Managing supply risks post pandemic : Understanding gaps in organizational decision-making and proposing a tool to manage differences

Abstract: Effective supply chain risk management has become crucial for companies as supply chains have become more complex and integrated due to decades of globalization. The outbreak of the Covid-19 pandemic has highlighted the fragility of global supply chains and the necessity of manufacturing companies to have a robust supply chain in order to be resilient towards supply chain disruptions. The recent sourcing difficulties of critical components have been exacerbated due to many organizations utilizing tactical sourcing strategies which have relied on ''just in time'' principle in an effort to source as cost-efficiently as possible. However, this has created supply chains which lack the ability to manage idiosyncratic risks effectively. Supply chains which are based on the ''just in case'' principle have instead more redundancy and flexibility in the supply chain that allows them to better mitigate supply chain risk. Though the reduction in risk and strengthening of supply chain means a drop in operational efficiency. Therein lies the problem for companies when it comes to creating a supply chain; how to manage the trade-off between robustness and effectiveness. Businesses have therefore been forced to reconsider risk management strategies and practices in relation to sourcing and balancing of supply chain capabilities in order to manage disruptions in the supply chain and fluctuations in the business cycle. A case study has been conducted in order to analyze how the difference in approach towards supply chain risk management on tactical and operational level affects deployment of risk mitigation strategies in relation to supply management. The research has been conducted through a literature review and a series of semi-structured interviews at a case company involved with manufacturing. The findings from this study indicate a contrast in selection of risk mitigation strategies between those operating at tactical and operational level. Differences in approach between these groups in regard to decision-making therefore affects deployment of risk mitigation strategies. This may result in ineffective risk management as mitigation strategies might ultimately become negated and prove ineffective on an aggregated level due to conflict with decisions made on the tactical and operational level. In an effort to minimize differences which exit in approach towards risk mitigation in the organizational structure, a tool has been developed which allows for the comparison of various mitigation strategies and their impact on performance. Thereby helping guide businesses on which mitigation strategies to pursue in a way that there is minimal contradiction through focusing on addressing risks that have positive dependence rather than a negative one. Whilst also aiming to narrow the gap between in how differing decision levels perceive risk and risk management.