The role of supply chain collaboration in supply chain risk mitigation

In the last two decades, supply chain operations have changed drastically. Globalization of the market, shortened product life cycle, global outsourcing and offshoring, and increasing complexity of the supply base has resulted in modern supply chains becoming more vulnerable than ever. There are also more frequent natural or man-made disasters which disrupt the supply chain operations. All these have led to higher exposure of risks of supply chains and the failure to manage these risks has costed organizations dearly. Supply chain risk management has thus emerged as an important area for both practitioners and academics. As a nascent area, research in supply chain risk management is characterized by gaps in terms of no clear consensus on the understanding of supply chain risks and inadequate empirical studies in risk management strategies. This study is thus developed to address these gaps. Drawn on the Theory of Swift, Even Flow and the relational view, this study proposes that supply chain risk undermines supply chain performance and supply chain collaboration reduces supply chain risks and empirically examines these relationships. This study takes a supply chain perspective and examines risks from the supply side, the internal production process and the demand side which compose a direct supply chain. This is in line with a holistic and systems view of supply chain management. Furthermore, this study also attempts to understand the mechanism by which supply chain collaboration reduces supply chain risks. This empirical study applied a mixed method with two-phase research design. In Phase One, a survey research was conducted and quantitative data were collected from 203 manufacturing companies in Australia. Structural equation modelling was used to test eight hypotheses about the relationships between supply chain risk, supply chain performance and supply chain collaboration. In Phase Two, two in-depth case studies were conducted in Australia and China, and qualitative data were collected from six companies involved. These x include one Australian company manufacturing scientific instruments and two of its suppliers, and one Australian provider of sport hardware and two of its suppliers. Qualitative data analysis included cross-case analysis and pattern matching to further improve and deepen the understanding of supply chain risks as well as supply chain collaboration as a risk mitigation strategy. The results of this study indicate that supply chain risks undermine supply chain performance and supply chain collaboration reduces supply chain risks. This study contributes to the literature through empirically verifying these relationships (the relationship between supply chain risk and supply chain performance; the relationship between supply chain collaboration and supply chain risk) which have not been empirically investigated thoroughly in earlier studies. This study also contributes to risk management in general and supply chain risk management in particular, through clarifying the confusion in the extant literature and providing a better understanding of supply chain risk. Furthermore, this study contributes to the body of knowledge on supply chain risk management through fostering a supply chain perspective. It investigates risks along a direct supply chain, including supply risk, process risk and demand risk, as well as the interrelations between them. The study also improves the understanding of a collaborative approach in risk mitigation through providing an explanation of the approach based on the relationship between information and uncertainty as well as the relational view. The major theoretical contribution of this study is the application of the Theory of Swift, Even Flow which is very limited in its application since it was proposed. This study empirically tested the propositions of this theory through a survey study which is scant in the extant literature. This study also provides insights to supply chain practitioners to manage supply chain risks with a systems approach and a holistic view.