Portland State University PDXScholar Dissertations and Theses Dissertations and Theses Spring 5-22-2014 Supply Chain Risk Management in India: An Empirical Study of Sourcing and Operations Disruptions, their Frequency, Severity, Mitigation Methods, and Expectations Andreas Udbye Portland State University Follow this and additional works at: https://pdxscholar.library.pdx.edu/open_access_etds Part of the Operations and Supply Chain Management Commons Let us know how access to this document benefits ou.y Recommended Citation Udbye, Andreas, "Supply Chain Risk Management in India: An Empirical Study of Sourcing and Operations Disruptions, their Frequency, Severity, Mitigation Methods, and Expectations" (2014). Dissertations and Theses. Paper 1813. https://doi.org/10.15760/etd.1812 This Dissertation is brought to you for free and open access. It has been accepted for inclusion in Dissertations and Theses by an authorized administrator of PDXScholar. Please contact us if we can make this document more accessible: [email protected]. Supply Chain Risk Management in India: An Empirical Study of Sourcing and Operations Disruptions, their Frequency, Severity, Mitigation Methods, and Expectations by Andreas Udbye A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Systems Science: Business Administration Dissertation Committee: Lee Buddress, Chair Timothy R. Anderson David M. Raffo Wayne Wakeland Portland State University 2014 © 2014 Andreas Udbye ABSTRACT With an annual growth of almost 20% since the year 2000, Indian merchandise exports exceeded 300 billion U.S. dollars in 2012. The country is becoming a major supplier to the world. However, companies sourcing products and operating in India are experiencing a variety of supply chain disruptions that impede their operations and finances. The purpose of this dissertation is to investigate the frequency, impact and severity of supply chain risks experienced by companies in India, as well as assess the usefulness of mitigation methods and enquire about future expected disruptions. It is hoped that the results will prepare managers to better prioritize their supply chain risk management efforts and investments. The scope of this study is upstream (sourcing and operations) disruptions that affected Indian supply chains over the past three years, including the areas of logistics and transportation. The methodology is a quantitative, empirical study, using a survey instrument in the form of a questionnaire distributed electronically to thousands of members of four prominent trade associations in India. The platform for the questionnaire is a modification of a traditional risk analysis progression: mapping, identifying, assessing, mitigating and improving, also dubbed “MIAMI”. The main findings are that there are major and significant differences in severity (frequency and impact) between the thirteen risk categories presented. There are also significant group differences among the respondents. Traditional mitigation methods differ with respect to usefulness, and expected risks are somewhat different than past i risks. Conclusions reached are that chronic risks such as inadequate transportation, logistics and utilities infrastructure, supplier and labor problems, and bureaucracy/red tape are more severe than highly publicized and visible risks such as natural disasters, terrorism and crime. Traditional mitigation methods are useful for many of the disruptions, but ineffective for non-physical risks. There is a certain optimism with respect to future infrastructure related disruptions. Limitations of the study include a relatively low response rate, the classic difficulty in risk analysis of comparing and scaling the impact of disruptions, and that it is not fine grained enough to fully describe any specific industry sectors. This study contributes to the field of supply chain risk management by adding crucial empirical information from a heretofore unexplored market. ii DEDICATION The dissertation is dedicated to my faithful wife, Kari, who not only financed a great deal of my self-actualization project, but also suffered through more than five years of stress, distractions and excuses. Obtaining a doctorate at middle age is hard on the family. I cannot thank her enough. iii Table of Contents ABSTRACT ............................................................................................................................. i DEDICATION ....................................................................................................................... iii List of Tables ...................................................................................................................... vi List of Figures .................................................................................................................... vii CHAPTER 1: INTRODUCTION ............................................................................................... 1 CHAPTER 2: SOME BACKGROUND ON INDIA ...................................................................... 5 a. The Rise of India .................................................................................................. 5 b. Why Source Overseas? ........................................................................................ 8 Eight arguments for global sourcing ......................................................................... 10 Further arguments for sourcing in India ................................................................... 14 CHAPTER 3: LITERATURE REVIEW AND CURRENT KNOWLEDGE ...................................... 16 a. Supply Chain Management ............................................................................... 16 b. Supply Chain Risks ............................................................................................. 23 Stage 1: Risk .............................................................................................................. 23 Stage 2: Supply Chain Risk ........................................................................................ 32 Stage 3: Supply Chain Risk Management .................................................................. 42 c. The “MIAMI” Template ......................................................................................... 48 1. Mapping ......................................................................................................... 48 2. Identification ................................................................................................. 51 Natural Disasters ....................................................................................................... 58 Man-made Disasters ................................................................................................. 60 Terrorism................................................................................................................... 62 Risk Taxonomies and India ........................................................................................ 64 3. Assessment ........................................................................................................... 74 4. Mitigation ............................................................................................................. 86 5. Improving............................................................................................................ 103 CHAPTER 4: RESEARCH OBJECTIVE AND METHODOLOGY: ............................................. 106 The Sample Population ............................................................................................... 113 The Survey Instrument ................................................................................................ 114 CHAPTER 5: FINDINGS AND RESULTS OF THE RESEARCH ............................................... 120 Summary of Results .................................................................................................... 125 a) Frequency of Disruptions ............................................................................. 125 b) Impact of Disruptions: .................................................................................. 129 iv c) Severity of disruptions (“risk assessment score”): ....................................... 132 d) Mitigation of disruptions: ............................................................................ 136 e) Expected disruptions .................................................................................... 140 Further Statistical Analysis .......................................................................................... 145 1. Group comparisons ...................................................................................... 146 2. Combinations of Predictor Variables? ...................................................... 149 3. Prediction and Multiple Regression .......................................................... 150 CHAPTER 6: DISCUSSION OF FINDINGS........................................................................... 153 Significance, Contribution and Limitations of this Work ............................................ 162 CHAPTER 7: CONCLUSIONS AND RECOMMENDATIONS ................................................. 167 REFERENCES .................................................................................................................... 171 APPENDIX A: COPY OF THE SURVEY ...............................................................................