Development of a prescription framework for supply chain risk management: cases of Asian MNCs

Abstract

We use the level of impact and duration of risk to classify types of supply chain risks and their effective prescriptions using case studies of multi-national companies. The classification of supply chain risks and countermeasures for each risk type are presented as a risk diagnosis and prescription matrix. The companies adopt a risk acceptance strategy when the impact is low and the duration short. When impact is high and the duration short, substitute raw materials (or production sites) are considered under risk avoidance strategy. New suppliers and technologies are developed for complete replacement for risk mitigation when the duration of risk is long but the impact low. For risk-sharing, new demand sources are developed, and diversification of suppliers and production sites pursued when the risk duration is long and the impact high. Novelty of our study is in considering risk duration as an additional variable in risk management strategy.