Supply risk identification in manufacturing supply networks

• Published date: 10 November 2020
• Pages: 650-672
• DOI: https://doi.org/10.1108/IJLM-02-2020-0081
• Date: 10 November 2020
• Subject Matter: Management science & operations,Logistics
• Author: Marc Wiedenmann,Andreas Größler

Supply risk identification in

manufacturing supply networks

Marc Wiedenmann

Graduate School of Excellence Advanced Manufacturing Engineering,

University of Stuttgart, Stuttgart, Germany, and

Andreas Gr€

oßler

Department of Operations Management, Institute of Business Administration,

University of Stuttgart, Stuttgart, Germany

Abstract

Purpose –Managing supply risk is gaining in importance in the tightly interconnected global economy.

Identifying the relevant risks is the foundation of any risk managementprocess. Therefore, the purpose of this

paper first is to provide a short introduction to supply risk management, before focussing on the identification

of such risks in more detail. A holistic framework of the identified supply risks, which distinguishes between

risk dimensions and risk factors in manufacturing upstream supply networks, is proposed.

Design/methodology/approach –This study applies a mixed methods research approach. Data are

collected based on a structured literature review in combination with the analysis of company-specific

documents and semi-structured expert interviews. Subsequently, a deductive content analysis is carried out to

derive a holistic framework of supply risks, adapted to the manufacturing industry. For the external validation

of the conceptual supply risk framework, additional experts from several manufacturing companies were

consulted.

Findings –Based on the definition and delimitation of supply risk, a categorization of supply risks is

developed. The relevant literature, as well as expert interviews, lead to the distinction of six supply risk

dimensions: quality, delivery, collaboration, economic, ambience and compliance. A total of 27 risk factors can

be assigned to these dimensions. A holistic foundation for the management of supply risk is thus created.

Originality/value –This study provides a holistic framework of relevant supply risks in the context of the

manufacturing industry. This overview of identified risks offers a novel perspective on risk in manufacturing

supply networks that can be helpful in researching assessment and mitigation strategies. Despite the high

relevance and popularity of this field of research, such an overview with a focus on manufacturing had not yet

been made available in the literature. Building thereon, management approaches can now be developed to

handle the risk arising from the upstream of the supply network.

Keywords Supply risk management, Manufacturing industry, Risk identification, Mixed methods

Paper type Research paper

1. Introduction

The development of a company’s corporate goals and their achievement through managerial

decision-making is the core of management (Drucker, 1974). As Smallman (1996) stated more

than 20 years ago, risk and risk-taking in decision-making is a crucial part of business.

Therefore, risk management is an integral component of ensuring the long-term sustainable

development of companies. Risk management identifies and assesses risks that could

adversely affect the success of companies and attempts to control these risks through

appropriate measures. The identification of potential risks, which constitutes the focus of this

paper, forms the basis of any risk management process. In order to manage risks effectively,

they must be known to the company (Romeike, 2018).

As in other fields of research, risk is also inherent when managing supply networks. In

recent years, many manufacturing companies have realized that outsourcing non-core

business activities and focussing on their core competencies is the right way to compete on

global markets (Dolgui and Proth, 2010). Thus, most individual companies do not act entirely

independently as they have become part of a globally connected supply network in order to

remain competitive. According to Tang (2006), four basic approaches for managing risk in

IJLM

32,2

650

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0957-4093.htm

Received 6 February 2020

Revised 24 July 2020

18 September 2020

Accepted 27 October 2020

The International Journal of

Logistics Management

Vol. 32 No. 2, 2021

pp. 650-672

© Emerald Publishing Limited

0957-4093

DOI 10.1108/IJLM-02-2020-0081

supply chains can be distinguished: product risk management (Ramdas, 2003), upstream risk

management (Giunipero and Aly Eltantawy, 2004), information risk management

(Wakolbinger and Cruz, 2011) and downstream risk management (Yano and Gilbert, 2005).

The main emphasis of this paper is on identifying upstream risks arising from the upstream

supply network. This is referred to as supply risk in the following.

Increasing attention is being devoted to supply risk management, both in scientific

discourse and in the practical context (Ho et al., 2015;Fan and Stevenson, 2018a,b). This

discussion is based on two pillars. On the one hand, due to recent crises and catastrophes,

particular attention is directed to the management of these risks to avoid supply disruptions

(Guertler and Spinler, 2015). On the other hand, modern, multibranched and strongly

synchronized supply networks are inherently more vulnerable than traditional integrated

production methods (Wagner and Bode, 2006).

The focus within this paper is on the identification of relevant supply risks within

manufacturing supply networks. Particularly in this industrial sector, where the value added

by a company is often less than one-third, supply risk management is increasingly gaining in

importance (Weber, 2019). In addition, various trends, including just-in-time delivery, shorter

product lifecycles as well as outsourcing strategies, render the consideration of associated

risks indispensable (Trkman et al., 2010). There is a variety of reasons that could lead to

disruptions in inbound supply. Although there are several publications dealing with the

illustration of possible risk factors, there is, especially regarding manufacturing supply

networks, no comprehensive overview which could serve as a basis for supply risk

management initiatives. This gap in research can also be identified in a broader context: to

date, no comprehensive review that compiles and analyses various supply risk frameworks

and categorization approaches is available in the literature. Furthermore, as various authors

such as Lim et al. (2013) describe, there is a lack of systematic approaches to supply risk

management; to the best of our knowledge, this situation has not improved since that study.

This work is intended to provide a foundation on which such an integrative approach can be

based. Therefore, the research question (RQ) “What are relevant supply risks in manufacturing

supply networks and how can they be categorized?”is answered in the following.

To answer this research question, the relevant literature is analysed and empirical

research in collaboration with several manufacturing companies is carried out. By applying a

mixed methods approach, a comprehensive framework for supply risk can be developed,

which includes relevant supply risk factors assigned to different risk dimensions according

to their specific characteristics.

The remainder of the paper is structured as follows: Section 2 provides the theoretical

basis in terms of a common understanding of supply risk, manufacturing supply networks as

well as the identification process of supply risk. Thereupon, Section 3 describes the applied

methodology for deriving a comprehensive supply risk framework. Subsequently, Section 4

provides an overview of the relevant literature in this field. The proposed categorization

approach for supply risk is presented and discussed in Section 5.1.Section 5.2 then examines

the deduction and allocation of supply risk factors to the developed supply risk dimensions in

more detail. Finally, in Section 6, a conclusion as well as a discussion based on the validation

of the developed supply risk framework is provided. In addition, insights are highlighted,

leading to recommendations for future research.

2. Supply risk in manufacturing supply networks

Managing risk addressing supply networks is also referred to as supply risk management,

upstream supply chain risk management or inbound risk management (Wu et al., 2006;

Wagner and Bode, 2006;Zsidisin, 2003a,b). It is assumed that the separate analysis of the

entire supply chain system, which means the individual analysis of upstream and

Supply risk

identification

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