CCIRM 2011
Global Supply Chain Risk
Management Strategies
Christophe Cermolacce
School of Economics and Management, Tongji University, Shanghai, China
Ecole Supérieure de Commerce, Euromed Management, Marseille, France
Anovo France, China’s branch representative
Supervisor: Professor WU SI ZONG, Tongji University, Shanghai, China
CCIRM 2011
Why SCRM strategies and China?
•
•
•
•
China = world’s first exporter
Lliterature = poor
Last decade = numerous risk events
Not well considered by managers and
organizations
CCIRM 2011
Goal
• Based on Manuj and Mentzer 2008 Research
• Refine, infirm, confirm their finding within the
scope of SC with suppliers located in China
CCIRM 2011
Methodology
• Based on Manuj and Mentzer 2008 Research
• Grounded theory
• In-depth interviews with professionals
CCIRM 2011
What is risk?
• “A state of uncertainty where some of the
possibilities involve a loss, catastrophe, or
other undesirable outcome” Douglas Hubbard,
2007
• Risk = PxL or Risk =∑[PxL] (P: probability of
the accident occurring, L: expected loss in
case of the accident)
CCIRM 2011
What is risk? Based on interviews
•
4 dimensions
1. Potential losses
2. Likelihood of those losses
3. Speed
1. Speed of the event leading to loss
2. Speed at which losses happen
3. “How quickly the risk event is discovered”
4. Frequency
CCIRM 2011
What is Global Supply Chain?
• A complex system
• Involves
–
–
–
–
–
–
•
Organizations (Companies and governments)
People
Technology
Activities
Information
Resources
Moving a product, service along a the chain between supplier
and customer
• An ever changing path
• Risky
CCIRM 2011
What is SCRM?
Global Supply chain risk management is the
identification and evaluation of risks and consequent
losses in the global supply chain and implementation
of appropriate strategies through a coordinated
approach among supply chain members with the
objective of reducing one or more of the following –
losses, probability, speed of event, speed of losses,
the time for detection of the events, frequency, or
exposure – for supply chain outcomes that in turn
lead to close matching of actual cost savings and
profitability with those desired
– Ila Manuj and John T, Mentzer, 2008 –
CCIRM 2011
Global Supply Chain risk events and China
11.
1. Currency
12.
2. Transit time variability
3. Forecasts
13.
4. Quality
14.
5. Safety
15.
6. Business disruption
16.
7. Survival
17.
8. Ownership
18.
9. Culture
10.Dependency and opportunism
Oil price fluctuation
Raw material price
fluctuation
Non-payment situations
Abandonment of goods
Political/Legal
Cheating
Overzealousness
Staff motivation
CCIRM 2011
Global Supply Chain risk events and China
CCIRM 2011
Supply Chain risk Management strategies
Low supply risk
High supply risk
Low demand risk
SlDl
ShDl
High demand risk
SlDh
ShDh
Antecedents
Temporal focus
SC Flexibility
SC environment
-SlDl
-ShDl
-SlDh
-ShDh
Strategy selection
Postponement
Speculation
Hedging
Control/Share/Transfer
Security
Avoidance
Team composition
Risk Management Outcomes
Total and Per Unit Cost
Total and Per Unit Profit
Average inventory
Disruptions
Total inbound Lead Time
Delays to customers
Stock-outs
Fill Rate
Premium Freight Usage
Cash-to-cash cycle time
Exposure
Supply Chain Complexity
Inter-organizational Learning
CCIRM 2011
Supply Chain risk Management strategies
Antecedents
Temporal focus
P0.a. The shorter the delays, the harder the management of risk
P0.b. Shorter delay does not mean lower importance of risk
P0.c. Delays  hard to implement risk management strategies
Flexibility
•Adaptability
•Alignment
•Agility
P0.d. Flexibility softens SCRM
P0.e. Good relations with the members of the SC improves
flexibility
CCIRM 2011
Supply Chain risk Management strategies
Postponement & Speculation
P1. Supply chains facing SlDh and ShDh environments are more likely to adopt
form postponement strategies than those facing SlDl and ShDl environments.
P2. Supply chains facing SlDl and ShDl environments are more likely to adopt a
speculation strategy than supply chains facing SlDh and ShDh.
P1.b. Supply chains facing ShDh and environments are more likely to adopt
manufacturing, logistics and form postponement strategies than those facing SlDl
and ShDl environments
CCIRM 2011
Supply Chain risk Management strategies
Hedging
Offsetting losses at some points by gains at others
P3. Supply chains facing ShDl and ShDh environments are more
likely to adopt hedging as compared to supply chains facing SlDl
and SlDh environments
CCIRM 2011
Supply Chain risk Management strategies
Control/share/transfer
•Control : forward or backward integration or virtual integration
fthrough contracts and partnerships
•Sharing : involves contracts and partnerships
•Transfer : involves disintegration and outsourcing.
P4. Supply chains facing ShDl environment are more likely to adopt
backward integration, supply chains facing SlDh environment are more likely
to adopt forward integration, and supply chains facing ShDh environments are
more likely to adopt both backward and forward integration.
P4.b. Supply chains facing ShDl environment are more likely to adopt virtual
backward integration and higher control strategy by outsourcing than those
facing SlDh and SlDl environments.
CCIRM 2011
Supply Chain risk Management strategies
Security
P5. All types of supply chains will increase the use of security strategies.
CCIRM 2011
Supply Chain risk Management strategies
Avoidance
Type1: avoid buying from China to reach a 0 risk situation
Type2: reduce, prevent risk by controls
P6. Supply chains operating in all types of environment adopt avoidance
strategies. Type 1 avoidance strategy is adopted when a supply chain has an
option not to enter a high demand or supply risk environment. Type 2
avoidance strategy is adopted when a supply chain has no option but to enter a
high demand and/or supply risk environment
CCIRM 2011
Supply Chain risk Management strategies
Moderators
Team composition
P7. Team composition strongly affects the relationship between the
antecedents and the strategy selected.
Supply chain complexity
P8. Greater supply chain complexity lessens the relationship between supply
chain risk strategies and risk-related outcomes.
CCIRM 2011
Implications
• Risk events introduction
• Testimonies for managers
• 16 propositions
– 5 on antecedents
– 9 on strategies
– 2 on moderators
• Validation of Manuj and Mentzer’s models and
propositions
CCIRM 2011
Thank you, 谢谢