Developing Guidelines for Proactive Supply Chain Risk Management - A Case Study at IKEA Category Food Logistic Services

Abstract: The number of supply chain disruptions has increased over the last couple of years. The Covid-19 Pandemic, blockage of the Suez Canal and Russian invasion of Ukraine are some well-known examples of disruptions. Academia seems to have noticed the increasing disruptions and has explored proactive Supply Chain Risk Management (SCRM) as an approach to address this. Consulting firms also suggest companies to work with proactive SCRM to make themselves a smaller target to the increasing supply chain disruptions. The proactive approach to SCRM means managing, planning as well as minimizing risks before they occur, i.e., addressing changes and risks before they are realized. To respond to this, IKEA Category Food Logistics Services (CFLS) saw a need to investigate how SCRM can be managed proactively. The purpose of this thesis is therefore to understand what is needed to work with proactive SCRM as well as to create guidelines for IKEA CFLS. To fulfil this purpose, a design science approach is taken by iterating between the four phases Framing, Creating, Validating and Theorizing. Embedded in the design science approach is also a literature review and a multiple case study. The output of the literature review is a conceptual framework consisting of the setting of the food-retail industry, a proactive SCRM process and the organizational aspect of proactive SCRM. The multiple case study is performed through gathering empirical data in interviews, secondary data and observations at IKEA CFLS. The data is analysed in within-case and cross-case analyses by adapting a coding technique. The result of this is five dimensions summarizing the IKEA CFLS employees' perception of the current state. They are (1) Lack of resources is an obstacle to work proactively with SCRM, (2) Efforts to become more proactive are limited to projects or top management level, (3) Lack of communication, (4) Lessons learned are sometimes neglected, but there is a desire to improve and incorporate them, and (5) No “we” in the organization. Moreover, a gap analysis is performed to identify gaps between IKEA CFLS and literature. The dimensions and gaps are laying the foundation to the content of the guidelines by translating the gaps and needs into proposals supported by the literature review. Three guidelines are proposed to IKEA CFLS. Two common themes of the guidelines are that they all require a cross-functional effort from the organization and that IKEA CFLS needs to expand their work with proactive SCRM beyond projects. Guideline 1 is named Create a common starting point & Develop a Risk Culture and puts emphasis on the need to form a common understanding of risks and a common ground to stand upon when implementing the other two guidelines. It consists of two parts; diagnose the current state and develop a risk culture. Guideline 2 is named Implement a 4-step proactive SCRM process and proposes an iterative process to be implemented at IKEA CFLS. The process consists of the four steps Identification, Assessment, Mitigation and Monitoring. Each step is described in terms of importance, instructions on how it can be conducted, which tools can facilitate it, and what is required from the organization to perform it. Guideline 3 is named Expand & Formalize the Lessons Learned Process and proposes a formal process for generating, sharing, and implementing changes based on learnings. The learnings can derive from projects or daily business. The thesis applies existing theory in a new setting by applying literature on proactive SCRM in IKEA CFLS’s setting. By confirming the theories in a new setting, they are further strengthened which is one theoretical contribution of the thesis. A practical contribution for companies, in general, is that the thesis emphasizes the importance of the organizational aspect of proactive SCRM. Moreover, for IKEA CFLS, the thesis can act as a pre-study as it examines the current state and how to move forward in terms of proactive SCRM. From the process of conducting the thesis, the authors have reflected upon some future research areas. For example, how environmental and sustainability risks can be integrated in proactive SCRM.