Managing Risks of Supply-Chain Disruptions: Dual ... - CiteSeerX

Some articles focus precisely on disruptions and discuss the measures that companies should taketo have safer supply-chains or study the different ways that could help firms to mitigate theconsequences of disruption. They recall an already existing, but more and more relevant field ofresearch on resilience that provides us with valuable insights. Coutu defines this notion ofresilience as “the ability to bend and bounce back from hardship” (Coutu, 2002). Children whohave schizophrenic parents and do not suffer psychological illness possess this quality of resilience.Another good illustration is the way UPS delivered packages to customers living in their cars justone day after Hurricane Andrew devastated Florida in 1992. Interest in resilience started about 40years ago and focuses on people or organization broadly speaking without directly covering thesupply-chain.2.2 Assess RiskRisks that can lead to supply-chain disruptions are as different as natural catastrophes, strikes,political instability, fires or terrorism. Vulnerability of supply chains to these risks has increasedbecause of modern practices such as lean management and just-in-time inventory. As WilliamMichels puts it “Many of the key risks factors have developed from a pressure to enhanceproductivity, eliminate waste, remove supply chain duplication, and drive for cost improvement”(Stauffer, 2003). But this list is not comprehensive and we can find many other reasons. Forexample market has put a lot of pressure on firms to differentiate their products. This has ledcompanies to rely on several third parties and has consequently increased the risks. Vulnerabilityhas also increased because of the growing complexity of supply networks. Indeed the probabilitythat something happens at a particular node or connection is higher than for a small and simplenetwork. Supply chains that comprise hundreds or even thousands of companies present numerousrisks. Cranfield (2002) characterizes as “risks within the supply chain” all the factors that make thesupply chain more vulnerable to external risks such as terrorism or strike.The organizations are “crisis-prepared (or proactive)” encounter fewer disasters and recover betterfrom hardship; in particular they “force themselves to confront crisis they have never experienced –or can’t even imagine.” (Mitroff and Alpasan, 2003). In order to think the unthinkable, theseauthors suggest a set of tools. Firms can try to put in an “internal assassin” shoes and figure outwhat are the weak points of the organization. Or they can do benchmarking and study otherindustries’ weaknesses in order to identify new threats. They can also invite external parties to17