Towards a Supply Risk Management Capability Process Model: An Analysis of What Constitutes Excellence in Supply Risk Management Across Different Industry Sectors

Abstract

Supply risk management (SRM) is on the rise as firms face increased risks due to outsourcing and an increasingly dynamic and complex business environment. Besides, supply chain risks and resulting disruptions are not only related to temporarily enhanced cost, but may endanger the existence of a firm. Many firms from different industries intensified their efforts in SRM during the economic crises. But so far – also because of the difficulty to assess the success of risk management approaches – a process standard for SRM has not yet been defined. Hence, different approaches for SRM in terms of scope, resource intensity and formalization exist, bringing different maturity levels of SRM systems to the light. In this paper, we contribute to prior research by illustrating a SRM process model. Based on this model we explore the status-quo of best practices across different industries. Based on insights from multiple case studies we elaborate on best practices and the maturity level of SRM processes. The eight identified SRM processes can be clustered into strategic, core and enabling processes. We investigate the supply risk strategy process, the four core practices of risk identification, risk assessment, risk treatment and risk monitoring as well as the three enabling processes establishment of risk guidelines and procedures, IT integration and employee training for supply risk management. Providing an overview over the significant spread of SRM processes proficiency we offer guidance to purchasing executives who seek to develop their SRM towards greater maturity.