Mitigating risk in physical and new product supply chains
Supply chain risk mitigation involves investing in strategic activities that minimize the financial impact of a disruption to the flow of goods through a supply chain or to processes within a firm. Strategic implementation of risk mitigation occurs along the supply chain with a variety of activities such as collaboration, options contracts, and buffer capacity just to name a few. These risk mitigation strategies require significant coordination and investment making it imperative to efficiently allocate resources in order to achieve a positive return on investment. Yet, the effectiveness of many of these strategies is not well known. This dissertation consists of three essays that investigate the effectiveness of risk mitigation strategies, methods for performance evaluation, and contextual factors that influence the interpretation and application of them. Each essay investigates risk mitigation at a different level of strategic decision making, beginning with the highest level, strategic, and proceeding to a more granular level with a focus on tactical and then operational.The first essay explores how strategic alliances influences new drug development project failures. Developing new products is a complex process that is inherently risky because of the enormous investment needed to develop them and the uncertainty of the product's potential. This risk is most prevalent for pharmaceutical drug development because of the strict requirements set by the Food and Drug Administration and high cost of development. Many organizations are adopting strategies aimed at mitigating this risk, including dispersing cost by alliancing with other organizations. Yet, alliance partners bring additional resources and capabilities to bear on new product development that may also reduce the likelihood of failure. I show that in early clinical trials, exploratory alliances require alliance partners with diverse new product development expertise to reduce the rate of failures, while in late stages exploitation alliance reduce failure rate if their alliance partners have technological diversity.Managing supply chain risk requires assessing the exposure a firm faces to various risks and allocating resources to reduce the impact or likelihood of a disruption occurring. Unfortunately, risk is often difficult to accurately quantify, exposing the process to bias by contextual factors. In the second essay, I investigate how these biases may reduce the resilience of supply chains since managing risk requires coordination across business partners. Moreover, this coordination requires consistent terminology of the types of strategies being applied. Flexibility and redundancy have frequently been cited as important supply chain risk mitigation strategies. However, practices, such as increasing capacity, pooling demand, or acquiring backup suppliers, vary in how they have been classified between studies. This study applies the behavior theory of the firm to show that a consistent taxonomy of supply chain risk mitigation strategies can be developed based on their mechanisms of slack. I develop measures of flexibility and redundancy in the context of risk management and address measurement challenges when dealing with psychometric measures related to uncertainty. Using confirmatory factor analysis and generalized structural equation modeling, I show that Japan has a significantly higher level of perceived supply chain risk and significantly lower application of risk mitigation strategies than two western culture countries, the USA and Australia.The final chapter of the dissertation assesses risk mitigation investments on an efficiency frontier by considering both the cost of the strategies and interdependencies among the different stages of the supply chain, an aspect past work in risk mitigation has ignored. Risk mitigation strategies were measured at the supplier, process, and customer segments of the supply chain and their performance was evaluated simultaneously using a network data envelopment analysis.
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- In Collections
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Electronic Theses & Dissertations
- Copyright Status
- In Copyright
- Material Type
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Theses
- Authors
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Kraude, Richard Leland
- Thesis Advisors
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Talluri, Srinivas
Narayanan, Sriram
- Committee Members
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Hult, Tomas
Sambamurthy, Vallabh
- Date
- 2017
- Subjects
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Risk management
Business logistics
- Program of Study
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Business Administration - Operations and Sourcing Management - Doctor of Philosophy
- Degree Level
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Doctoral
- Language
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English
- Pages
- xi, 132 pages
- ISBN
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9781369757439
1369757433
- Permalink
- https://doi.org/doi:10.25335/nc6f-s255