le
andretail
PlasE
csand
rubbers
Mach
inery
and
equipment
Manufacture
ofteKE
les
%companieswithformalSCRiskresponsibleper
industry
yes no
Figure 16: Supply chain risk manager versus industry
© Vlerick Leuven Gent Management School | 11
Conclusion
Due to globalisation – and despite some supply chain best practi-
ces – supply chain risks have increased. Although companies and
supply chain managers have increased their risk management
efforts over the past few years, only 18% of the companies are at
a mature stage of supply chain risk management. In particular,
the organisational dimension of supply chain risk management –
that is, the creation of cross-functional teams to manage supply
chain risks – needs further attention.
Our research shows that the highest levels of supply chain risk
can be found in the demand, supply and process risk categories.
As these risks are in the supply chain manager’s domain, the
management of them is undoubtedly part of his/her job.
In companies with a high level of other supply chain risks –
especially environmental risk – the organisational dimension
can be developed by forming a formal cross-functional risk
management team, where a risk manager works with the supply
chain manager to manage all supply chain risks.
References
> Aberdeen, Supply Chain Risk Management:
Building a Resilient Global Supply Chain,
white paper, 2008
> Johnson V. and Peppas S., Crisis management in Belgium:
the Case of Coca-Cola, Corporate Communications:
an international journal, vol 8, nr 1, 2003, pp18-22
> Marsh, Stemming the Rising Tide of Supply Chain Risks,
white paper, 2008
> Sheffi Y., The Resilient Enterprise: overcoming vulnerability
for competitive advantage, MIT press, 2007
> IBM, Supply Chain Risk Management:
a Delicate Balancing Act, white paper, 2008
in particular, the organisational dimension of supply chain risk management – that is the creation of cross-functional teams to manage supply chain risks – needs further attention.
© Vlerick Leuven Gent Management School | 12
The Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Research carried out by the Vlerick Centre for Supply Chain Excellence
ISBN: 9789078858720
July
201
0
Research team
Prof Dr Ann Vereecke Els Pandelaere Danny Boeykens Jonas Hatem Erika Vreys Roel De Haes
