Supply chain risk management

Management science academics are part of a UK-wide group that's won a prestigious major grant of almost £1 million to develop tools to better manage risks in manufacturing supply networks.

Funded by the Engineering and Physical Sciences Research Council, the University of Strathclyde won a bid in partnership with the universities of Bristol, Coventry and Nottingham. Each academic institution focuses on a different element of the project, building on their distinctive knowledge and experience of management, modelling and risk. Each element will be brought together over this three-year project to develop useful methods and tools.

Industry partners including Nautricity, Rolls-Royce, Dynex, Tricorn Group, PA Consulting and DSTL. They'll be involved in this research from the beginning. An initial launch meeting of the research and industry team took place at Nottingham in November 2014.

Professor Lesley Walls explains:

"The idea is to develop ways of managing resilient supply networks: supply networks that can continue to deliver if there is a natural hazard or disaster. Loss of supply flow due to such hazards can lead to major disruption in global supply chains. While such risks cannot be predicted with certainty, it is possible to use our understanding of hazard types and the behaviour of networks to design supply chains that are more resilient. For example, companies can think through alternative supply providers or routes to plan mitigations and so maintain operations."

Professor John Quigley further clarifies:

"As well as natural hazards, strategic uncertainties also affect supply networks. Manufacturing is a competitive business and so there are risks associated with international partnerships. Take an example where a company is doing business in China, then it might be useful to offer decision support for the managers there so that companies can ensure contracts are watertight or appropriate incentives are used in different situations."

"Obviously, different companies will have different uncertainties that have to be addressed. However, it is possible to conceive a general framework that encompasses the types of decisions that companies might expect to make to manage a resilient supply chain."

A general approach can be applied to specific scenarios. Take an aerospace company, which by its very nature will be reliant on supplies of high-specification parts. Some of the parts may have a limited number of suppliers meaning that there is a risk that a competitor buys up required components leading to loss of supply. "Someone buying up parts critical to the supply chain would be extremely problematic," says Professor Quigley.

"In response, a company might take production in-house but that could be expensive, and so there are risks involved either way. Our work involves looking at possibilities for risks to occur and to rule out those deemed more unlikely, concentrating instead on the more likely scenarios."