1 proposal - The impact of environmental risks on supply chain vulnerability(1)(1)

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Table of Content
FINAL PROPOSAL
2
LIST OF REFERENCES
10
APPENDIX 1 - DISSERTATION STRUCTURE
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APPENDIX 2 – RESEARCH LOG
12
APPENDIX 3 – GANTT CHART
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Student number:
FINAL PROPOSAL
The impact of environmental risks on supply chain vulnerability.
Word Count: 1986
1. Introduction
Modern supply chains are quite complex with many simultaneous flows of goods and
information to guarantee the products are delivered in required quantity to the intended
destination and in cost efficient way. Supply chains including sometimes hundreds or even
more companies and network levels run several risks. In general, those risks can be categorized
as risks appearing within the supply chain and risks external to it. Those risks together
influence the vulnerability of the supply chain (Peck, 2002). Recent world conflicts and
economic confrontations show the increasing impact of environmental factors on the supply
chain vulnerability. The mineral fertilizer industry of the Ukraine plays a vitally important role
in the country’s agricultural sector’s prosperity. The disruption of high export / import flows of
mineral fertilizers in the context of Russian – Ukrainian conflict is a glaring example of such an
impact on supply chain vulnerability. Moreover, the Ukrainian mineral fertilizer industry is
very internationally oriented as the Ukraine used to be one of the five biggest world suppliers
of the urea (nitrogen mineral fertilizer) in 2013 (Fertecon 2014, as cited in PotashCorp, 2014)
and it remains large importer of phosphoric and potash fertilizers from international markets
mostly from Russia and Belorussia. Therefore, the industry is very exposed to the
environmental risks that need to be thoroughly identified, assessed and managed. That is why
the objective of this research is to increase awareness, understanding of today’s environmental
risks and thus the ability of Ukrainian mineral fertilizer industry to cope with disruptions to its
supply chains. In order to achieve the objective, the following question is raised: To what
extent can supply chain risk management identify and mitigate environmental risks?
2. Review of the Literature
A supply chain is a system of companies mainly consisting of suppliers, producers, logistic
firms, distributors, and retailers that is established to manufacture and deliver goods or services
to the end consumers (Sodhi and Tang, 2012). According to Schlegel and Trent (2015), a risk
is a likelihood or danger of damage, obligation, waste, or other negative events brought about
by external and internal factors that can be eluded through preventive actions. Supply chain
risk is about any threat of interruption to the workings of the supply chain. The risk may be
generated as a result of risk ‘drivers’ that are either internal or external to the company (LCP
Consulting, 2003). Both internal and external risks influence the vulnerability of the supply
chain. Supply chain vulnerability is the supply chain’s sensitivity to the disruption arising from
the risks to the processes within the company, to the interconnections within the supply chain,
and from the external factors (Waters, 2007).
1
Source: (LCP Consulting, 2003)
The environmental risks are the ones that influence a company’s operation and its supply
chain’s functioning, resulting from a third party’s actions; and are not under the control of the
supply chain or a company and cannot be avoided, but only mitigated (Kara et al., 2008).
2
Source: (Kara et al., 2008, p.105)
Conceptualization of the Supply Chain Risk Types
Source: (Kara et al., 2008, p.105)
This research is concentrated on governmental and macroeconomic risks with the special focus
on political and economic stability risks influencing the supply chain vulnerability. McKellar
(2010) defines political risk as possible damage to a business activity resulting from the
political behaviour. Political risk is considered as a change in the political situation that affects
supposed outcomes or political circumstances that impact a business through the implications
of such change. While the political risks can have both positive and negative effect political
risks are more often considered as having unfavorable consequences and disruptions in trade
and the economy (Cook, 2015). According to the World Economic Forum survey, the
economic risks are more significant to the supply chain than many other risks such as
corruption, piracy or pandemics (WEF, 2013). The survey identifies the economic risks as
follows:
● Demand shocks;
● Volatility in commodity prices;
● Border delays;
● Export/import restrictions;
● Currency fluctuations;
● Energy shortages;
● Ownership/investment restrictions;
● Shortage of labour;
● Industrial unrest.
The most important elements of managing risks are the activities of identifying, measuring and
responding to the risks. (Waters, 2007) suggests that risk identification implies making a list of
risks that are likely to have an impact on the supply chain and might interrupt its functioning.
According to McKellar (2010), the risks are usually measured based on the probability of the
occurrence and the level of impact or harm incurred if the risks are materialized. The
interaction of the risk probability and degree of harm provides information about the overall
severity of the risk.
3
Source: (Kouvelis et al., 2011)
Managers usually pay less attention to the external risk area, considering it outside of the
company control and so unmanageable. Identifying the differences between internal and
external risks allow the companies to use appropriate contingency and mitigation risk strategies
(Peck, 2002). The main steps to manage risks consist of identifying the possible supply chain
risks, risks probability and implications severity estimation, and taking actions to avoid or
lower the likelihood of the risks appearance, and to abate the injury or disruption of the supply
chain (Kouvelis et al., 2012). Many of these activities, instruments and approaches can be
included in the company’s risk management portfolio. Those approaches can be arranged by
their main risk objective, such as risk mitigation, risk avoidance, risk prevention, risk
acceptance and risk sharing (Schlegel and Trent, 2015).
Conceptualization of risk management
identifying risk
listing potential
sources of risk
probability of the
occurrence
measuring risk
the level of impact
or harm incurred
reduce likelihood
risk mitigation
minimize impact
supplier change
risk avoidance
Managing risks
stop dealing in
certain products
anticipating risks
risk prevention
averting risks
responding to
the risks
take on the risks
risk acceptance
assume the risks
risk sharing with
supplier / buyer
4
risk sharing
risks insurance
commodity/currency
hedging
3. Research Objective
This study will be based on positivism, that according to (Saunders et al., 2009) means to deal
with perceptible reality so that the result of this study can be generalized in a way similar to the
results obtained by physical and natural scientists, and to understand what forms the suitable
knowledge in a research area.
The research objective is to increase understanding of today’s environmental risks and thus
the ability of Ukrainian mineral fertilizer industry to cope with disruptions to its supply chains.
To achieve the objective, the following central research and sub-questions should be answered.
Central research question and sub-questions.
What are the most significant
environmental risks influencing supply
chain vulnerability in the Ukrainian
fertilizer industry ?
To what extent can supply chain
risk management identify and
mitigate environmental risks?
What types of environmental risks
are there in the Ukrainian
fertilizer industry?
What are the most severe
environmental risks in the
Ukrainian fertilizer industry?
How long would the risk
exposure last before it could be
fixed?
To what extent can environmental risks
be mitigated in the Ukrainian fertilizer
industry?
What kinds of recovery actions
can be needed for each risk in
the Ukrainian fertilizer industry?
What is an indicative cost for
supply chain recovery in the
Ukrainian fertilizer industry?
Those sub-questions are relevant to this study as they help to answer the central research
question and finally achieve the objective of the research.
4. Method and Design
4.1. Research method and approaches
In the research, the explanatory multiple case study and holistic approach will be used as a
research design. The deductive approach will be applied to the research project to use and
develop the existing theory and answer the research questions. A qualitative approach will be
used for the data collection and analysis, including summarising, categorising and structuring
narrative data to understand the relationships between variables and to develop and test
propositions and make sound conclusions (Saunders et al., 2009). This strategy is appropriate
for the certain phenomena – supply chain vulnerability within real life context – mineral
fertilizer industry functioning given the current conflict between Russia and Ukraine.
4.2. Data Collection Method
The data will be collected via semi-structured interviews and documentary analysis. It is
noticed that managers are more willing to answer interview questions than fill in questioner’s
forms, especially if the topic is related to their work experience and sphere of interests
(Saunders et al., 2009). In order to provide more in-depth insight to the insider’s viewpoint,
questionnaires will be also used as additional source of data. Moreover, the market experts’
valuable opinions will be collected as well during the interviews to answer the research
questions more precisely.
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4.3. Sampling Technique
Sampling in this case study research will be non-probability based for both case and
respondent selection. Non-probability sampling allows the researcher answering research
questions, achieving an objective, and generalizing from the non-probability samples rather for
the theory than about the population, and not on the statistical basis. Purposive sampling
enables to select cases in accordance with the researcher’s personal judgement to choose
information-rich cases for in-depth study that better fit to explore the research questions and
achieve the objectives (Saunders et al., 2009). Three cases will be studied and eight interviews
with eight respondents (from one to five per case) will be conducted for the data collection.
The interviewees will represent three companies located in Ukraine, Germany and Russia,
dealing in the mineral fertilizer and are directly relevant to the Ukrainian mineral fertilizer
market. All the respondents have from five to twenty years managerial experience in some
fields of the mineral fertilizer production, procurement, distribution, logistics, finance and
market analysis. An expert from an information-analytical company, specializing in mineral
fertilizer local and global markets analysis and reporting will be interviewed for the research.
4.4. Operationalization
Operationalization models below show how the main research concepts will be measured on
the basis of the collected data. After filling in the table and drawing the graph below the
answers to the research questions will be found.
Environmental supply chain risks mitigation
№
Risk management
portfolio
Types of Risks
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Risk Mitigation
Risk Avoidance
Risk Prevention
Risk Acceptance
Risk Sharing
Reduce Minimize Supplier Stop dealing in Anticipating Averting Take on the Assume the Risk sharing with
Risk
Commodity /
likelihood impact Change certain product
Risks
Risks
Risks
Risks
supplier / buyer Insurance currency hedging
GOVERNMENTAL
Trade Restriction
Political Stability
Nationalization
Price Control
Trade Regulations
MACROECONOMICS
Economic Slump
Economy Stability
Exchange rates volatility
Inflation
Tax or duty imposing
Economic Activity
Central Bank currency transfer
regulations
Level of trade bariers
Unemployment rate
6
High
Environmental supply chain risks' severity assesment
5
Probability
4
3
2
Low
1
0
0
1
2
Light
3
4
5
Severe
Consequences
Measurement scale
Probability of risk’s type
Consequence of risk’s type
1
1
2
2
3
3
4
4
5
5
4.5. Expected Obstacles
The potential risks for the data collection are the willingness and availability of the
interviewees during the data collecting period as well as potential conflict escalation in
Ukraine, and difficulties connected with interviewing people in different countries: Ukraine,
Russia, and Germany. In order to overcome the difficulties all people will be asking about
interview reconfirmations and Skype interviews will be used to avoid long-term traveling.
4.6. Ethical Matters
To anticipate and cope with ethical issues the potential ethical problems will be recognized and
analysed. The confidentiality, organisational and individual participants anonymity will be
maintained (Saunders et al., 2009).
4.7. Data analysis techniques
The documents which are available on the website of the company will be used for
documentary analysis. To analyse qualitative data the following techniques will be applied:
- Data documentation and the process of data collection
- Categorization of the data into concepts
- Connection of the data to see the impact of one concept to another
- Legitimization by evaluating alternative explanations.
- Reporting the results
The interview data will be recorded and transformed into transcripts. Those transcripts and
voice recording (as a source of information about the voice’s tone) will be coded in order to
analyse the opinions in the interviews (Dul and Hak, 2008).
4.8. Presentation of the Results
The data will be presented on the following worksheets: Supply Chain Description,
Environmental Risks, Evaluating Implications and Identifying Actions. At the end of the
research on the basis of the worksheets, the list of supply chain vulnerabilities under the impact
of environmental factors will be produced that will be narrowed to the fields of priority and
appropriate actions marked and evaluated.
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4. Significance and Conclusion
This research adds to the existing knowledge generated in previous studies by providing
identification and better understanding, asserting and mitigation of environmental risks
influencing supply chain vulnerability more specifically in the mineral fertilizer industry,
where few types of research have been conducted so far. Moreover, previous research is more
focused on operational level internal risks while the external risks are less studied and assessed
being commonly considered unmanageable. Even in the case of external risks exploration,
more attention has been recently paid to the demand, supply, business, and natural disasters
while political, and the threat of war and terrorism risks are influencing nowadays the supply
chain vulnerability to an ever larger extent worldwide. The present research was conducted
exactly in the context of Russian and Ukrainian conflict and political risks influencing the
supply chain vulnerability and disruption threatening. This study is designed to identify the
most significant environmental risks and supply chain vulnerability, providing initial
estimation and prioritisation. The research gives the management of the company the insight
about the range of the environmental risks may occur, their approximate significance, cost
estimation and some guidance of risks costs lowering. This can help the management team in
contingency planning, risks mitigation and investments directing to make appropriate changes.
8
List of References:
Cook, T. (2015) Driving Risk and Spend Out of the Global Supply Chain. Boca Raton: CRC Press
Taylor and Francis Group
Dul, J. and Hak, T. (2008) Case Study Methodology in Business Research. 1ed., Burlington: Elsevier
Ltd.
Kara, S., Kayis, B. and Gomez, E. (2008) ‘Managing Supply Chain Risks in Multi-site, Multi-partner
Engineering Projects.’ Innovation and Knowledge Management in Business Globalization: Theory and
Practice. 5, 100–112
Kouvelis, P, Lingxiu D., Boyabatli, R. (2011) Handbook of Integrated Risk Management in Global
Supply Chains. Hoboken: John Wiley and Sons, Inc
Kouvelis, P, Lingxiu D., Li, O. (2012) Integrated Risk Management in Global Supply Chains. Hoboken:
John Wiley and Sons, Inc
LCP Consulting (2003) Understanding Supply Chain Risk : A Self-Assessment Workbook
Understanding Supply Chain Risk : A Self-Assessment Workbook. Cranfield: Cranfield University
McKellar, R. (2010) A Short Guide to Political Risk. Burlington: Gower Publishing Limited
Peck, H. (2002) Supply Chain Vulnerability. Cranfield: Cranfield University, School of Management
PotashCorp (2014) Nitrogen - Overview. Available at:
http://www.potashcorp.com/overview/nutrients/nitrogen/overview/world-urea-exports (Accessed: 6th
January 2016)
Saunders, M., Lewis P. and Thornhill A. (2009) Research methods for business students.5 ed., Harlow:
Pearson Education
Schlegel, G. and Trent, R. (2015) Supply Chain Risk Management. An Emerging Discipline. Boca
Raton: Taylor and Francis Group, LLC
Sodhi, M. and Tang, C. (2012) Managing Supply Chain Risk. London: Springer Science+Business
Media, LLC
Waters, D. (2007) Supply Chain Management: Vulnerability and Resilience in Logistics. London:
Kogan Page Limited
WEF (2013) Building Resilience in Supply Chain. World Economic Forum
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Appendix 1. Dissertation Structure
1
…………………………………………………………………………Introduction
2
…………………………………………………………………Review of literature
2.1 ………………………………………………Supply Chain Risks and Implications
2.1.1……………………………………………………………… Environmental Risks
2.1.2……………………………………………………………………… Political Risks
2.1.3……………………………………………………………………. Economic Risks
2.2……………………………………………………Supply Chain Risks Management
2.2.1………………………………………………………………….Risks Identification
2.2.2…………………………………………………………………Risks Measurement
2.2.3 ……………………………………………………..Risks Avoidance or Mitigation
3. …………………………………………………….. Research questions and objective
4. ……………………..………………………………………………Method and Design
4.1……………………..……………………………...Research Method and Approaches
4.2……………..……………………………………………….....Data Collection Method
4.3 ………………………………………………………………….. .Sampling Technique
4.4 ………………………………………………………………………Operationalization
4.5 …………………………………………………………………...…Expected Obstacles
4.6 ………………………………………………………………………. Ethical Concerns
4.7 ………………………………………………………………..Data analysis techniques
4.8. ……………………………………………………………..Presentation of the Results
5. ………………………………Results discussion, Conclusion and Recommendations
5.1. ……………………………………………………………….Discussion of the results
5.2. ………………………………………………………………………………Conclusion
5.3. ………………………………………………….Recommendations and Implications
6. ……………………………………………………………………………Reference List
10
Research Log
Appendix 2
Results
(number of
records)
Evaluation of material
(how will it contribute to
the research or support
the argument?)
The materials was not
always relevant and
difficult to focus on the
relationships between
supply chain risks and
environmental risks
Database
Time
Spent
JStore.org
2 hours
Supply chain,
environmental risks
Exceeding
number of
the articles
Saxion
University
online library
1 hour
Supply chain
vulnerability
More than
50 articles
Less material to study, but
not many relevant topics
Greenwich
University
online library
2 hours
Risk management,
Supply chain
management,
Too many
articles for
evaluation
Helped to find the articles
about the risks and supply
chain and few about
supply chain risks
management
Sage Journals
Key words
1 and a Environmental risks,
half hour
supply chain
vulnerability,
Risk management
1219
Sage Journals
1 hour
Supply chain risk
management
394
Saxion
University
online library
2 hours
Environmental risks
types
Supply chain risks
Too many
articles
found
Too many articles,
narrowing search
Better matches
Appropriate article found
There were many articles
but many relevant found
11
Appendix 3 Gantt Chart (Timetable)
17-Nov-15 2-Dec-15 17-Dec-15 1-Jan-16
Draft proposal 1
Preparation period
Consultation
Consultation
Feedbacks for Draft 1
Submission
Draft proposal 2
Preparation period
Consultation
Feedbacks for Draft 2
Submission
Final proposal
Preparation period
Consultation
Feedbacks for Final Proposal
Submission
Data collection
Interview conducting
Secondary data collecting
Data processing
Analysing the data
Dissertation writing
Draft Chapter 1 Introduction
Draft Chapter 2 Literature Review
Consultation Chapter 1 and Chapter 2
Draft chapter 3 Research Questions and Objective
Consultation Chapter 3
Draft chapter 4 Research Methods
Consultation Chapter 4
Draft Chapter 5 Conclusion
Consultation Chapter 5
Final Review of Dissertation
Final consultation
Submission
16-Jan-16 31-Jan-16 15-Feb-16 1-Mar-16 16-Mar-16 31-Mar-16 15-Apr-16 30-Apr-16 15-May-16 30-May-16 14-Jun-16 29-Jun-16 14-Jul-16
29-Jul-16 13-Aug-16
27
26
2
2
2
1
25
24
5
2
1
25
24
5
2
1
100
100
10
100
30
165
25
25
5
8
4
45
14
14
7
11
2
1
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