Approaches to managing global sourcing risk

Approaches to managing global sourcing risk Purpose – Global sourcing can bring many benefits to organisations, but it can also expose them to a number of risks. The purpose of this study is to understand how managers assess global sourcing risks across the entire supply chain and what actions they take to mitigate those risks. Design/methodology/approach – A multiple case study approach was used, involving 15 cases in seven different industries. Each case consisted of interviews with managers directly involved in the global sourcing decision, supported by documentary evidence. A cross‐case analysis was conducted to analyse patterns across different industries. Findings – The study revealed that most companies do not have a structured supply chain risk management and mitigation system. Nevertheless they do use a number of informal approaches to cope with risk. The paper proposes that a multidisciplinary approach is required when dealing with global sourcing risks. It presents a classification of risks covering four categories: supply risk, process and control risks, environmental and sustainability risks, and demand risks. Originality/value – The paper addresses a research gap concerning managers' approaches to assessing and mitigating supply chain risk in a global context. In this context, this study proposes a new categorisation for global sourcing risks and offers a characterisation of global sourcing risk mitigation strategies applicable to different industries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Supply Chain Management: An International Journal Emerald Publishing

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1359-8546
D.O.I.
10.1108/13598541111115338
Publisher site
See Article on Publisher Site

Abstract

Purpose – Global sourcing can bring many benefits to organisations, but it can also expose them to a number of risks. The purpose of this study is to understand how managers assess global sourcing risks across the entire supply chain and what actions they take to mitigate those risks. Design/methodology/approach – A multiple case study approach was used, involving 15 cases in seven different industries. Each case consisted of interviews with managers directly involved in the global sourcing decision, supported by documentary evidence. A cross‐case analysis was conducted to analyse patterns across different industries. Findings – The study revealed that most companies do not have a structured supply chain risk management and mitigation system. Nevertheless they do use a number of informal approaches to cope with risk. The paper proposes that a multidisciplinary approach is required when dealing with global sourcing risks. It presents a classification of risks covering four categories: supply risk, process and control risks, environmental and sustainability risks, and demand risks. Originality/value – The paper addresses a research gap concerning managers' approaches to assessing and mitigating supply chain risk in a global context. In this context, this study proposes a new categorisation for global sourcing risks and offers a characterisation of global sourcing risk mitigation strategies applicable to different industries.

Journal

Supply Chain Management: An International JournalEmerald Publishing

Published: Mar 15, 2011

Keywords: Globalization; Risk management; Risk analysis

References

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