Risk Evaluation and Management Involved in Supply Chain
Plesat, Frants (2023)
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2023052413935
https://urn.fi/URN:NBN:fi:amk-2023052413935
Tiivistelmä
Trading of goods and services on the internet (E-commerce) has created a global market environment, which together with business objectives namely reducing distribution and inventory costs, increasing production efficiency, and delivering the fastest way possible has created a wave for new methods and initiatives by firms. This new world order has overall increased the global economy, but at the same time, the increase in process complexity has put the SC industry into an unknown market characterized by constant demand fluctuations, pressure, and lack of control, which make SCM react in a wrong manner that eventually will raise unforeseen risks and problems.
These risks are unexpected events that might negatively affect a business on an operational and financial level and even harm a firm’s reputation. We only have to see the latest challenges that the world has been through. From 2019 until the present, where we had the Covid-19 pandemic that left people dumb at home for months and closed businesses. Furthermore, in 2021 Suez Canal obstruction, when a 400-meter-long vessel got stuck in the canal due to strong wind, blocked all ship trafficking for days which resulted in millions of losses. Today, in 2022 we have political risks, the Ukraine-Russia war that will unreservedly leave a negative impact globally.
Of course, the above risks, together with natural disasters are exceedingly rare to occur, but when they do, they can be detrimental to a business and sometimes to the total global economy. There are risks that we never hear but they occur almost daily. These risk events are usually internal to the business which might be late deliveries, price changes, road accidents, or stolen or damaged goods. Even smaller problems can affect performance, so to mitigate them we need competent risk management.
Change is unavoidable and risk management which still today is an underdeveloped concept will be essential shortly for companies to achieve success.
This paper aims to present the principles of supply chain risk management that are suggested by the majority of the related analysed authors, and experts relevant to this topic. The paper is for anyone interested to learn more about risk management in general. Considers people from diverse backgrounds in the business industry and particularly could be helpful and interesting for existing and future supply chain professionals.
These risks are unexpected events that might negatively affect a business on an operational and financial level and even harm a firm’s reputation. We only have to see the latest challenges that the world has been through. From 2019 until the present, where we had the Covid-19 pandemic that left people dumb at home for months and closed businesses. Furthermore, in 2021 Suez Canal obstruction, when a 400-meter-long vessel got stuck in the canal due to strong wind, blocked all ship trafficking for days which resulted in millions of losses. Today, in 2022 we have political risks, the Ukraine-Russia war that will unreservedly leave a negative impact globally.
Of course, the above risks, together with natural disasters are exceedingly rare to occur, but when they do, they can be detrimental to a business and sometimes to the total global economy. There are risks that we never hear but they occur almost daily. These risk events are usually internal to the business which might be late deliveries, price changes, road accidents, or stolen or damaged goods. Even smaller problems can affect performance, so to mitigate them we need competent risk management.
Change is unavoidable and risk management which still today is an underdeveloped concept will be essential shortly for companies to achieve success.
This paper aims to present the principles of supply chain risk management that are suggested by the majority of the related analysed authors, and experts relevant to this topic. The paper is for anyone interested to learn more about risk management in general. Considers people from diverse backgrounds in the business industry and particularly could be helpful and interesting for existing and future supply chain professionals.