Managing supply chain risks and vulnerabilities through collaboration: Present and future scope

Abstract

Risk is everywhere and part of every operation. Therefore, today, risk management is becoming critical part of the organizations’ long term goals. Capabilities to managing diverse risks are considered important attributes that differentiate a successful business from others. To acquire such capabilities, firms are increasingly pursuing multiple risk management strategies. Although significant work has been done in the area of supply chain risk management, the research lacks a unified framework exploring relationship between risk perception, risk management, collaboration and firm performance. We further highlight that the agri-food industry plays a critical role in many countries through the provision of employment, income and contribution to economic development. However, this industry is largely untapped in the extant literature of supply chain risk management. The current paper attempts to bridge these gaps in the existing literature. The analysis is based on a pilot test comprising five semi-structured interviews with the managers of firms at different nodes within the Australian citrus supply chain. The findings suggest that the firms are highly vulnerable to various risks due to perishable nature of products, uncertain weather conditions, changing consumer preferences and stringent and rapidly changing food safety regulations. Based on the results of study and insights from the existing literature, we propose a conceptual framework to examine the relationship between perceived risks, risk management and firm performance. Our framework also examines the moderating role of collaboration in managing risks and improving firm performance in a supply chain. The framework is underpinned by the key assumptions of contingency theory and relational view. This paper provides theoretical contributions by integrating and extending contingency theory and relational view from organizational studies into supply chain network perspective. The findings of the paper also enhance managers’ understanding of divergent risks and appropriate risk management measures to mitigate them. Specifically, this paper emphasizes for a strong vertical and horizontal collaboration among the firms within the supply chain. This paper contributes to the extant literature in the field of supply chain risk management as well as agri-food supply chains by investigating the risks faced in supply chains and how they determine the risk management strategies undertaken by firms to maintain or enhance performance. The paper adopts holistic approach, as opposed to the many past studies which focus on either supply side risks or demand side risks. In doing so, this paper extends the unit of analysis from dyadic to a network perspective.