A Study on

“How Organizations Manage Their Supply Chain Risks”

Submitted to

NMIMS Global Access School For Continuing Education

(NGA-SCE)

In partial fulfillment of the requirement of the

Degree of

Post Graduate Diploma in Business Management -

Supply Chain Management
(PGDBM - SCM) (2019 ~ 2021)

Submitted By:

Shashank Sharma
SAP ID - 77119863617
 Acknowledgement

This is sincere expression of my profound gratefulness to all those who made it

possible for me to successfully complete my project work.

I would like to express my gratitude towards my colleagues of Supply Chain

Management I have worked with in various organizations.

I am especially thankful to Mr. Ankit Sharma (ŠKODA AUTO Volkswagen India

Private Limited) for guidance and cooperation during this project work and in fact
without his navigational assistance project period would have been very difficult as
far as structuring the project is concerned.

Last but not the least I would like to thank SCM department of NMIMS for inducting
the Supply Chain Management programme and its syllabus so efficiently without
which I wouldn’t have learnt and implemented the required knowledge in this
project.

Finally, I would like to take this opportunity as a platform to thank various individual,
without the support of whom this project would not have been successful.

Shashank Sharma
SAP ID - 77119863617
 Table of Contents

List of Tables

Below are the list of tables used in the project for different explanations:

Table No. Table name Page

No.

1 Supply Chain Risks 8

2 Creating Risk Profiles 15

3 Risk Assessment & Evaluation 16

Supply Chain Types and Risk Management Strategies

4 18

5 Selection of Appropriate Strategy 20

 List of Figures

Graph No. Graph name Page no.

1 Research Methodology 3

2 Integrating and Managing Business Processes Across the Supply Chain 5

3 Supply Chain Management Framework: Elements & Key Decisions 6

4 Risk in The Extended Supply Chain 10

Five-Step Process For Supply Chain Risk Management And Mitigation

5 11

6 Supply Chain Risk Management And Mitigation Framework 13

7 Risk Identification Summary 14

8 Risk Ranking 17

Shashank Sharma
SAP ID - 77119863617
 Index

Chapter No. Page no.

Description

1 Introduction 1

1.1 Background 1

1.2 Research Problem 1

1.3 Research Objectives 2

1.4 Research Methodology 3

2 Literature Review 4

2.1 Supply Chain Management 4

2.2 Risk 7

3 Supply Chain Risk Management Process 11

3.1 SCRM Process 11

3.2 Risk Identification 13

3.3 Risk Assessment and Evaluation 15

3.4 Risk Management Strategy Selection 18

Implementation of Risk Management Strategy

3.5 20

3.6 Mitigation of Supply Chain Risk 20

4 Facts and Findings 22

5 Conclusion 23

6 Future Research 24

7 References 25

Shashank Sharma
SAP ID - 77119863617

ABSTRACT
This project aims to answer two basic questions concerning supply chain risks in
organizations or companies:

 What are the most significant risks companies having to tackle down?

 What action plans are implemented by companies in order to mitigate these

significant supply chain risks?

A thorough literature review was necessary in order to understand better important

concepts such as supply chain, supply chain management, risk management and
supply chain risk management and be available to answer the questions.

One of the most important aspects of the literature is the supply chain risk
management process.

According to Dr. Ila Manuj, the SCRM process can be divided in five steps:

 Risk identification

 Risk Assessment and Evaluation

 Selection of appropriate risk management

 Implementation of supply chain risk management strategy

 Mitigation of supply chain risks

These steps are extremely important for the companies as they help them to be
prepared to mitigate risks with alternative action plans. In order to have a common
tool for ranking the risks according to their significance, impact to the company and
probabilities of occurring, a risk matrix was created.

This risk matrix is used as ranking tool for the industry, in order to have a common
scale of measurement for the risks. The most important risks for those companies
are presented, as well as their evaluation and company’s mitigation strategy.
Additionally, further possible actions are proposed.

To conclude with, the posed questions are answered in accordance with the given
information through the SCRM process.

Shashank Sharma
SAP ID - 77119863617

Objective Of The Project

The prime objective of Supply chain risk management (SCRM) is to reduce the
chances of any uncertain situation and feat an appropriate set of solution to manage
the situation efficiently and effectively.

SCRM is full of challenges that can result in higher cost, wasted materials and
production error. It has become even more complex and vulnerable than in past.

Due to absence of commonly recognized definition of SCRM and very scared

literature, it is very difficult to clearly understand it.
However, efforts are made to cover such a vast subject for detailed analysis through
this project.

This project study has worked on two objectives.

1. First, this study has tried to understand the nature of SCRM by elaborating
relevant literature with a novel methodology and to verdict its accurate
explanation.

2. Second, compile the diverse and scattered literature so for potential researchers
it will be easy to approach it.

A comprehensive review shows that study on SCRM is still not only very limited but
also much dispersed. This project will elaborate a general literature review on
evaluation of definitions of supply chain, risk management and supply chain risk
management.

This project applies content analysis approach, bibliographic analysis and analyzing
top cited journal and researches in SCRM that is a unique and novel methodology.

The finding of this study reveals that, majority of the researchers are agreed, risk is
variation in outcome or performances that are not predictable, whereas supply chain
is a network of organizations that add value in every stage of product or services till
its destination toward users.

Supply chain risk is probabilistic and unwanted situation whereas supply chain risk
management is to manage probabilistic and undesirable situation by evaluating risk
sources, analyzing likelihood and present a strategy to avoid, mitigate or minimize
the effect of risk sources.

Scope of the Project

Supply chain and supply chain risk have gained the interest of many researchers and
practitioners. Although supply chain risk management has gained popularity but still
attempts to synthesize research within this turf have rarely been conducted.
There is still no clear definition that describe SCRM completely. Whereas, the
background of the word risk is still not clear. The gap for this study also become
validated when detailed that even though this area has attracted many researcher’s
attention still it does not have a clear definition.

One of the most important study revealed that being a relatively new area, SCRM is
being assumed as confused and order less field.

The study is also justified when stated that due to absence of commonly recognized
definition of SCM, it is very difficult to clearly understand it. Some other studies also
add values like A comprehensive review from 1995 to 2009 shows that study on
SCRM is still limited and It has been expressed that there is no universal definition of
SCRM.

Therefore, this study has noted a gap of knowledge to understand

the fundamental conception of SCRM. After detail discussion it seems essential
before going to the depth of study that the fundamental concept or basics of SCRM
should be clear.

Executive Summary
The risks associated with global supply chain management has created a discourse
among practitioners and academics. This is evident by the business uncertainties
growing in supply chain management, which pose threats to the entire network flow
and economy.

This project aims to review the existing literature on risk factors in supply chain
management in an uncertain and competitive business environment. Supply chain
risk management is an integral function of the supply network. It faces unpredictable
challenges due to nations’ economic policies and globalization, which have raised
uncertainty and challenges for supply chain organizations.
These significantly affect the financial performance of the organizations and the
economy of a nation. Debate on supply chain risk management may promote
competitiveness in business. Risk mitigation strategies will reduce the impact caused
due to natural and human made disasters.

International trade leads to global supply chains, and risks are inherent in supply
chain management (SCM). Globalization and trade openness have amplified the
vulnerability in SCM and increased the risks. The monetary value of supply chain
expenses is the highest in manufacturing organizations. Nonetheless, SCM risks are
assumed to be non-financial risks in the traditional sense of risk in the finance and
insurance industries.

Risk management refers to the implementation of strategies and plans to manage

supply chain networks through constant risk assessment and reduce vulnerabilities
to ensure resilience in supply chains. All supply chains do not have the same risks,
but some risks are common. The risks are also specific to an area of business or the
field of study. A supply chain is as strong as the most vulnerable member of the
supply chain. Therefore, the longer a supply chain, the greater the risk of failure of
the supply chain. Supply chains have many players. A high number of players present
risks. However, building a robust supply chain is expensive. Numerous research
articles have suggested the need for such supply chains due to the magnitude of the
adverse effects of risk on its performance.
Supply chain risk management (SCRM) is a systematic and phased approach for
recognizing, evaluating, ranking, mitigating, and monitoring potential disruptions in
supply chains. SCRM is an important area due to an incident’s cascading effects on
logistics networks. Some examples of such events include September 11, the Gulf
War, the outbreak of a pandemic (e.g., bovine spongiform encephalopathy, and
coronavirus disease 2019, COVID-19), the millennium bug. These disruptive events
have compelled practitioners to explore the vulnerabilities in supply chains and
evaluate risks. Vulnerabilities in a supply chain depend on the supply chain.
Moreover, the COVID-19 pandemic has resulted in disruption to the mechanics of
most economies, irrespective of their size and phase of development.

SCRM can be divided into two broad categories of approaches.

The first is the strategy for comprehensive risk management approach and the
second is a focused approach to a specific disruption.

These specific disruptions could be security, lead times, or terrorism. Although these
methods provided enormous value and insights, the events causing disruption were
presumed to be unintentional.

The lack of risk managing strategies to understand the cause of disruption leaves a
gap from a theoretical perspective, exposing firms to unavoidable risks in the
environment. Children’s toys contained lead-based paint in 2007 without the
knowledge of Mattel. This caused disruptions in Mattel’s supply chains. Mattel ended
up setting quality assurance centers at the suppliers’ factories to avoid the repetition
of the lead paint crisis. The supplier used lead-based paint to save small operational
costs.
The cost of disruption to Mattel was much more significant and could have been
avoided.

The remainder of the section is divided into four subsections.

The first subsection reviews the past literature for various definitions of risk.
The second subsection discusses risk disruption in SCM caused by natural disasters
or events which are beyond human control. Risk disruption can occur due to weak
supply chain strategies.

The third subsection discusses risk management methods and strategies.

The fourth subsection illustrates risk detection and risk mitigation in the supply chain
network for a contingency plan and supplier evaluation to be carried for reducing
risk impact and achieving supply chain resilience as shown in below figure.

Conclusions
Supply chains form the backbone of the global economy and promote trade,
consumption, and economic growth. The changing phases of globalization, lean
manufacturing processes, and outsourcing to low-income countries have made
supply chain networks more efficient and changed their supply chain risk profile. Due
to globalization, intersupply chain competition has intensified; companies strive to
deliver the best value to customers with greater efficiency at the lowest cost;
communication with vendors/suppliers will play a vital role in many organizations.
Supply chain cost reductions can be gained through optimally designed supply chain
flows combined with goods’ physical movement. This can be simplified by extending
trade credit through conventional modes of distribution, reducing inventory levels,
cost in supply chain management, and increase the access to trade finance
organizations This paper reviews the existing literature on SCRM and the exploration
of risk factors in SCM. This comprehensive classification of publications in top
journals could help researchers conduct more detailed analyses based on risk factors
affecting SCM networks. This indicates that the need for a greater focus on risks in
global supply chains is needed. Risk assessments, risk analyses, and risk management
are areas of interest in finance and insurance. However, the value of inventories in
global supply chains and the impact of disruptions in global supply chains must be
paid greater attention.