 RESEARCH AT CRANFIELD SCHOOL OF MANAGEMENT
APPROACHES TO MANAGING GLOBAL SOURCING RISK
Carlos Mena
Senior Lecturer
Most companies do not have a structured supply chain risk management and mitigation
system. This paper proposes a way forward.
Global sourcing can bring many benefits to
organisations, but it can also expose them to a
number of risks as supply networks become
longer and more complex, involving more
partners.
about how supply risks should be assessed
when making global sourcing decisions.
Furthermore, once global sourcing is in place,
how do companies mitigate the associated
risks?
Risk in supply chains is a critical issue since
companies, which are unable to manage it are
likely to suffer in terms of performance. Poorly
managed risks can lead to inaccurate
forecasting, lower product quality, decrease in
turnover and share price, loss of reputation,
poor relationships with the other members of
the supply chain and conflict amongst the
organisation’s stakeholders. To eliminate, or at
least mitigate these effects, companies need
to adopt supply chain risk management
strategies.
The researchers used a multiple case study
approach, which involved 15 UK companies
involved in global sourcing in seven different
industries to understand how managers
assess global sourcing risks across the entire
supply chain and what actions they take to
mitigate those risks. Managers directly
involved in the global sourcing decision were
interviewed and patterns in their responses
were analyzed across the different industries.
The research reported here focuses on one
specific type of risk, called supply risk i.e. risk
associated with the sourcing of products by a
particular firm. While this type of risk has
received some recent attention in the
literature, there is still a limited understanding
The study revealed that most companies do
not have a structured supply chain risk
management and mitigation system. Although
managers interviewed in this study were
aware of many of the risks of global sourcing
and were, directly or indirectly, referring to the
risk mitigation strategies proposed in this
study i.e. network re-engineering,
RESEARCH AT CRANFIELD SCHOOL OF MANAGEMENT
collaboration, agility and a risk management
culture, they were not implementing them
systematically and holistically. Nevertheless
they do use a number of informal approaches
to cope with risk.
Additionally, the research showed a high
variability of practices between firms,
indicating a wide gap between the top
performers and the laggards. This suggests
that there are still many opportunities for firms
to improve their approach to making global
sourcing decisions. Organisations could use
the framework proposed in this study to review
their current strategies for managing global
sourcing risk and to devise future strategies
that are more comprehensive and robust.
For further details on this research paper
please contact: carlos.mena@cranfield.ac.uk
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The paper proposes that a multidisciplinary
approach is required when dealing with global
sourcing risks and presents a classification of
risks covering four categories: supply risk,
process and control risks, environmental and
sustainability risks, and demand risks. The
study also proposes four generic strategies for
managing global sourcing risk: network reengineering, collaboration, agility and a risk
management culture.
Christopher, M., Mena, C., Khan, O. & Yurt,
O. (2011) Approaches to Managing Global
Sourcing Risk, Supply Chain Management:
An International Journal, vol. 16, no. 2, pp.
67-81
Management Theme: Supply Chain
and Logistics Management
MANAGEMENT THEMES AT CRANFIELD SCHOOL OF MANAGEMENT
 Business Economics and Finance
 Business Performance Management
 Corporate Responsibility and Sustainability
 Entrepreneurship and Business Growth
 General Management
 Information Systems
 Innovation and Operations Management
 Leadership
 Managing People and Global Careers
 Marketing, Sales and Client Relationships
 Programme and Project Management
 Strategy, Complexity and Change Management
 Supply Chain and Logistics Management