Supply Risk Management at a Large Manufacturing Company: Identified Issues and Areas of Improvement

Abstract

Supply risk management is important for all companies, but even more so for manufacturers. They operate in an environment where they often have many suppliers, and the supply of raw material and parts is vital to keep production going. Supply chains have become more complex in recent years, but also more sensitive due to globalization and JIT practices, meaning that supply risk management is more important than ever. The thesis is based on a case study of a large, global manufacturing company, which has production in 20 countries and is doing business with over 30 000 suppliers. The data is collected mainly at the purchasing department of the company through interviews and internal documents. The data and information collected at the company is evaluated using a model for supply risk management effectiveness of a company is the direct result of the supply chain’s warning and recovery capabilities. These capabilities are based on the supply chain’s resources and their coordination and interaction, and gives the supply chain members the ability to share information about disruptions and to put actions in place to prevent or mitigate these disruptions. The model also states that these capabilities can be strengthened by focusing on three factors: internal integration, information sharing and training. What is found is that the company has plenty of resources and routines for supply risk management, but that the coordination and information sharing is not always working properly. There are also gaps in the knowledge of employees of these resources and routines. The internal coordination is analyzed with a basis in different coordination mechanisms, and suggestions is given for how these coordination mechanisms can be used to improve the supply risk management work at the company. For information sharing the data is analyzed using a model of six barriers to information sharing. And finally, the training aspect is analyzed by using a model for tacit and explicit knowledge and how this is transferred between persons. The result of the study is that there are several problem areas at the company that affect the warning and recovery capabilities, with the most important ones being a lack of training for employees and a lack of IT-support for information sharing. A conclusion that can be drawn from the study is that the model used for analyzing the case company can be an important tool for improving the supply risk management effectiveness at large and complex companies, where this otherwise can be a challenge.