Defining Risk in Supply Chains?

Risk are generally addressed only when crisis takes place or during times of scepticism. But risk needs to be addressed and prepared for at all times even during good times to build resilience in the supply chain. Terrorist attacks ( 9/11 attacks), natural disasters ( Hurricane Katrina), supply disasters (Mattel toy supply chain incident in 2007) have been greatly discussed as supply chain risk causes because they are “sexy” and known to all. The definition of supply chain risk is so vast in scope and there are different ways to look at the risk in supply chains.

(1) Upstream (Supply side), Internal (Company/Enterprise focussed) & Downstream (customer side)

(2) Process Flow oriented - Physical flows, Information flows and Cash flow risks

(3) Functional orientation and performance ( Purchasing, Marketing, Logistics and Production )

(4) Time frame oriented ( Strategic, Tactical and operational)

(5) Environmental and Natural disasters

But so far not much of the focus has been from a perspective of Corporate Social responsibility and Carbon foot print (environmental sustainability in supply chains). There will be a growing need for these in the near future especially because of rising concerns for environment & climatic change coupled with increasing concerns of long global supply chains.

We have greatly acknowledged that the scope of supply chain is increasing, it is equally important to acknowledge that the scope and understanding of Risk, Roles and Responsibility also has increased.