As anyone who has worked in procurement or supply chain knows, it's impossible to predict with perfect accuracy -- and sufficient lead time -- all potential supply disruptions. But might there be a new approach that promises to enhance this endeavor? A group of professors and researchers think so, providing the specifics of their approach in a recent press released research abstract. In it, three academics suggest a new "two-phase approach that enables firms to potentially decrease the negative impact of disruptions in the supply chain" that relies on a "decision support model that complements traditional supplier selection tools by considering risks associated with global sourcing". But is there anything revolutionary about considering supply risk upfront in a sourcing process versus after a supply chain relationship and has been established? I'm not so sure.
According to the abstract, the academics initially suggest an approach to engaging suppliers "based on their performance with respect to traditional selection factors, like price, quality, service, and delivery". They also add on a second step that proposes employing "a model used to consider the risk issues of each supplier". In theory, the authors believe this model "allows for the analysis and mitigation of two key global risk measures, environmental and density risk, when selecting suppliers for critical products. When selecting a supplier, a manager selects the supplier's environment as well. Therefore, each potential supplier is assigned an environmental risk index, which captures issues such as political instability, infrastructure issues, economic problems, or potentially severe weather that could introduce uncertainty in the supply of parts from that region."
Even though I agree with the suggestions in this approach -- and suspect that they may prove helpful for organizations with little understanding of risk in their global supply chain -- I'd argue that many organizations have been relying on this type of approach for years, albeit in a often loosely functional coupled manner. For example, a range of companies I know have deployed geospatial technology for visualizing potential risks, looking at actual maps and transposing natural risk elements (e.g., fault lines, weather patterns, etc.) on top of their proposed or current supply chain. But the problem for organizations that go down this path is that those responsible for tackling risk such as this rarely do it in an integrated fashion with procurement -- or at least those procurement team members tasked with initially sourcing and establishing global supplier relationships. So perhaps these Penn State and Georgia Tech researchers are onto something.