Managers' risk perception of supply chain uncertainties

Abstract

Purpose

This paper provides a practical framework for managers to develop a sustainable supply chain. Given that rapid globalization has increased supply disruption risk, managers have been forced to establish efficient and responsive supply chain strategies. Nevertheless, diverse uncertainty factors, such as risk perception of strategies, have made practical management difficult. Quantifying managers' risk perceptions and applying them to supply chain strategies allows the authors to propose a structural and practical model for managing supply disruption.

Design/methodology/approach

The existing structural model is refined by taking subjective factors into account using the analytic hierarchy process. The applicability of the refined model is demonstrated through a comparative case study.

Findings

Managers' risk perceptions vary not only among companies but also between managing divisions within a company, which necessitates possible changes in strategy due to environmental turbulence. The principal component analysis (PCA) characterizes managers' risk perceptions that illustrate companies' emphases on disruption risk.

Practical implications

The proposed approach quantifies risk perception, which enables practitioners to deal with subjective information in quantitative form. Comparative studies clarify differences in perception given different business backgrounds. The results provide managers with in-depth insights for establishing supply chain strategies reflecting their risk perception.

Originality/value

Quantification of managers' subjective risk perception clarifies both the trend and the individual features for uncertainties. The results allow the authors to conduct the PCA, which characterizes companies. Comparative studies generalize the results of extant work, shedding light on cross-sectional differences given different business backgrounds. The effectiveness of the approach is confirmed through retrospective interviews with practitioners.

Citation

Sato, Y., Tse, Y.K. and Tan, K.H. (2020), "Managers' risk perception of supply chain uncertainties", Industrial Management & Data Systems, Vol. 120 No. 9, pp. 1617-1634. https://doi.org/10.1108/IMDS-01-2020-0049