Developing a Supply Chain Flow Risk Model

A number of trends like globalisation, outsourcing, single sourcing, and leanness have together created a more vulnerable supply chain. This increased vulnerability has made supply chain risk issues a hot topic in academia as well as in industry. There has, however, been a lack of suitable models. The objective of this paper is to develop one such model – a conceptual model with the help of which risks, seen from the perspective of a single focal company in the chain, related to disturbances and interruptions in the physical flow in the supply chain, could be structured and described on a general level. Only economic risks are considered. The paper is based on a literature review and some case studies. The literature review was focused on articles and reports/books on supply chain risk management and related areas. There are one main case study (Beta) and two smaller ones (Alfa and Gamma). The author has spent five weeks on the floor in two of the factories of Beta. One basic assumption in the model is that the supply chain can be divided into three "parts" named: Demand side, Production and Supply side. Another assumption is that there exists a need to analyse the supply chain flow-related risks both from the perspective of the single company in the chain and from the perspective of the supply chain of which it is a part. Three existing cases illustrate the use of the model. Finally, weaknesses of the model are discussed and some possible directions for further elaboration are presented.