Supply Chain Risk Management: Identifying and Mitigating Risks

This report provides a comprehensive analysis of risk management within the supply chain, exploring both upstream and downstream challenges. It highlights weaknesses in contract management, including the absence of strategic requirements for supplier insurance, limitations of liabilities, and inefficiencies in contracting processes. The report emphasizes the importance of supplier financial visibility, proper diligence, and effective dispute resolution. Key findings include the need for proactive risk management, emphasizing the importance of identifying and mitigating both internal and external threats. The study also reviews essential steps for effective supply chain risk management, such as profiling the supply base, establishing strategic requirements for supplier insurance, and implementing strategies for effective dispute resolution. The report underscores the impact of poor risk management on business performance and the need for a proactive, integrated approach to managing supply chain risks, concluding that successful risk management is crucial for business resilience and opportunity creation.

RISK MANAGRMENT IN SUPPLY CHAIN 1
RISK MANAGEMENT IN SUPPLY CHAIN
Name:
Institution:
Course:
Tutor:
Date:

RISK MANAGRMENT IN SUPPLY CHAIN 2
Abstract
The project was carried out to clearly define the risks that occur in the supply chain both
upstream and downstream. The major areas of concerns of the project included showing the
areas of weaknesses and the various mistakes done by many organizations while entering into
contract with supply companies. The lack of such strategic requirement for supplier insurance
and limitations of liabilities together with lack of innovation and efficiency in contracting
management in addition to portfolios that state out the regulations of the contract among many
that have been illustrated in the report. In the process of the mitigating the risks in the supply
chain, several processes and steps were developed that can effectively help the organization to
avoid these risks. Such steps include effective resolution of disputes, provider optimization and
redundancy supplier stability visibility and proper diligence in operational supplier assessment
review.
Introduction
This report was written so as to give insight and way forward to mitigate or help solve the
problems encountered in business organizations more especially in the case of managing the
risks that may arise as a result of supply disruption in the chain of supply. This report contains
the steps that can be undertaken such as ensuring financial visibility of the suppliers and ensuring
the supplier has required documents such license of insurance before entering in to contract with
them. This report is intended to provide possible solutions to all business dealing with supply of
goods and services to evade anticipated and unanticipated risks.

RISK MANAGRMENT IN SUPPLY CHAIN 3
The report was carried out through the use of direct interviews and use of questionnaires to
chosen enterprises and chosen suppliers so as to come up with all round study about supply chain
management. It particularly involves finding out what is important for the firm to be in charge of
and those that require little attention. Coming up with a list that identifies every individual staple,
coming up with critical material and the know-how of rudimentary supplier firms is thus
essential. It is closely linked to invention and efficient contract management. The way a
procurement firm tackles contract management will build the platform for risk management in
supply chain.
Literature Review
Supply Risk management in the supply chain process of any firm should be taken as one of the
essential substages in the structure of any business organization (Haraburda 2017, p.657). This
involves coming up with both abstract and tangible plans that will enable the company to
continue with normal operation even in the case of the occurrence of supply breakdown. This
will determine the speed of things going back to normal incase after the breakdown
The major cause of many businesses falling out of the market is due to poor strategies or
completely no plan put in place to manage the risks that may arise in the course of contract given
out to suppliers (Zhou et al 2018, p. 9). These may be caused by several business in the
management plan of the company such for instance, failure to provide suppliers with
performance report which may make the suppliers think, that he is on the right truck even if they
are not this end s up making the suppliers reduce their dedication thus can cause artificial or lack
of the materials being supplied.

RISK MANAGRMENT IN SUPPLY CHAIN 4
Failure to evaluate potential liabilities exposure before using any external suppliers has also been
one of the breaking point of many businesses either upstream or downstream supplemented with
lack of proper diligence in the operational supplier assessment (Almaktoom et al 2016, p.861).
According to Martian Christopher’s book (Managing Risks in the supply chain), there are both
internal and external risks that may affect the supply chain in any organization. The macro
threats are those which are mostly created by incidences either upstairs and downstairs include
demand (unpredictable or misunderstood customers and customers terminating their demands),
supply disturbance to the movement of products in the supplant chain) physical threats such as
the conditions of supplier’s facilities (Synder eta al 2016, p.91). While internal threats are
oriented by incidences within the companies restrain check. They include mass produce (risks
instigated by disruption of reticent or processes and threats fostered by changes in central
persons in leadership.
Several steps and technics can be undertaken to help mitigate both speculated and unspeculated
risks in the logistics. According to Martin Christopher, several steps can be used in the process to
help manage the supply chain effectively (Yu, Xiong & Cao 2015, p.98). This involves coming
up with several steps in the supply risk management plan. These steps include:
Profiling the supply base
It particularly involves finding out what is important for the firm to be in charge of and what
should be given little focus. Coming up with a list that identifies each raw material, developing
effective strategic material and understanding the strategic supplier organization is essential at
this stage for every business. It is closely linked to innovation and efficiency in contracting
management (Vujovic et al. 2017, p.9). The way procurement office will tackle the issue
critically. The use of contract streaming that brings a clear knowledge of the important cost of

RISK MANAGRMENT IN SUPPLY CHAIN 5
building and leaving old styles which provide the ability to secure higher chances of success
rates of executing well-drafted agreements for instance use of procurement contracting
portfolios. Understanding the gaps present in the organization agreement terms and secure
methods of fixing them
Secondly, coming up with strategic requirements for supplier insurance and limitations in
liabilities.it encompasses evolving of potential liability exposure before using any external
supplies of product services either upstream or downstream (Lee, Song & Cheong 2018, p.9).
Addressing all areas of protections that is limitation of liabilities, indemnification and supplier
insurance. The cost of suppliers to be insured so that they are protected against legal and finance
exposure that could reduce the ability to carry out the contractual commitment and bridge of
protection to the procurement firm from direct and indirect allegations from Stuckists or other
parties that may be affected by the contract (Fang et al2018, p.22). This is by ensuring that every
organization has a proactive management of risk protection by having all the resources in place
to proactively collect and knowledgably renew the contract. In addition to this, the company or
organization should be able to tackle vulnerability, for each of the risks present in the supply
chain this include answering the questions such as scenarios that are expected to happen, reason
for their occurrence and the way the company is able or unable to deal with them.
Third stage in managing risks in the supply chain involve innuendo/inference the failure of
many organizations to take into consideration or insufficiently mentioning the substantially
useful information besides promoting the imitation techniques (Zou & Counni 2012, p.148). It
can be dealt with through employing the principles of enterprise resource management to affirm
that overflow consolidation of the stockiest group does not occur. Coming up with strategic
sourcing work by having a balanced portfolio which gives room to perform services in multiple

RISK MANAGRMENT IN SUPPLY CHAIN 6
locations thus segmenting the relationship be among many velour’s in all levels of contract
manner thus opening door to substantial supply chain operation (Hialiang & Jiambo 2017, p98).
The process ensures financial solidity perceptibility thus stabilizing entire suppliers.
The strength of a business depends with the stability of supply chain it deals with, building
strong payment protocols and managing vendor relationship pays also a key role in managing
any risk in the supply chain. Effective resolution of disputes which are inevitable at each stage of
the supply chain coming up with effective procurement procedures such as putting complicated
requirements for supplier cover for compensation and reduction of liabilities (Yucenur, Vayvay
& Demirel 2011). Selection of established and investigated qualified best practice supplier firms
that lead their sectors, critically making difficult decision and taking responsibility of every
situation by discussing all conceivable chances of failure (Singh et al 2012, p.280). The company
should be able to come up with ways that can go a long way to curb cases such as natural
phenomena that cannot be anticipated for under normal circumstances such as tsunami.
Empowering all sections of the organization with user reliable technics of placing order of goods
and services and securing convenient prices as a result of the willingness to make long-term
commitments.
Lastly checking the cost and benefits in allaying actions and measures comes with the benefits of
threat reduction and if it is worth. The link between benefit of cost and susceptibility verses
authenticity. Presence of disruption cost and thus increases of vulnerability.
Evaluation
From the research above, its quite clear that many organizations and firms have stumbled in the
course of doing business due to poor risk management plans that range from failing to qualify

RISK MANAGRMENT IN SUPPLY CHAIN 7
their suppliers by giving report status of their progress to complex issues such as presence of
gaps in their risk management plans. The risks range from macro (externa) to micro (internal)
that are under the control of the firm management.
In assessing the market with several organizations, several steps were qualified to be more
helpful in mitigating the risks including the” black swan”(Shenngham et al 2016, p.3369).The
steps include coming up with innovative and efficient technics of risk management in supply
chain, critical prerequisite for stockiest insurance, limiting liabilities, providing optimum and
circumlocution(Edward & Chakraborty 2012, p. 1031) in addition to supplier financial visibility
which concerns itself with ensuring that the supplier company is capable of honoring the contract
without terminating it before its due date and has got the cover of insurance and has the financial
ability to carry out the work
Conclusion
Risk management in the supply chain goes beyond the chain. It is organization itself as when
disruption in supply is handled well it can change into business opportunity but when it is
handled poorly it can turn into failure in business. Management of risks can only be effective if it
is fully accepted into the organizational business process. The procedure of finding threats,
scrutinizing them and forethought in imitation must be noted and feedback given through the
firm.
Various road maps can be put in place such as giving reports to the suppliers and even going
further to ensure that the suppliers provide their insurance licenses so as to help avoid the risks
that may arise in the cause of any dispute which may arise in supply and any controversies. Risks
to the supply chain consist of; value vulnerability, shortage of material. Automating steps

RISK MANAGRMENT IN SUPPLY CHAIN 8
involved in stockiest risk management collection, scrutinizing and managing supplier
information.
.
List of References
Almaktoom, A, Krishnan, K, Wang, P, & Alsobhi, S 2016, 'Cost efficient robust global supply
chain system design under uncertainty', International Journal Of Advanced Manufacturing

RISK MANAGRMENT IN SUPPLY CHAIN 9
Technology, 85, 1-4, pp. 853-868, Academic Search Premier, EBSCOhost, viewed 28 April
2018.
Edwards, B, & Chakraborty, S 2012, 'Risk Communication and the Pharmaceutical Industry.
What is the Reality?', Drug Safety, 35, 11, pp. 1027-1040, Academic Search Premier,
EBSCOhost, viewed 28 April 2018.
Fang, H, Jiang, D, Yang, T, Fang, L, Yang, J, Li, W, & Zhao, J 2018, 'Network evolution model
for supply chain with manufactures as the core', Plos ONE, 13, 1, pp. 1-28, Academic Search
Premier, EBSCOhost, viewed 28 April 2018.
Haraburda, SS 2017, 'SUPPLY CHAIN MANAGEMENT Maturity Level Assessment', Defense
Acquisition Research Journal: A Publication Of The Defense Acquisition University, 24, 4, pp.
656-681, Academic Search Premier, EBSCOhost, viewed 28 April 2018.
Hualiang, C, & Jianbo, W 2017, 'Financing Model Analysis and Risk Management of Supply
Chain Finance Based on Gray Evaluation', Revista De La Facultad De Ingenieria, 32, 1, pp. 95-
105, Academic Search Premier, EBSCOhost, viewed 28 April 2018.
Inderfurth, K, & Clemens, J 2014, 'Supply chain coordination by risk sharing contracts under
random production yield and deterministic demand', OR Spectrum, 36, 2, pp. 525-556, Academic
Search Premier, EBSCOhost, viewed 28 April 2018.
Lee, Y, Song, S, & Cheong, T 2018, 'The value of supply chain coordination under moral
hazard: A case study of the consumer product supply chain', Plos ONE, 13, 3, pp. 1-16,
Academic Search Premier, EBSCOhost, viewed 28 April 2018.

RISK MANAGRMENT IN SUPPLY CHAIN 10
Ralph, N, & Hancock, L 2018, 'Exploring the Role of Alternative Energy Corporations in Ethical
Supply Chains and Corporate Peacebuilding', Global Governance, 24, 1, pp. 81-102, Academic
Search Premier, EBSCOhost, viewed 28 April 2018.
Shenghan, Z, Chen, H, Yue, X, & Wenbing, C 2016, 'Research on supply chain risk assessment
with intuitionistic fuzzy information', Journal Of Intelligent & Fuzzy Systems, 30, 6, pp. 3367-
3372, Academic Search Premier, EBSCOhost, viewed 28 April 2018.
Singh, A, Mishra, P, Jain, R, & Khurana, M 2012, 'Design of global supply chain network with
operational risks', International Journal Of Advanced Manufacturing Technology, 60, 1-4, pp.
273-290, Academic Search Premier, EBSCOhost, viewed 28 April 2018.
Snyder, L, Atan, Z, Peng, P, Rong, Y, Schmitt, A, & Sinsoysal, B 2016, 'OR/MS models for
supply chain disruptions: a review', IIE Transactions, 48, 2, pp. 89-109, Academic Search
Premier, EBSCOhost, viewed 28 April 2018.
Vujović, A, Đorđević, A, Gojković, R, & Borota, M 2017, 'ABC Classification of Risk Factors
in Production Supply Chains with Uncertain Data', Mathematical Problems In Engineering, pp.
1-11, Academic Search Premier, EBSCOhost, viewed 28 April 2018.
Yu, Y, Xiong, W, & Cao, Y 2015, 'A Conceptual Model of Supply Chain Risk Mitigation: The
Role of Supply Chain Integration and Organizational Risk Propensity', Journal Of Coastal
Research, 73, pp. 95-98, Academic Search Premier, EBSCOhost, viewed 28 April 2018.
Yücenur, G, Vayvay, Ö, & Demirel, N 2011, 'Supplier selection problem in global supply chains
by AHP and ANP approaches under fuzzy environment', International Journal Of Advanced
Manufacturing Technology, 56, 5-8, pp. 823-833, Academic Search Premier, EBSCOhost,
viewed 28 April 2018.

RISK MANAGRMENT IN SUPPLY CHAIN 11
Zhou, Y, Feng, J, Wei, J, & Sun, X 2018, 'Pricing Decisions of a Dual-Channel Supply Chain
considering Supply Disruption Risk', Discrete Dynamics in Nature & Society, pp. 1-16.
Available from: 10.1155/2018/6841519. [28 April 2018].
Zou, P, & Couani, P 2012, 'Managing risks in green building supply chain', Architectural
Engineering & Design Management, 8, 2, pp. 143-158, Academic Search Premier, EBSCOhost,
viewed 28 April 2018.