Supply Chain Risk Of Supply Chains Essay

1703 Words Nov 28th, 2016 7 Pages
Every activity that supply chain (SC) conducts has inherent risk that an unexpected disruption can occur. There are a number of factors such as global reach of supply chains, relatively shorter product life cycles as well as more stringent customer demands, which can be a cause of supply chain disturbances. These disruptions can cause undesirable operational and functional impacts. Supply chains must be planned to include readiness for risky events, provide an effective and efficient response as well as have the capacity to recover from disruptive occurrences or even perform better after the occurrence of such events. If they are designed in that manner, risks can be effectively diminished (Ponomarov and Holcomb, 2009). Notwithstanding the advances that have been achieved in SC, disruptions now occur in greater frequency and intensity, and thus can yield greater adverse consequences. Therefore, supply chain risk management can be viewed as a critical capacity which helps create cost-efficient supply chain (Ivanov, Sokolov & Dolgui, 2014).
Firms have realised that effective risk management is an excellent tool to utilise in order to survive and be prosperous in a highly competitive business environment. Consequently, supply risk management risk management (SCRM) has become an extension of supply chain management with the prime objective of dealing with probable risk sources which have been objectively identified. The end result of the process is providing action plans that…

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