Dealing with supply chain risks

Abstract

PurposeThe effects of supply chain risk management (SCRM) on the performance of a supply chain remain unexplored. It is assumed that SCRM helps supply chains to cope with vulnerabilities both proactively by supporting robustness and reactively by supporting agility. Both dimensions are assumed to have an influence on the supply chain's customer value and on business performance. The aim of this research is to provide clarity by empirically testing these hypotheses and scrutinizing the findings by the means of case studies.Design/methodology/approachThe research is empirical. Survey data were collected from 270 manufacturing companies for hypotheses testing via structural equation modeling. Additionally, qualitative data were collected to explore the nature of non‐hypothesized findings.FindingsIt is found that SCRM is important for agility and robustness of a company. Both agility and robustness show to be important in improving performance. While agility has a strong positive effect only on the supply chain's customer value, but not directly on business performance, robustness has a strong positive effect on both performance dimensions. This important finding directs the strategic attention from agility‐centered supply chains to ones that are both robust and agile. The case studies provide insights to the fact that robustness can be considered a basic prerequisite to deal with supplier‐side risks, while agility is necessary to deal with customer‐side risks. The amount of agility and robustness needs to fit to the competitive strategy.Practical implicationsSince volatility has increasingly become a prevalent state of supply chains, companies need to consider robustness to be of primary importance to withstand everyday risks and exceptions.Originality/valueThis is the first study to view the relationship between SCRM, agility/robustness, and performance.