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Supply Chain Risk Management Practice in Bangladesh

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Uncertainty and risk are part of doing business. In recent years, many companies have faced supply chain disruptions which can strongly impact the performance of these organizations. supply chain risk is everywhere, just waiting for million-dollar disruption. It could be coming from an early flashflood in Haor area, massive student protests for road safety, the coal theft from Barapukuria mine, cyber heist of Bangladesh Bank, or even from a disgruntled employee or former partner. Even it could come in anytime without further notice-so supply chain managers should prepare themselves to mitigate those risk.

The concept of supply chain risk has evolved and developed momentum during the past two decades. In the 1990ies, during its infancy, the focus was largely on supply chain risks internal to the firm, examples of which could be the concern arisen from the bullwhip effect or supply side vulnerability as a result of ineffective sourcing strategies. (Skjoett-Larsen, 2007)

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Risk management is about taking necessary actions against the potential risks, in order to reduce their occurrence probability and impacts, affecting the projects (Shahriari, 2011). It is mainly the procedure of potential risks‟ identification, analyzing them and responding to them, in an organization (Waters, 2011).

Supply chain risk management has become a high priority issues for companies operating in global markets. The ability to meet customer demand and preserve the financial bottom line hinge on effective preparation and mitigation efforts. Sourcing and operating in less developed economies present supply chain managers with a new set of potential risks and uncertainties.

Bangladesh’s economy is growing rapidly by charging towards record growth figure. It’s manufacturing and construction sectors has been experiencing double-digit growth for the past few years, as more companies perform sourcing and production here. It is expected that Bangladesh will become a more realistic and attractive alternative for many categories of goods and services.

Bangladesh is still inexpensive, with an abundance of labor and a very promising demographic profile. However, the country turns up with a cocktail of serious supply chain risks for firms trying to source or produce here. This thesis will survey Bangladesh supply chain practitioners on how aware they are about risk, what specific risks they encounter, what impact these risks had on their companies, which method they used for analyzing qualitative and quantitative risk, how often some specific risk assessment techniques are used in their organization to support supply chain risk opportunity analysis, what mitigation steps may have worked, and what specific risks they expect to experience in the future. The usefulness of this research cannot be overestimated. So far, articles, news reports and commentaries about doing business in Bangladesh have been full of mostly anecdotal stories of the risks and disturbances experienced here.

Literature on Bangladeshi supply chains describe poor infrastructure, bureaucratic delays and the prevalence of corruption. A comprehensive review of the literature reveals no academic studies that enquire on-the-ground practitioners about the identification, assessment and mitigation of supply chain risks in Bangladesh. The results of this research will be valuable for companies contemplating or currently sourcing and producing in Bangladesh. It is hoped that the results will reveal the issues of real concern to supply chain managers in Bangladesh, and can help practitioners focus in on risk factors that deserve immediate attention.

It appears that Bangladesh is not necessarily riskier than other countries in Asia when it comes to supply chain exposures. Overall risk consists of a mosaic of miscellaneous operational and environmental disruptions. Bangladesh has a different set of risks than China or Korea, for example, or even India and Myanmar next door. Each specific supply chain is also different, meaning that the interplay between this and the country’s environmental factors determine the relevant risk topography and circumstances for a company. The risk exposure, experience and impact will depend on a given company’s industry and product categories.

The dissertation is organized as follows: A comprehensive literature review outlines the attractiveness of sourcing in Bangladesh, defines global supply chains and supply chain risk, and discusses what modern supply chain risk management encompasses. The dissertation culminates with the empirical study. The research methodology and survey process are explained in Chapter 4, and the results are revealed and discussed in Chapters 5 and 6. Chapter 7 is a concluding chapter that recaps the overall findings, makes some comments on possible causalities, suggests that some Bangladeshi risks are not remedied with traditional mitigation methods, and recommends general paths for further and more pin-pointed research into Indian supply chain risks.

Because this dissertation focuses on supply chain management risks in Bangladesh, it is useful to provide appropriate definitions before we move on.

Supply Chain Management

A supply chain is a conceptual term for a string or network of companies from suppliers to end-users, with the intention of integrating supply and demand via coordinated company efforts (Frankel, Bolumole, Eltantawy, Paulraj, & Gundlach, 2008). For the purposes of this research, the definition offered by the Council of Supply Chain Management Professionals will be used:

“Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies”. According to Monmohan & Sodhi (2012) supply Chain Management is a network of organizations possibly including suppliers, manufacturers, logistics providers, wholesalers/distributors, and retailers that aims to produce and deliver products or services for the end customer.

Supply Chain Risk Management (SCRM)

AMR Research (2007) defined risk management and supply chain risk management (SCRM) as “Risk management is the process of measuring or assessing risk and then developing strategies to manage the risk. These strategies can involve the transference of risk to another party, risk avoidance or mitigation, and channel risk sharing. SCM risk assessments balance the probability of demand, the likelihood of reliable supply, the most effective allocation of resources, the probability of success of new product introductions, market conditions, and the opportunity costs of alternative decision paths”. We define supply disruptions as unforeseen events that interfere with ‘‘the normal flow of goods and[/or] materials within a supply chain’’ (Craighead et al., 2007, p. 132). Supply disruptions can be characterized as glitches (Hendricks and Singhal, 2003) and may be attributable to many factors including supply market complexities and the importance of the purchased product (Kraljic, 1983). Supply disruptions may have immediate or delayed negative effects on buying firm performance over the short and/ or long-term, pending the severity of the disruption and the buying firm’s recovery capabilities (Sheffi and Rice, 2005).


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