Supply chain external risks

Enterprises need a certain internal organisation for chemicals control. A clear allocation of responsibility and efficient routines must be established within the company for control of the purchase of chemicals, data retrieval, hazard and risk assessment, classification, labelling, SDS, work instructions, training, exposure and emission control, etc. Obviously, smooth and efficient co-operation between actors in the supply chain simplifies the work of enterprises (c.f. Fig. 16.4). Enterprises may meet demands on expertise by making use of the skills of their chemical suppliers, by hiring their own experts or by hiring external expertise as consultants. Normally, a combination of these alternatives is used. 

Further, the framework is developed to account for risk and uncertainty caused by factors internal and external to the enterprise. Obviously, this requires reconfiguring the supply chain in order to keep pace with the changing environment. 

To sum up, the issue of risk is a wide topic covered by a range of definitions, classifications and associated terms. Clearly, risk leads to various losses. Hence, risk needs to be effectively managed. To that end, it is necessary - first - to identify the external and internal sources of risk (threats) to the supply chain, and then take actions to minimise the risk of potential adverse events. 

Internal and external sources of risk for supply chains... 

The most common classification of risk sources for a supply chain is a division into internal and external sources. The Research at Cranfield School of Management sponsored by the British Department of Transport has shown that the most important factors affecting the vulnerability of supply chains are (Braithwaite 2003, pp. 6-7) ... 

While analysing the supply chain structure, one can see that the externally and internally driven supply chain risks can be divided as follows ... 

The sources of risk described are usually interrelated. They strongly influence one another, intensifying the possible negative outcomes of events (Table 3.7). In relation to the very diverse and individual (for each supply chain) internal and external terms of operation, the efficient identification of internal and external sources of risk is fundamental to effective... 

At the same time the vulnerability of supply chains to disturbance or disruption has increased. It is not only the effect of external events such as natural disasters, strikes or terrorist attacks but also the impact of changes in business strategy. Many companies have experienced a change in their supply chain risk profile as a result of changes in their business models. For example, the adoption of lean practices, the move to outsourcing and a general tendency to reduce the size of the supplier base potentially increase supply chain vulnerability. 

Clearly, there are risks that are external to the supply chain and those that are internal. External risks may arise from natural disasters, wars, terrorism and epidemics, or from government-imposed legal restrictions. Internal risks will be described in more detail later in this chapter but essentially they refer to the risks that arise as a result of how the supply chain is structured and managed. Whilst external risk cannot be influenced by managerial actions, internal risk can. 

To maintain supply continuity successfully, sourcing professionals work to open lines of communication between their company s internal functional departments and with external suppliers. Communication reduces the risk of supply chain disruptions. Many areas in a supply chain can cause an interruption in the flow of goods operational, financial. 

In order to understand the specific risk situation within the four focused supply chains, between 8 and 16 interviews have been conducted in each partnering company. We have applied a process-orientated approach based on the original SCOR model (Supply Chain Operations Reference) (Supply Chain Council 2006) but extended the perspective to include suppher and customer-driven risks (see Fig. 13.2). The interview partners have either been responsible for the entire supply chain or for selected processes. Supplier or customer representatives have not been involved. While this might appear as a weakness, it accurately reflects the situation in many SMEs which have little or no influence over their external supply chain partners and will find it difficult to involve them in a joint SCRM approach. 

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