SUPPLY CHAIN RISK MANAGEMENT

Current Purchasing and Supply Chain Practices in Supply Chain Risk Management

Current Purchasing and Supply Chain Practices in Supply Chain Risk Management

Introduction In the present-age highly competitive and challenging global environment, organizations need to put great emphasis upon achieving effective supply chain risk management. Supply chain risk management is the best and most effective strategy for achieving responsiveness and efficiency in the global markets. Managing supply chains is a challenging task due to the internal and external factors affecting the organization. The assessment of internal and external factors of the organization sets the basis for understanding the supply chain and managing it effectively. Organizations in the dynamic cell phone industry have learned good lessons from the disruptions in their supply chains. Ericsson for instance faced a serious crisis in 2000 when fire accident disrupted the material supply. The losses incurred by Ericsson reached up to $400 million which was a setback for the organization. The disruption in supply chain network caused delays and serious losses to the organization. Nokia, which was also using the same material supplier, adopted a contingency backup strategy to avoid such mishaps. This led to increase in Nokia's market share. This shows that for highly dynamic and competitive markets require organization be highly effective in their supply chain risk management. In the current global competitive environment, it is highly important to minimize risks and improvise supply chain operations to achieve maximum efficiency through human resource and supply chain (Yeung & Berman, 1997). There are several risks to be assessed beforehand so that supply chain could be managed more effectively. The financial, material or information risk can lead towards disruptions in the supply chain network of the organization. As the organizations are expanding globally, it is highly important to have effective supply chain management system. The end user of the organization which is the customer should be offered a high quality product/service on time. The strategy for gaining competitive advantage depends upon supply chain risk management so that smooth operations take place. The organizational efficiency is determined but the supply chain risk management especially in highly dynamic industries and markets. A single risk incident can lead towards disruptions in the supply chain network (Bramme, Hoejmose, Millington & NBS, 2011). Discussion Supply Chain Risk Management At the very outset, it is important to understand the meaning of supply chain risk management. It is the effective management of supply chain tools and partners to deal with risks and uncertainties affecting the supply chain operations. The risk and uncertainties arising from within or outside the organization are the main challenges faced by the organization through effective supply chain risk management. Supply chain risk management is the ability of the organization to identify and manage its economic, financial, social, information, and environmental risks in the supply chain. These risks can be minimized through contingency planning and flexible supply chains. Supply Chain Risk Management Model In order to understand the purchasing and supply chain practices in supply chain risk management; ...