Assessing the Vulnerability of Supply Chains

Asbjemslett, Bjorn Egil. 2008. Assessing the Vulnerability of Supply Chains. In Supply Chain Risk — A handbook of Assessment, Management, and Performance, eds. G. A. Zsidisin and Bob Ritchie Springer Science-I-Business Media, LLC. 

Dr. Bjorn Asbjornslett tackles the issues associated with analyzing the potential vulnerabihty of supply chains, enabling a more proactive approach to SCRM. Having introduced the concepts of vulnerability and resilience in the context of the supply chain, the author examines the contributory factors influencing both vulnerabihty and resilience. The chapter concludes with the exposition of a detailed approach to assessing the vulnerability of the supply ch providing practical iUustrations, guidance and advice on associated tools that may be employed to support the analysis and assessment. 

The proposed framework for formal vulnerability assessment [FVA] for maritime supply chains is presented below. In short, this is an expansion of the Formal Safety Assessment [FSA] methodology described by IMO for maritime applications (IMO 2002). FSA is a structured and systematic, tested and provenmethod-ology for enhancing safety, including protection of life, health, the marine environment and property, latest used for risk based design of vessels (SAFEDOR 2009). 

A Formal Vulnerability Assessment methodology may offer the possibility to assess and systemize risks, both to evaluate the current state, as well as to allow for assessing the impact of changes to the existing supply chain. It is beneficial that the methodology is based on existing and tested methods, and no current method, to the authors knowledge, exist... 

I met with DHS S T representatives several times early in the study process to discuss the statement of task, data availability, and the departments objectives in commissioning this study. Based on these discussions and from discussions with DHS representatives at the committee s first meeting, it was agreed that this study should complement and not attempt to duplicate other ongoing activities such as the DHS Risk Analysis and Management for Critical Asset Protection (RAMCAP) and Environmental Protection Agency s (EPA s) Off-Site Consequence Analysis. Thus, the committee did not attempt to assess the effectiveness of current protective measures although called for in the statement of task this was a part of the DHS RAMCAP effort, which DHS representatives made clear should not be duplicated. As the statement of task indicates, the focus of this review is on the vulnerabilities of the supply chain as a whole rather than the vulnerability of individual chemical plants. 

After executives assess the impact of alternative crisis scenarios on the supply chain, they will have detailed knowledge of their operational vulnerabilities and how these soft spots relate to performance goals and earnings. Understanding these weak areas at the enterprise level will clarify critical decisions. 

There is a need for methodologies for assessing vulnerabilities in maritime supply chains, which allows for systematic and transparent identification and mitigation of vulnerabilities. Given that supply chains are increasingly complex and are depending on a munber of participants and external factors, getting a reahstic overview of potential threats to the supply chain is a considerable task. 

The development of a continuous follow-up tool allowing for real-time assessment of the vulnerability level of a supply chain is another relevant task. This requires thorough testing of metrics and indicators for assessing risk levels in the supply chain. 

A survey of over 3,000 senior executives undertaken by the consultancy company McKinsey in 2006 reported that they believed their companies faced growing risk to disruptions to their supply chains. However, the same survey found that in many cases companies had inadequate processes in place for the management and mitigation of that risk. Whilst most organisations recognise the need to regularly assess their risk profile, that assessment has tended to be focused on broader regulatory and financial risk issues rather than supply chain vulnerability. 

Where across the supply chain as a whole are we vulnerable to external forces Whilst the type and timings of extreme external events may not be forecastable, their impact needs to be assessed. 

In this chapter, we present a disruption risk assessment procedure for determining the disruption risk scores of facilities and transportation links in a supply chain network. Disruption risk score is calculated from three factors hazard, vulnerability, and risk management practice. We also present the use of disruption risk scores as a risk parameter in a mathematical model. 

This chapter presented a disruption risk assessment method for managing the supply disruptions in a global supply chain. The assessment can help practitioners to quantify risks in their supply chains based on hazards, vulnerability, and risk management practices. The disruption risk scores of suppliers facilities and transportation links can lead a company to proactively manage its suppliers. They then can use the disruption risk matrix to visualize the relative risk of all idenfified hazards. We presented a case study of a global distribution company to illustrate the application of this framework in assessing disruption risks for facilities and transportation links. This framework can be used to develop a company disruption risk profile, which in turn can be used to identify the critical network components that are prone to disruptions and to prioritize the risk mitigation activities. 

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