Supply chain risk management dimensions in Indian automobile industry : A cluster analysis approach

Abstract

Purpose

Globalization and outsourcing have rendered Indian automotive companies more vulnerable to supply chain (SC) risks. Consequently, companies adopt different supply chain risk management (SCRM) strategies to mitigate SC risks. The purpose of this paper is to explore SCRM strategies in Indian automobile industry and to classify automobile firms based on SCRM dimensions.

Design/methodology/approach

A survey instrument on SCRM dimensions was designed and data were collected from 79 automobile firms. Principle component analysis (PCA) was performed on the collected data to derive the factors underlying SCRM dimensions. Further, cluster analysis using extracted factors as a clustering variate was performed to identify strategic groups from the given set of firms.

Findings

PCA derived seven factors, namely: avoidance, supplier development, flexibility, risk pooling, redundancy, integration and control strategies. The surveyed firms were classified into two clusters as low and high SCRM level.

Research limitations/implications

A limitation of this study is that data were collected from a single industry and in a single country.

Practical implications

Understanding of SCRM dimensions shall increase the use of these dimensions and firms can mitigate negative effects of SC risks. The detailed operationalization of SCRM strategies highlights the importance of three strategies: avoidance, integration and supplier development. Managers’ understanding of SCRM strategies will improve the firm's performance and business excellence.

Originality/value

This research empirically validates SCRM strategies and investigates how these create differences among firms.

Citation

Kumar Sharma, S. and Bhat, A. (2014), "Supply chain risk management dimensions in Indian automobile industry : A cluster analysis approach", Benchmarking: An International Journal, Vol. 21 No. 6, pp. 1023-1040. https://doi.org/10.1108/BIJ-02-2013-0023