Supply Chain Risk Management in the Transmission and Amplification of Disruptions

Abstract

The concept of risk management within the supply chain framework ought to involve indirect effects of disruptions. In other words, not only should it take into consideration the risk sources and their direct consequences, but also look into the indirect disruptions that may be transmitted and amplified in the supply chain structure. The transmission of disruptions means that the negative effects of risk are extended to a larger number of participants in a supply chain. If the negative risk effects are additionally magnified during the transmission, this suggests the occurrence of the amplification of disruptions. In other words, the subsequent links in a supply chain are exposed to a stronger impact of disruptions in the transmission. Thus, the supply chain management needs to apply a certain approach that enables to mitigate the negative consequences of the transmission and amplification of disruptions in supply chains. In this chapter, we review the extant literature on the essence, sources and factors of the transmission and amplification of disruptions in supply chains. In particular, we put emphasis on the issue of supply chain integration that may either drive or inhibit the transmission and amplification of disruptions. Having linked the obtained findings with the classical concepts of risk management, we develop and assess a framework of risk management that aims at mitigating the transmission and amplification of disruptions in supply chains.