ARTICLE IN PRESS

Int. J. Production Economics 118 (2009) 168174

Contents lists available at ScienceDirect

Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

Managing disruptions in supply chains: A case study of a retail

supply chain
Adegoke Oke , Mohan Gopalakrishnan
Arizona State University, PO Box 37100, Phoenix, AZ 85069-7100, USA

a r t i c l e i n f o

abstract

Available online 31 August 2008

We investigate the types and management of risks faced within the supply chain of a
large US retailer. Based on relevant frameworks from the literature, we categorized the
risks into inherent or high frequent risks and disruption or infrequent risks. We
investigate mitigation strategies for dealing with these risks, and we identify generic
strategies that could handle most risk types as well as specic strategies for handling
particular risks.
Published by Elsevier B.V.

Keywords:
Supply chain risks
Disruption
Case study
Retail

1. Introduction
Supply chain risks, vulnerabilities and uncertainties have
become topical issues of interest amongst academics and
practitioners in the last few years. The adoption of supply
chain management principles by many organizations has
resulted in more networked, highly dependent organizations. While this has obvious operational benets that have
been recognized in the literature, it has, at the same time
resulted in increased vulnerabilities of supply chains.
Supply chains are vulnerable to risks that arise from
problems in co-ordinating supply and demand (Kleindorfer
and Saad, 2005), typically high-likelihood, low-impact risks
(Shef and Rice, 2005). Supply chains are also vulnerable to
disruption risks or high-impact, low-likelihood risks, which
affect organizations in a major way (Kleindorfer and Saad,
2005; Chopra and Sodhi, 2004). Examples of these include
the 9/11 terrorists attack, the west coast port lockout in the
USA in California and the other Pacic coast states, the SARS
outbreak in 2003, the lightning strike at Phillips plant in
New Mexico in March 2000, the Union carbide gas leak
disaster in Bhopal, India in 1984 and more recently the
outbreak of Avian u in parts of Asia.

 Corresponding author. Tel.: +1 602 543 6209; fax: +1 602 543 6221.

E-mail addresses: adegoke.oke@asu.edu (A. Oke),

mohan.gopalakrishnan@asu.edu (M. Gopalakrishnan).
0925-5273/$ - see front matter Published by Elsevier B.V.
doi:10.1016/j.ijpe.2008.08.045

While the literature on supply chain risks and vulnerability is growing, many questions remain unanswered.
Two areas in particular are of interest to many academicsrisk categorization and risk mitigation. Early
studies in the area have focused on categorizing and
distinguishing between types of risk. Many frameworks
have emerged from these studies but there is yet to be a
consensus on which framework(s) best captures different
types of supply chain risks. Further, there has been
signicant work in the literature that addresses mitigation
strategies for different types of risk. Much of this work has
focused on high-likelihood, low-impact type of risk. But
low-likelihood, high-impact risks present different challenges. Generally, most of the discussion in the literature
on risk management in supply chains relies on anecdotes.
We intend to contribute to knowledge in this area by
addressing two key questions in an empirical setting:

 What are the different types of risks or potential risks

in a retail supply chain?

 What are the mitigation strategies required to manage

these risks? And which of these are generic and which
are specic to a particular type of risk?
In order to address the above questions, this paper is
organized as follows. First we review the relevant
literature on risk categorization and mitigation in supply
chains. From the literature review, we identify a conceptual

ARTICLE IN PRESS
A. Oke, M. Gopalakrishnan / Int. J. Production Economics 118 (2009) 168174

framework that can be used to analyze the research

questions in an empirical setting. We then present the
case study methodology and analysis. Then we discuss the
results and conclude with suggestions for future work.
2. Risk categorization in supply chains
Pioneering research in any eld often starts with
identifying and dening concepts and developing categories or taxonomies. Early works on risk management in
supply chains have followed this trend. A pioneering work
by Lee (2002) provides an uncertainty framework based
on supplier risk and demand risk in the context of products that are functional or innovative, stable or evolving.
He argues that supply chain strategies need to be matched
to the right level of demand and supply risks encountered.
Some of the extant literature on risk categorization is
summarized in Table 1.
In this paper, we adopt the broad classication of risks
by Norrman and Jansson (2004), Kleindorfer and Saad
(2005) and Chopra and Sodhi (2004). From the literature
review, one could argue that supply chain risks fall into
two fairly distinct categorieshigh-likelihood, low-impact risks (or inherent and frequent risks) and lowlikelihood, high-impact risks (or disruption and infrequent
risks). However, our empirical ndings indicate the
existence of medium probability, moderate impact risks.
The context of our empirical investigation is a retail
supply chain. A retail supply chain was chosen because of
the authors familiarity in this domain. In addition, the
retail environment lends itself because of the interconnectivity of the network and the movement of goods.
Hence we focus on the risk management issues from the
perspective of the retailer in the supply chain. The rst

Table 1
Prior research on supply chain risk sources or categories
Reference

Summary risk categories

Svensson (2000, 2002)

Inbound and outbound risk sources
Zsidisin (2003), Zsidisin et al. Supply risks
(2004)
Finch (2004)
Information systems related
risksnatural disasters, accidents,
deliberate actions, data information
security risks and legal risks
Cavinato (2004)
Risk to product ows, storage and
inventories
Chopra and Sodhi (2004)
Major natural and man-made disasters,
supply risks, systems, forecast,
intellectual property, inventory and
capacity
Spekman and Davis (2004)
Supply risks, inventory, information ow,
money ow, security, opportunistic
behavior, corporate social responsibility
Peck (2005)
Risks exist at different levelsproduct/
process, assets, organizations and interorganizational networks, environment
Kleindorfer and Saad (2005) Imbalance between demand and supply,
disruptions of normal activities
Shef and Rice (2005),
Risk categories based on probability of
Norrman and Jansson (2004) disruption occurrence and consequences
of risk

169

research question is: What are the different types of risk or

potential risks in a retail supply chain?
3. Risk mitigation in supply chains
As noted previously, there has been signicant work in
the literature that addresses mitigation strategies for
high-likelihood, low-impact risks but high-impact, lowlikelihood risks present different challenges. Chopra and
Sodhi (2004) state that while companies develop plans to
protect against recurrent, low-impact risks, they all but
ignore high-impact, low-likelihood risks. We argue that
an understanding or identication of risk is required in
order to propose appropriate mitigation strategies. Table 2
summarizes some of the contributions in this area.
Generally, studies that address mitigation of risks in
supply chains have tended to propose strategies but have
not separated mitigation strategies for different types of
risk (i.e. the Why versus the How). There is also a need for
more empirical studies on this aspect of supply chain risk
research. As such our second research question is:
What are the mitigation strategies required to manage
different types of supply chain risks? For example, how
different are mitigation strategies for low-likelihood, highimpact risks as compared to high-likelihood, low-impact
risks? And which of these are generic and which are specic
to a particular type of risk?
4. Methodology
A case study research approach was chosen as the
research strategy for investigating the research questions.
Case studies consist of detailed investigations (from one
or more organizations, or groups within organizations)
alongside data collection, with a view of providing an
analysis of the context and processes involved in the
phenomenon under study (Yin, 1994). A case study offers
the opportunity to study a phenomenon in its own natural
setting where complex links and underlying meanings can
be explored, whilst also enabling the researcher to study
Table 2
Prior research on supply chain risk mitigation
Reference

Summary of risk mitigation strategies

Christopher and Lee (2004),

Blackhurst et al. (2005)
Shef and Rice (2005)

End to end visibility of supply chains

Flexibility in: supply and procurement,

conversion, distribution and customerfacing activities, control systems,
organizational culture
Blackhurst et al. (2005)
A 3-stage process: disruption discovery,
disruption recovery and supply chain
redesign
Zsidisin et al. (2005)
A 4-stage framework: awareness,
prevention, remediation and knowledge
management
Choi and Liker (1995), Krause Supplier developmentimproving
(1999)
suppliers performance for example by
implementing quality management
programs
Newman (1989)
Multiple sourcing strategy
Lee and Billington (1993)
Safety stock

ARTICLE IN PRESS
170

A. Oke, M. Gopalakrishnan / Int. J. Production Economics 118 (2009) 168174

whole supply chains (Miles and Huberman, 1994; Yin,

1994). It is also appropriate where existing knowledge is
limited because it generates in-depth contextual information which may result in a superior level of understanding.
As such the use of a case study research strategy is
considered suitable in this study.
4.1. The case study
The supply chain of focus is a retail supply chain. The
supply chain is comprised of a large retailer and several
manufacturers and vendors. The retailer is a North Americas
leading retailer of food, supplies, accessories, pets and
professional services for the lifetime needs of pets. The
retailer provides a broad line of products for all life stages of
pets and is the nations largest provider of high-quality
grooming and pet training services. It is also a leading
retailer of mail order catalog and e-commerce for pet and
equine products and supplies. The retailer operates more
than 700 superstores in the United States and Canada, with
over $3 billion in sales in 2003. It distributes products out
of two types of distribution centers one that serves fastmoving goods (e.g. perishable products and food for
animals) and the other slow-moving goods (e.g. furniture,
special toys and apparel for animals). Products are sourced
from within and outside United States. The typical movement of goods is from the producer to the producers
distribution network and then to the stores via the retailers
distribution network. The point of focus or the supply chain
node for investigating the research questions in the supply
chain is the large retailer.
4.2. Data collection
Data were collected through visits to the retailers
sitesdistribution center and head quarters. Interviews
were held with six informants in the USA-based retail
organization comprising the Vice-President of supply
chain and merchandizing and two purchasing managers,
two store managers (each managing a retail outlet) and a
distribution center supervisor. Additional interviews were
held with two supply chain managers representing two of
the vendors that the retail organization deals with. One of
the vendors is USA based while the second vendor is
based in China. So, telephone interview was carried out
with the latter. Additionally, in some cases follow-up
telephone conversations were held to complete the interviews. For triangulation purposes the same questions
were asked to multiple informants. Although the point of
focus was the retail organization, the informants who
belonged to the supplier organizations in the supply chain
provided as much information as possible relating to the
entire supply chain. Interviews were carried out between
January and April 2006. Relevant documents were
collected to validate the informants responses.
4.3. In-depth semi-structured interviews
To gain a deep understanding of the phenomenon of
supply chain risk management, an in-depth semi-struc-

tured interview technique was used to probe informants

regarding the organizations background; the type of risks
that the organization and the entire supply chain have
been exposed to or perceived as potential risks and
the mitigation strategies that are in place to cope with
those risks. We also sought to nd out the impacts of
risks that the organization and the supply chain have
experienced in the past. Each of the interviews lasted
between 1 and 3 h. Interviews were transcribed and
veried by the informants to increase construct validity
(Yin, 1994). New interviews were added until no new
information was forthcoming, i.e., until a point of saturation was reached (Glaser and Strauss, 1967; Eisenhardt,
1989).
4.4. Data analysis
The unit of analysis is a single informant within the
retail supply chain. As used in previous qualitative
research (Harris and Sutton, 1986; Van Maanen, 1983;
Choi and Hong, 2002), the analysis sought common
patterns across the multiple interviews carried out. Any
differences found were noted and reconciled (Poole and
Van de Ven, 1989). In line with the approach suggested by
Miles and Huberman (1994), we begin by conducting the
within-case analysis where we present sets of responses
that are unique to the informants. Following this we
perform a cross-case analysis where we compare and
contrast the responses of the informants and as a result of
this develop a set of principles that eventually lead to the
propositions regarding the categorization of risks in a
retail supply chain and mitigation strategies for coping
with particular risk types.
5. Discussions and propositions
5.1. Risks categorization and mitigation strategies
Analysis reveals that a retail supply chain potentially
faces different types of risks. In response, supply chains
tend to have plans in place that are capable of mitigating
these risks. In the following discussion we draw on
relevant frameworks from the literature (e.g. Chopra and
Sodhi, 2004; Peck, 2005) and summarize the different
types of risks the retail supply chain faces as well as the
strategies that are employed to mitigate the risks. The
risks are broadly classied as supply related, demandrelated and miscellaneous risks.
5.1.1. Supply risks
These are risks that could potentially affect or disrupt
the supply of products or services that the retail supply
chain offers its customers. Our analysis reveals that the
retail supply chain could potentially be affected by the
following supply risks:

 Imports: The imports from China are affected annually

by the Chinese New Year and the attendant 6 week
shutdown of key suppliers in China. This is, however,
a predictable, annually occurring, low-impact risk.

ARTICLE IN PRESS
A. Oke, M. Gopalakrishnan / Int. J. Production Economics 118 (2009) 168174

The retailer mitigates this risk by planning in collaboration with its suppliers for additional inventory to
cover the shortfall during this period.
Climate: Birds breed only in April and Turtles breed
only for 4 months. These restrict the supply of these
live-stocks. Again, it is a predictable annually occurring
risk and needs to be planned accordingly.
Man-made disasters: Examples include the West Coast
port lockout in 2002 and the September 11, 2001
terrorist attack on the World Trade Center. The port
strike impacted the movement of goods from the ports
to the warehouses and the stores. The September 11
tragedy temporarily prevented movement of goods
from across the borders into the US. Hence, supply of
goods was temporarily severely disrupted. Though
these are low-frequency events, the potential impacts
are very high. The mitigation strategies involve understanding the vulnerability points and their impact in
the supply chain and developing and testing contingency plans.
Natural disasters: These include oods, hurricanes,
earthquakes and break-out of pandemic diseases. For
example, the avian u epidemic reduced the availability of imported live-stock. The Katrina hurricane
and similar disasters prevented relevant supplies to
reach stores on time, rendered stores to be unavailable in the regions affected by the oods and also
prevented the movement of goods from the ports in
that region. These are examples of risks occurring
infrequently, however, severely impacting the supply.
The mitigation strategies involve understanding the
vulnerability points and their impact in the supply
chain and developing and testing contingency plans.
For example, during the Katrina oods, the retailer
used make-shift stores to make products available to
customers.
Socio-economic: Example includes migration of shfarmers from the coastal regions (Florida) due to land
value appreciation. This is an infrequent risk but has a
long-lasting high impact on supply. Having multiple
sourcing strategies including global sourcing is essential. For example, the retailer established a presence in
Asia for sourcing to mitigate this risk.
Loss of key suppliers: This is similar to the above factor
but the reason for the loss of supplier in this case could
be due to inability to meet high regulatory standards or
suppliers going out of business. These are infrequent, but
high-impact-oriented risks. Again, having multiple sourcing strategies including global sourcing is essential.

5.1.2. Demand risks

These are demand-related risks that could potentially
affect or disrupt the operations of the retailer and affect its
ability to make products available to its customers. Our
analysis reveals that the retail supply chain could
potentially be affected by the following demand-related
risks:

 Economic: Increasing gas prices leave people with

lesser disposable income and hence reduced trips to

171

the retail stores. The frequency and the impact depend

on other global and economic factors and hence are
unpredictable. To manage this risk, the retailer has
introduced loyalty programs and promotions as incentives to customers.
Demand variability and unpredictability:
J General marketing campaigns aimed at increasing
trafc to the stores or advertisements that target
web-buying can affect short- to medium-term
demand. The retailer in conjunction with its
suppliers has been co-ordinating its operations
and marketing effort better in order to mitigate
this type of risk.
J News about product hazards (for example, allergic
reaction for animals) can be infrequent but has a
large impact on the demand.
J News such as the outbreak of avian u and madcow disease could severely affect demand of
products related to them. These are infrequent type
of risks but can have a long-lasting effect. In order
to mitigate the impact of this type of risk, the
retailer has in a place a communication strategy. For
example, it used its website signicantly during the
outbreak of the mad-cow disease to give assurances
to customers about the safety of its products as well
as to educate them about the disease and what they
as a company were doing to ensure the safety of
their products. The retailer was also involved in
lobbying with the government to mitigate the
impact of this risk.
J Fads in terms of color changes can affect short-term
demand.
J Ban on certain ingredients by some countries
restricts selling the products that contain the
ingredients in those countries thereby affecting
the global demand. Again, these are infrequent,
long-term, severe impact-oriented risks. The retailer has strategies in place to work collaboratively
with suppliers and manufacturers. These collaborative arrangements can be leveraged upon to nd
ways of substituting the ingredients quickly in the
event of this type of risk occurring.
J Forecasting errors could exasperate the demand
unpredictability. Forecasting errors relating to economic risks could be minimized if global and
economic factors are taken into consideration in
the forecasting process. Other factors that affect
forecast accuracy include long lead times, short lifecycle products, orders placed by intermediaries
within the supply chain that creates the bullwhip
effect, and not incorporating the impact of promotions in forecast calculations. These are frequently
occurring risks and the impact includes signicant
misallocation of resources in inventory, facilities,
transportation, sourcing, pricing and information
management. Some mitigating strategies employed
by the retailer and its suppliers include utilizing
opportunities to pooling of demand and incorporating the promotional details into forecasting
and replenishment planning and having exible
capacities.

ARTICLE IN PRESS
172

A. Oke, M. Gopalakrishnan / Int. J. Production Economics 118 (2009) 168174

5.1.3. Miscellaneous risks that increase cost-of-doingbusiness

These are risks that could potentially affect the costs of
doing business

 The increases in gas prices have increased transporta-

tion costs which have led to erosion of margins and

protability since the retailer has not been able to
recover such losses from revenues. The mitigating
strategies that the retailer and its suppliers have
employed include operating the supply chain more
efciently and driving out costs through better planning, scheduling and inventory management.
Increase in the global consumption of goods that are
used in retail products such as plastics increases the
cost of these commodities. Apart from trying to absorb
the cost increases and driving out costs wherever
possible, the retailer through good scenario planning
analysis has in place contingency plans in collaboration
with its suppliers to explore the use of substitute
products in the event of this type of risk occurring.
Safety regulations by government agencies may impose more stringent requirements on companies and
increase the cost of doing business. Again, apart from
implementing cost reduction strategies in its operations and supply chain, the retailer has been involved
in lobbying with the government to mitigate the
impact of this risk.
The actions of organizations such as People for the
Ethical Treatment of Animals enforcing the need for
additional practices and procedures to ensure the
safety of animals increase the cost of doing business.

We adopted the framework by Norrman and Jansson

(2004) to classify the different risks as shown in Fig. 1.
Based on the evidence of the qualitative interviews and
relevant documents, we carried out an initial classication
of the risks identied. We then asked the informants to
carry out individual classications and to base their
classications of the probability of a particular risk
occurring on a best guesstimate subjective probability

Miscellaneous risks

Supply risks

Demand risks

Chinese imports
Climate
Forecasting errors

(approximate number of times

affected by the event over a 6-year period)

Frequency (Likelihood of occurrence)

Legend

6
(High)

0
(Low)No

Demand variability &

unpredictability
Fads
Economic
Regulation
Gas prices
Ban on
ingredients PETA
Global consumption
Loss of key
supplier
Socio-economic

Minor

Product hazards
Outbreak
Man-made
disaster
Natural
disaster

Medium Serious Catastrophic

Business Impact

Fig. 1. Supply, demand and miscellaneous risks facing a major US retail

supply chain (adapted from Norrman and Jansson, 2004).

measure comprising the frequency or the number of times

a risk (which had an impact on the supply chain) has
occurred in the past over a particular period (the past
6 yearsbeing the period for which the most accurate
information was available). Similarly, we asked them to
rate the impact of a risk based on the best guess estimate
of how the supply chain was affected by the risk in the
past (nancial and non-nancial measures) and the
potential impact of future occurrence. We then attempted
to reconcile the classications, made adjustments where
necessary and had it checked and veried and consented
to by the informants. Although we based the nal
classication on events that occurred over the past 6
years, as a check we attempted to classify the risks over an
extended period of 10 years and found the classications
to be similar except for man-made disasters which
occurred even less frequently over the extended period.
Thus, validity was ensured in spite of the subjectivity of
the process and measures.
Fig. 1 shows that many of the risks identied above can
be classied as either low-impact frequently occurring
(high likelihood) risks or high-impact infrequently occurring (low likelihood risks). However, a few risks (predominantly miscellaneous risks) fall within the medium
or moderate likelihood and impact regions. An example of
a miscellaneous risk in our study is industry regulation.
Regulation is not something that occurs very frequently,
but its occurrence is typically more frequent than the
occurrence of natural disasters over a given period.
Regulation may increase the cost of doing business (e.g.
cost of additional safety requirements, etc.). While the
impact of such costs on the business would be more than
the impact that a supply shortfall from China during the
Chinese new year would have, it would be much less than
the possible impact of natural disasters. Hence such
miscellaneous risks (e.g. regulation) tend to be classied
as medium likelihood, medium impact risks. It is
pertinent to note that risks such as increasing gas prices,
increasing global consumption of plastics and socioeconomic risks did not lend themselves to easy classication as frequently or infrequently occurring risks since
their occurrence tended to be continuous rather than
discrete over a period of time. Thus, a subjective
probability judgement of the likelihood of their continuous occurrence relative to other risks was used to classify
them.
Based on the above, we offer the following proposition:
Proposition 1. Most supply chain risks fall into two fairly
distinct categorieshigh-likelihood, low-impact risks (or
inherent and frequent risks) and low-likelihood, high-impact
risks (or disruption and infrequent risks). However, a few will
have moderate likelihood of occurring and moderate impact.
We argue that the classication of a specic type or category
of risk may depend on the type of supply chain in question or
on contextual characterization or in fact on the supply chain
design.
The effectiveness of the mitigation strategies depends
on how well the organization is able to cope with or
recover quickly from the impact of disruptions. Our

ARTICLE IN PRESS
A. Oke, M. Gopalakrishnan / Int. J. Production Economics 118 (2009) 168174

analysis reveals that the retail organization suffered

severe impacts in terms of a considerable loss of demand
when there was an outbreak of avian u in Asia. As a
result, the retail organization has put in place a communication strategy to educate customers in the event of
such type of risk re-occurring. Blackhurst et al. (2005)
suggest that once a company understands its supply chain
risks, it can select general mitigation approach and
specic tailored strategy to cope with risks.
Drawing from Okes (2003) concept of classifying
exibility drivers, mitigation strategies for risks can be
classied as generic (i.e. are capable of coping with any
type of risks) and specic (i.e. for coping with a particular
type of risk). Interestingly, we found that the strategies
employed by the retail organization to mitigate miscellaneous risks (that increase the cost of doing business) are
specic but focus mainly on increasing efciency and
driving out costs. Strategies for mitigating high-likelihood,
low-impact risks regardless of whether they are supply or
demand related are generic (better planning and coordination of demand and supply may be required). This is
an interesting nding as it suggests a one ts all
approach for mitigating the various categories of highlikelihood, low-impact risks. However, strategies for
mitigating low-likelihood, high-impact risks appear to
be specic to the category of risks involved. For example,
the supply risks of man-made and natural disasters can
both be mitigated by a specic approach of understanding
and identifying supply chain vulnerability points and
developing contingency plans. On the other hand,
demand-related risks of product hazards and outbreaks

173

can both be mitigated by a specic approach of educating

customers. Finally, other demand- and supply-related
risks such as fads, economic, ban on ingredients and loss
of key suppliers can also be mitigated by specic
strategies. Thus, we propose that:
Proposition 2. Specic mitigation strategies may be employed to cope with miscellaneous risks that tend to increase
the cost of doing business in a retail supply chain. These
strategies are focused on efciency gains and cost reduction
initiatives.
Proposition 3. Generic strategies that focus on better
planning and co-ordination between demand and supply
are required to mitigate high-likelihood, low-impact type of
demand and supply-related risks.
Proposition 4. Strategies that are specic to the category of
risk in question are required to cope with low-likelihood
high-impact risks. For example, the understanding and
identication of supply chain vulnerability points is required
and a contingency plan put in place in order to mitigate the
supply-related risks of man-made and natural disasters in a
retail supply chain. Table 3 summarizes the major ndings of
this study.
6. Conclusions
An empirical study of risks type and mitigation
strategies is pioneering. The relevance of various frameworks on risk categorization was tested out in an
empirical study of risk management in a retail supply

Table 3
Summary of ndings
Risk category

Risk type

Classication

Mitigation strategies

Supply

Imports

High likelihood, low impact

Climate

High likelihood, low impact

Man-made disasters

Low likelihood, high impact

Natural disasters

Low likelihood, high impact

Socio-economic
Loss of key suppliers

Medium likelihood, moderate impact

Medium likelihood, moderate impact

Better planning and co-ordination of supply and

demand; exible capacity
Better planning and co-ordination of supply and
demand; exible capacity
Identifying supply chain vulnerability points and
having contingency plans
Identifying supply chain vulnerability points and
having contingency plans
Multiple sourcing strategy
Multiple sourcing strategy

Economic

Medium likelihood, moderate impact

Demand variability and

uncertainty
Product hazards
Outbreak
Fads
Ban on ingredients
Forecasting errors

High likelihood, low impact

Low likelihood, high impact
Low likelihood, high impact
Medium likelihood, moderate impact
Medium likelihood, moderate impact
High likelihood, low impact

Increasing gas prices

Medium likelihood, moderate impact

Global consumption

Medium likelihood, moderate impact

Regulations
PETA

Medium likelihood, moderate impact

Medium likelihood, moderate impact

Demand

Miscellaneous
risks

Managing demandpromotions, incentives for

customers
Better planning and co-ordination of supply and
demand; exible capacity
Educate customers
Educate customers
Better planning and exible capacity
Multiple sourcing strategy
Better planning and co-ordination of supply and
demand; exible capacity
Cost reduction in operations; managing
demandpromotions, incentives for customers
Cost reduction in operations; working with suppliers
to nd alternative raw materials
Cost reduction in operations; lobbying
Cost reduction in operations; lobbying

ARTICLE IN PRESS
174

A. Oke, M. Gopalakrishnan / Int. J. Production Economics 118 (2009) 168174

chain. We nd the simple classication of supply chain

risks as high-likelihood, low-impact and low-likelihood
high-impact to be highly relevant for classifying supply
chain risks. The likelihood or probability of occurrence
and the potential impact of risks are dened on scales or
continuums on the framework suggesting that there are
some risks that have, for example, moderate likelihood of
occurring. We argue that this type of risk categorization is
key to identifying relevant mitigation strategies. Thus,
four propositions are developed based on the empirical
investigation of risk management in a retail supply chain.
The point of focus was the retail organization, being the
most signicant player in the chain. However, data were
also collected from informants of rst tier supplier
organizations within the chain in order to have a broad
view about risks types and mitigation strategies for the
entire supply chain. We identify a number of mitigation
strategies some of which are generic in that they can be
employed to cope with both demand and supply risks in a
wider context other than a retail supply chain context.
Some are specic to the particular type of risk category
that the supply chain is faced with rather than the sector
in question.
The use of a case study in research has many
limitations of which the issue of generalizability is one.
How can the ndings from a small sample such as this be
generalized to a wider context? However, the purpose of
the empirical case study analysis in this study is not one of
generalization but one of theoretical replication (Yin,
1994) for which propositions have been developed in a
theory-building approach fashion. In spite of this, the
propositions developed from this study are broad relating
to classications of risks and mitigation strategies that
can be employed by different organizations irrespective of
sectoral differences. These propositions can be further
tested using other methodological approaches such as a
large survey. Collecting information about risk management in a retail supply chain from the perspectives of the
retail organization and rst tier supplier organizations has
obvious limitations since we did not cover the entire
supply chain. This was due to issues relating to gaining
access as most of the secondary and tertiary suppliers
are located abroad. However, it can be argued that the
retail organization and the supplier organizations targeted
for data collection are fairly representative of the retail
supply chain given their collective clout in the supply
chain.
Further studies are required to test the propositions
developed in this study to see if they can be generalized to
a wider context. It will be interesting to investigate how
risks types vary or are applicable at different points of a
particular supply chain. What are the trade-offs involved
when implementing strategies to mitigate risks in supply
chains? How can these be resolved? What are the
quantiable impacts of different types of risks? How do
these impacts relate to which type of mitigation strategies
is chosen? These are some of the questions that need to be
investigated to further the study on this important topic
in supply chain risk management research.

References
Blackhurst, J., Craighead, C.W., Elkins, D., Handeld, R.B., 2005. An
empirically derived agenda of critical issues for managing supply
chain disruptions. International Journal of Production Research 43
(19), 40674081.
Cavinato, J., 2004. Supply chain logistics risks, from the back room to the
board room. International Journal of Physical Distribution and
Logistics Management 34 (5), 383387.
Choi, T., Liker, J., 1995. Bringing Japanese continuous improvement
approaches to US manufacturing: The roles of process orientation
and communications. Decision Sciences 26 (5), 589620.
Choi, T.Y., Hong, Y., 2002. Unveiling the structure of supply networks:
Case studies in Honda, Acura and DaimlerChrysler. Journal of
Operations Management 20, 469493.
Chopra, S., Sodhi, M.S., 2004. Managing risk to avoid supply chain
breakdown. MIT Sloan Management Review 46 (1), 5362.
Christopher, M., Lee, H., 2004. Mitigating supply chain risk through
improved condence. International Journal of Physical Distribution
and Logistics Management 34 (5), 388396.
Eisenhardt, K.M., 1989. Building theories from case study research.
Academy of Management Review 14 (4), 532550.
Finch, P., 2004. Supply chain risk management. Supply Chain Management 9 (2), 183196.
Glaser, B., Strauss, A., 1967. The Discovery of Grounded Theory: Strategies
for Qualitative Research. Aldline, Chicago.
Harris, S.G., Sutton, R.I., 1986. Functions of parting ceremonies in dying
organizations. Academy of Management Journal 29, 530.
Kleindorfer, P.R., Saad, G.H., 2005. Managing disruption risks in supply
chains. Production and Operations Management 14 (1), 5368.
Krause, D., 1999. The antecedents of buying rms efforts to improve
suppliers. Journal of Operations Management 17 (2), 205224.
Lee, H., 2002. Aligning supply chain strategies with product uncertainties. California Management Review 44 (3), 105119.
Lee, H., Billington, C., 1993. Materials management in decentralized
supply chains. Operations Research 41 (5), 835847.
Miles, M.B., Huberman, A.M., 1994. Qualitative Data Analysis: A Source
Book of New Methods. Sage, Newbury Park, CA.
Newman, R., 1989. Single sourcing: Short-term savings versus long-term problems. Journal of Purchasing and Materials Management 25 (2), 2025.
Norrman, A., Jansson, U., 2004. Ericssons proactive risk management
approach after a serious sub-supplier accident. International Journal
of Physical Distribution and Logistics Management 34 (5), 434456.
Oke, A., 2003. Drivers of volume exibility requirements in manufacturing plants. International Journal of Operations and Production
Management 23 (12).
Peck, H., 2005. Drivers of supply chain vulnerability: An integrated
framework. International Journal of Physical Distribution and
Logistics Management 35 (4), 210232.
Poole, M.S., Van de Ven, A.H., 1989. Using paradox to build management and
organization theory. Academy of Management Review 14 (4), 562578.
Shef, Y., Rice Jr., J.B., 2005. A supply chain view of the resilient
enterprise. MIT Sloan Management Review 47 (1), 4148.
Spekman, R.E., Davis, E.W., 2004. Risky business: Expanding the risk and
the extended enterprise. International Journal of Physical Distribution and Logistics management 34 (5), 414433.
Svensson, G., 2002. A typology of vulnerability scenarios towards
suppliers and customers in supply chains based upon perceived
time and relationship dependencies. International Journal of Physical
Distribution and Logistics Management 32 (3), 168187.
Svensson, G.A., 2000. Conceptual framework for the analysis of
vulnerability in supply chains. International Journal of Physical
Distribution and Logistics Management 30 (9), 731749.
Van Maanen, J., 1983. Epilogue: Qualitative methods reclaimed. In: Van
Maanen, J. (Ed.), Qualitative Methodology. Sage, Beverly Hills.
Yin, R.K., 1994. Case Study Research: Design and Methods, second ed.
Sage, Thousand Oaks, CA.
Zsidisin, G., Ellram, L., Carter, J., Cavinato, J., 2004. An analysis of supply
risks assessment techniques. International Journal of Physical
Distribution and Logistics Management 34 (5), 397413.
Zsidisin, G., Melnyk, S., Ragatz, G., 2005. An institutional theory
perspective of business continuity planning for purchasing and
supply chain management. International Journal of Production
Research 43 (16), 34013420.
Zsidisin, G.A., 2003. Managerial perceptions of supply risk. Journal of
Supply Chain Management 39 (1), 1425.