Journal of Purchasing & Supply Management 9 (2003) 217224

A grounded denition of supply risk

George A. Zsidisin*
Department of Marketing and Supply Chain Management, The Eli Broad Graduate School of Management, Michigan State University,
N362 North Business Complex, East Lansing, MI 48824-1122, USA
Received 10 December 2001; received in revised form 11 December 2002; accepted 27 July 2003
Abstract
All purchasing organizations encounter supply risk, whether it is explicitly understood and assessed, or reactively managed. The
purpose of this paper is to provide a grounded denition of supply risk. Case study data from seven purchasing organizations
uncovered various denitions of supply risk. These denitions focus on the sources of supply risk, emanating from individual
supplier factors and market characteristics, and the outcomes of supply risk events, which involve the inability of purchasing rms to
meet customer requirements and threats to customer life and safety. Findings from this research provide practitioners and
academicians a starting point for understanding supply risk and insights as to how supply risk can negatively affect business
operations.
r 2003 Elsevier Ltd. All rights reserved.
Keywords: Supply risk; Grounded theory; Risk; Uncertainty
1. Introduction
Risk and uncertainty have been studied in numerous
business settings and have warranted signicant inves-
tigation in corporate functions, such as managerial
decision making (March and Shapira, 1987; Shapira,
1995; Yates and Stone, 1992), strategy (Ruei et al.,
1999; Sitkin and Pablo, 1992; Wiseman and Bromiley,
1991), operations (Newman et al., 1993; Pagell and
Krause, 1999), accounting (Ashton, 1998; Baucus et al.,
1993), nance (Chow and Denning, 1994; Ho and Pike,
1992) and distribution (Celly and Frazier, 1996; Lassar
and Kerr, 1996). Risk has been dened as the extent
to which there is uncertainty about whether potentially
signicant and/or disappointing outcomes of decisions
will be realized (Sitkin and Pablo, 1992, p. 10).
Inherent in this denition are the dimensions of
outcome uncertainty, outcome expectations, and outcome
potential.
From transaction cost (Williamson, 1975) and agency
(Eisenhardt, 1989a) theory perspectives, outcome un-
certainty is associated with the variability of outcomes,
lack of knowledge about the distribution of potential
outcomes, and uncontrollability of outcome attainment.
According to prospect theory (Kahneman and Tversky,
1979), outcome expectations suggest that positive ex-
pected returns facilitate different decision framing and
decision-making behavior than negative expected out-
comes. The third dimension of risk, outcome potential,
argues that individuals often overweight extreme out-
comes, even if their likelihood of manifestation is
removed (Kahneman and Tversky, 1979; Sitkin and
Pablo, 1992).
Risk within a supply management context may be
viewed in a similar manner. For example, there can be
outcome uncertainty associated with whether a supplier
is able to make product design and specication changes
in a timely manner for new products (Bidault et al.,
1998). However, there is little understanding of what
risk means within a supply management context,
although a few scholars have begun to address the
issue. Harland et al. (2003), in their study of risk
assessment and management tools, adopt a denition of
input risk from Meulbrook (2000). In addition, Zsidisin
et al. (1999) provide a preliminary denition of supply
risk in their exploratory study of supply risk assessments
and contingency plans. However, a grounded denition
of supply risk has yet to emerge in the purchasing and
supply management literature. Therefore, the purpose of
ARTICLE IN PRESS
*Tel.: +1-517-353-6381x269; fax: +1-517-432-1112.
E-mail address: zsidisin@msu.edu (G.A. Zsidisin).
1478-4092/$ - see front matter r 2003 Elsevier Ltd. All rights reserved.
doi:10.1016/j.pursup.2003.07.002
this paper is to provide the purchasing and supply
management eld with a denition of supply risk in
order to guide and encourage future research on supply
risk and its management.
2. Denitions of risk
The concept of risk has been extensively studied in
various business contexts. Three notable studies provid-
ing insights to the meaning of risk are provided below.
2.1. Baird and Thomas
Baird and Thomas (1990) have dened risk from eight
different perspectives. Their arguments incorporate
views from nance, marketing, management, strategy,
and psychology. Table 1 presents the eight risk
denitions and a brief description of each. The rst
three denitionsvariability of returns, variance, and
market riskfocus on the organizations nancial
return. The last two denitions of risk as disaster and
as accounting risk measures relate to the risk of a
company going bankrupt. These denitions of risk
provide evidence that risk is a multi-dimensional
construct and differs according to business function.
2.2. Shapira (1995)
An often-cited denition of risk in the academic
literature is the variance of the probability distribution
of outcomes (March and Shapira, 1987, p. 1404;
Shapira, 1995, p. 43). However, Shapira (1995) found
that very few managers dene risk in those terms.
Instead, managers identify (1) the downside of risk, (2)
its magnitude of possible losses, (3) the act of risk taking
involving the use of skills, judgment and control, and (4)
risk as a concept that cannot be captured with a single
number. A list of these four risk aspects and brief
denitions is also presented in Table 1. These ndings
also suggest that the term risk can be perceived in
different ways, and no single denition of risk may be
appropriate in all circumstances.
2.3. Yates and Stone (1992)
Yates and Stone (1992) note that risk entails (1) the
elements of loss, (2) the signicance of loss, and (3) the
uncertainty associated with loss. Within the elements of
loss are three additional factors. First, risk is not limited
to one specic loss that can occur. This is similar to the
variance of outcomes discussed by March and Shapira
(1987), with the exception that it focuses only on losses.
For example, a re that destroys a suppliers plant can
affect production for 1, 2 days, or even months. The
incident can result in various degrees of loss (outcomes)
for the supplier as well as the suppliers customers.
Losses are also experienced in reference to an outcome.
What is important is not the loss itself, but the actual
outcome in comparison to an expected outcome.
Another facet of loss is multiplicity, in which losses
can transcend multiple categories such as nancial,
performance, and time loss.
The second aspect of risk is the signicance of loss. It
is often assumed by researchers and laypersons that the
more signicant the potential losses in a situation, the
greater the implied risk. For example, there would be
greater perceived loss by a purchasing rm if a suppliers
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Table 1
Risk characteristics and denitions
Reference Risk characteristics Denition
Baird and Thomas (1990) Variability of returns Firm performance evaluated in terms of return and growth criteria
Variance Variability of the probability distribution of returns
Market risk The use of the capital asset pricing model to measure risk
Risk as innovation Risk conditions equated with conditions characterized by newness,
uncertainty, and lack of information
Risk as lack of information Information scarcity as a key facet of uncertainty in terms of the
existence of important resources and commitment duration
Risk as entrepreneurship Independence of action in venturing into the unknown
Risk as disaster Strategies that could result in corporate disaster, bankruptcy or ruin
Accounting risk measures Accounting ratios related to risk of ruin, default or bankruptcy
Shapira (1995) Downside of risk Risk being associated with a negative outcome
Magnitude of possible losses
compared to its probabilities
At least one possible outcome of an uncertain situation having a bad
outcome
Distinction between risk taking
and gambling
Risk taking is associated with using skills, judgment, and control,
while gambling is not
Risk as a multi-faceted construct Risk cannot be captured with a single number, since multiple facets
such as nancial, technical, marketing, production and other risk
aspects exist
G.A. Zsidisin / Journal of Purchasing & Supply Management 9 (2003) 217224 218
failure results in the chance of losing $10,000 of
customer business as compared with the chance a recall
will occur that would result in a loss of millions of
dollars in revenue.
The third risk element is uncertainty, where uncer-
tainty is associated with the degree of condence a
decision maker can develop probability and outcome
assessments of decisions (Mitchell, 1995; Luce and
Raiffa, 1957; Chiles and McMackin, 1996). Additional
facets of uncertainty involve a lack of understanding by
decision maker about the loss categories that exist, and
which losses can occur.
3. Prior denitions of supply risk
There are few denitions for risk within the context of
supply. Kraljic (1983) discusses risk in terms of supply
market complexity. Kraljics perspective of risk incor-
porates supply scarcity, the pace of technology and/or
materials substitution, entry barriers, logistics cost or
complexity, and monopoly or oligopoly conditions.
Other denitions of supply risk that do exist have
emerged from research studies focusing on supply risk
assessments and management. Harland et al. (2003)
dene supply risk as one of 11 risk types. They adopt
Meulbrooks (2000) denition of supply risk as ad-
versely affects inward ow of any type of resource to
enable operations to take place; also termed as input
risk. (p. 308). In addition, Zsidisin, Panelli, and Upton
dene supply risk as the transpiration of signicant
and/or disappointing failures with inbound goods and
service (p. 187). This denition focuses on outcomes
and was proposed in an exploratory study of supply risk
assessments and contingency plans. Mitchell (1995) has
investigated risk within organizational buying behavior.
His literature search uncovered numerous factors that
potentially affect managerial risk perceptions of pur-
chasing professionals. A summary of prior denitions
of supply risk and supply risk factors can be found in
Table 2.
The remainder of this paper will discuss the research
method implemented for creating a grounded denition
of supply risk. Next, the research ndings, which
describe supply risk by its sources and outcomes, are
presented. Industry characteristics and differences are
then presented to illustrate how they affect organiza-
tions denitions of supply risk. Managerial implications
and conclusions are provided at the end of the paper.
4. Research method
The research process consisted of conducting case
studies with purchasing organizations involved in supply
risk management. The case studies were used to build a
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Table 2
Supply risk denitions and characteristics
Reference Risk characteristics Denition
Harland et al. (2001) Supply risk Adversely affects inward ow of any type of resource to enable operations to take
place; also termed input risk
Zsidisin et al. (1999) Supply risk The transpiration of signicant and/or disappointing failures with inbound goods
and service
Mitchell (1995) Buyer demographics The effects of factors such as age, professional organization membership, education,
and job experience on risk perceptions
Job function Risk perceptions differ according to the job and position of the buyer
Decision-making unit The greater the risk involved, the greater the propensity to group, buy and share the
risk involved
Buyers personality Intrinsic motivational factors exist, such as the need for certainty, self-condence,
and the need to achieve, which affect individual risk perceptions
Buy-type Perceived risk differs if it is considered a new buy, modied rebuy, or straight rebuy
Product characteristics Technical complexity and value of the item are positively correlated with the degree
of perceived risk
Degree of customer/supplier
interaction
The extent of communication or state of the relationship between a buyer and
supplier inuences the degree of perceived risk
Characteristics of customer/
supplier markets
The propensity to innovate, stability of the market structure, and growth rate affects
risk perceptions
Company size The occurrence of performance risk is much higher among buyers in small
companies because of the rms limited ability to tolerate nancially unfavorable
decision consequences
Organizational performance Risk taking is affected by the relationship between the companys current position
and some critical reference points
Country Country of origin of the buyer affects an individuals risk preference
G.A. Zsidisin / Journal of Purchasing & Supply Management 9 (2003) 217224 219
theory of supply risk using a grounded theory approach
(Eisenhardt, 1989b; Glaser and Strauss, 1967; Wacker,
1998), where the researcher begins with an area of study
and allows the theory to emerge from the data (Strauss
and Corbin, 1998, p. 12). Case study participants were
pre-screened through initial telephone, in-person, or
e-mail interviews. Organizations with established supply
risk assessment or risk management processes were
solicited for further study, even if no formal denition
of supply risk existed at their rms. The case studies were
conducted until the researcher reached a point of
information saturation, where many of the concepts of
supply risk discussed by the case study participants
became repetitious (Strauss and Corbin, 1998).
A case study research protocol was created prior to
data collection and rened after the pilot case study. All
of the case studies were conducted at the companies
locations. In the few circumstances where in-person
interviews were not possible with certain individuals,
telephone interviews were conducted following the
guidelines proposed by Walton (1997).
The case study organizations consisted of a conve-
nience sample of electronics and aerospace rms. Five
manufacturers in the electronics industry were selected
due to rapid technological development cycles and
dynamic customer demand changes (Fine, 1998). To
obtain insights as to whether supply risk and supply risk
management differ between industries, two rms in the
aerospace industry were also selected. Information
gathering techniques such as obtaining historical data
and documentation, and conducting anywhere from three
to six structured interviews with various professional
purchasing personnel and other key informants from
each rm, were implemented during the case studies.
Since one of the goals of the research was to
investigate how purchasing organizations dene risk,
the purchasing function was the unit of analysis.
Purchasing professionals were asked how their organi-
zations dene supply risk. If a formal organizational
denition of supply risk did not exist, the researcher
asked how that individual dened supply risk from a
purchasing organization perspective.
Data generated in the case studies was subject to open
and axial coding analysis, as per the guidelines set by
Miles and Huberman (1984), Strauss and Corbin (1998),
and Yin (1994). Open coding breaks down case study data
in order to analyze, conceptualize, and develop categories
for the data. Axial coding is a technique that makes
connections among categories, groups issues during rst-
level coding, and summarizes the issues into themes.
5. Research ndings
The research ndings indicate that there are a variety
of ways to dene supply risk. Two of the organizations,
Cell and Semi1, have formal organizational denitions
of supply risk. The ve other organizations did not have
formal denitions of supply risk disseminated through-
out their rms. However, each of the case study
participants had an explicit understanding of what
supply risk means within their position and organiza-
tion. These denitions of supply risk were discussed in
terms of sources and outcomes, as discussed below.
5.1. Organizational denitions of supply risk
Cell denes supply risk as the danger that events or
decisions will obstruct the companys achievement of its
objectives. The events and decisions include potential
direct losses as well as opportunity costs. This denition
of risk is disseminated and understood throughout the
organization. The purchasing and supply management
function at Cell has adopted this denition of risk in its
supply strategy to support overall corporate goals and
direction.
In contrast, Semi1 denes supply risk as anything
that impedes the introduction of a new product, or any
event that could disrupt production. This denition of
supply risk focuses on the introduction of new products.
By the time a product is considered mature, Semi1
believes that most supply risk characteristics have
already been identied.
5.2. Classication of supply risk
The majority of rms in this study do not currently
have formal denitions for supply risk. However, each
of the respondents from those rms had strong
conceptions of what supply risk means to their
organizations. Case study participants provided deni-
tions of supply risk by its sources and outcomes. The
sources of supply risk were described in terms of
individual supplier failures and supplier market char-
acteristics. Respondents conceptualized the outcomes of
supply risk by the inability to meet customer require-
ments and threats to customer life and safety. Table 3
provides an overview of the classications and related
factors that the case study participants used to dene
supply risk.
5.2.1. Sources of supply risk
According to the case studies, the sources of supply
risk tend to arise from individual supplier failures and
from market factors. The individual supplier failures
that dene the scope of supply risk were the inability to
handle demand uctuations, quality problems at sup-
plier plants, and the inability to stay in pace with
technological changes. In addition, supply risk was
understood in terms of supplier market characteristics.
Market characteristics include sole sources (such as
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G.A. Zsidisin / Journal of Purchasing & Supply Management 9 (2003) 217224 220
suppliers having a patent) and market capacity con-
straints.
5.2.1.1. Individual supplier failures. Five of the seven
rms noted individual supplier factors within their
denitions of supply risk. For example, a respondent
from Aero1 stated Supply risk is when there are
suppliers that their failure would affect the ability for
our rm to make nancial goals at the end of the year.
This denition of supply risk species supplier failures
as a cause of supply risk. However, the denition does
not provide any detail about what constitutes failure.
Two additional denitions of supply risk provide
more details regarding individual supplier failures. A
respondent from Comp1 believed, Supply risk is the
inability to develop products on time and deliver those
products into manufacturing. In addition, one Comp2
participant stated, Supply risk is the uncertainty
associated with supplier activities, obligations, and in
general, supplier relationships. Supply risk boils down
to the three components of price (best deal), quantity,
and demand. These denitions of supply risk indicate
that supply risk originates from individual supplier
failures, and these failures consist of issues such as
quality, delivery, relationships, and price.
5.2.1.2. Market characteristics. Several supply risk de-
nitions focused on factors originating from market
characteristics instead of individual supplier failures.
For example, a respondent from Aero2 was concerned
with availability. This respondent noted, Supply risk is
having a single or sole source supplier, without having a
proven or established second sourcey[which] occurs
when there are patents on [the] supplier end without a
backup.
There were two recent incidents related to market
characteristics that affected the perceptions of many
case study respondents. The rst one involved the
tantalum capacitor shortage that occurred in 2000.
Several of the case study respondents noted that part of
the shortage was due to the rapid growth of the cellular
phone industry. Although most of the rms expected
greater demand for those capacitors, none of them
anticipated the extent that the cellular phone growth
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Table 3
Classication of supply risk denitions
Aero1 Comp1 Comp2 Cell Aero2 Semi1 Semi2
Sources
Individual supplier failures X X X X X X
New product development problems X X
Delivery failures X
Relationship issues X
Supplier obligations to other customers X
Quality problems X X
Price/cost increases X X X
Inability to meet quantity demand X X
Technologically behind X
Discontinuity of supply X
Market characteristics X X X X
Sole source/limited qualied sources X X
Market shortages X X
Commodity price increases X X
Geographic concentration of suppliers X X
Supplier patents X
Outcomes
Inability to meet customer requirements X X X X X X X
Unable to meet customer specications X X
Subcontractor failures X
Impedes new product introductions X X
Missed shipments X X
Negative effect on prot targets X X X X X
Loss of customer business X
Failure to meet customer demand X
Threats to customer life and safety X X
Product liability and integrity X X
Quality failures result in loss of life X X
G.A. Zsidisin / Journal of Purchasing & Supply Management 9 (2003) 217224 221
would have on their rms ability to acquire piece parts
such as tantalum capacitors. This incident was discussed
by many case study respondents in their perceptions of
what supply risk means to their organizations.
A second incident that several of the case study
respondents described in their denitions of supply risk
was the September 1999 earthquake in Taiwan. This
event had signicant repercussions for many rms,
especially in preparation for forecasted sales of the
holidays. The earthquake disaster had detrimental
effects on many suppliers, which had subsequent ripple
effects throughout many supply chains.
5.2.2. Outcomes of supply risk
Supply risk was also dened in terms of negative
outcomes, specically the inability to meet customer
requirements or threats to customer life and safety. All
the rms understood supply risk in terms of meeting
customer requirements, which can result in the loss of
customer business and detrimentally affect revenues and
prots. Threats to customer life and safety, on the other
hand, arise from issues with product integrity, dur-
ability, and reliability. If a product has a failure in the
eld, such as a part on an aircraft, the ramication of
that failure can lead to consumer injury or even death.
5.2.2.1. Inability to meet customer requirements. All of
the organizations stated that supply risk results in the
inability of the purchasing rm to meet their customers
requirements. For example, one respondent from Aero1
stated, Supply risk is the failure to provide a seamless
ow of product to the customer that meets or exceeds
specication. Another example of supply risk resulting
in the inability to meet customer requirements was
provided by a participant in Comp2, who stated,
Supply risk affects getting product out to market
(i.e. built by subcontractors). It is an event that disrupts
the delivery of products to the customer, or impedes
the production of new items to customers.
Since these rms perceive the effects of supply risk
from a supply chain perspective, the organizations are
dening supply risk in reference to meeting customer
demand. Specically, the case study rms not only
looked at supply risk from the link between their rm
and supplier organizations, but also its effect on their
internal operations, on customer rms, and eventually
on the nal consumer. To emphasize this point, one
respondent from Comp1 stated, Supply risk is the
potential for a supply constraint on a subassembly or
component that affects the shipment of product. In
addition, an Aero2 case study respondent viewed supply
risk as ynot being able to satisfy customer demand. It
affects the longevity of our rm and jobs. These
denitions of supply risk focus on the ability to meet
customer demand, and, eventually its impact on the
entire supply chain.
5.2.2.2. Threats to customer life and safety. Two of the
organizations also stated the effect of supply risk in
terms of customer life and safety. Both of these rms are
suppliers in the aerospace industry, where the ramica-
tions of quality and reliability problems can have
devastating effects on consumers. For example, a case
study participant from Aero2 understood supply risk
to consist of product liability and integrity where the
parts must meet requirements.
The nal product manufactured by aerospace com-
panies can have a direct impact on customer safety if
a failure occurs. Failure of the products manufactured
by electronics rms normally does not have life or death
ramications for their customers. As noted by one
respondent from Aero2, There are no service stations
at 33,000 ft.
6. Proposed denition of supply risk
The ndings from this research provide evidence that,
similar to prior denitions of risk, purchasing organiza-
tions perceive supply risk as a multi-dimensional
construct (Hallikas et al., 2002; Shapira, 1995; Yates
and Stone, 1992). The scope of supply risk was dened
in terms of sources, either from individual supplier
failures or market factors, and outcomes, which include
the inability to meet customer requirements and threats
to customer life and safety. Therefore, a new denition
of supply risk is proposed below:
Supply risk is dened as the probability of an incident
associated with inbound supply from individual
supplier failures or the supply market occurring, in
which its outcomes result in the inability of the
purchasing rm to meet customer demand or cause
threats to customer life and safety.
Supply risk is a multi-faceted concept, since its scope
includes risk sources and outcomes. In addition, the
scope for understanding supply risk differs according to
industry. As the research indicated, aerospace rms are
more likely to understand supply risk in terms of threats
to customer life and safety. The nding that supply risk
is a multi-faceted concept that differs according to
industry is similar to prior studies investigating risk
denitions (Pablo, 1999).
7. Managerial implications
Understanding and managing risk is an important
issue of business and has been extensively studied in
many business disciplines. Even though there is a rich
stream of literature investigating risk, there has been
little research applied to the risk that exists with
inbound supply. In order to start closing the research
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G.A. Zsidisin / Journal of Purchasing & Supply Management 9 (2003) 217224 222
gap in supply risk management, this research, through
the use of case studies, investigated how organizations
dene supply risk.
The denitions of supply risk provided by case study
participants show that supply risk is a multi-dimensional
construct. The most widely held denition of supply risk
focuses on understanding how risk affects a purchasing
rms ability to meet its customers requirements.
However, the meaning of supply risk can differ
according to factors such as industry, source, and
outcome. This contributes to theory by providing
researchers with an empirically based denition for
supply risk and presenting insights into how those
denitions may change according to industry context.
In addition, having an empirically grounded deni-
tion of supply risk provides greater detail for under-
standing an overall supply network risk tool proposed
by Harland et al. (2003). The tool, which can be found
in Fig. 1, begins with mapping the supply network, then
involves identifying risk and its current location,
assessing that risk, managing the risk, forming a
collaborative supply network risk strategy, and, nally,
implementing a supply network risk strategy. One key
element missing within this tool is how organizations
dene supply risk. Although Harland et al. (2003)
provide an initial denition of supply risk, that
denition had not been empirically validated and was
only one type of risk identied. This research provides a
grounded denition of supply risk, which can help
purchasing organizations understand the sources and
outcomes of supply risk for their rms.
The sources and outcomes of supply risk discovered
in this research are not mutually exclusive. In fact,
several of the risk characteristics may have a compound-
ing effect. For example, the source of risk from the
September 1999 earthquake in Taiwan was that many
suppliers of passive components were located within the
same geographical location. From a supply side
perspective of several of the rms in this study, this
event manifested in market shortages for these compo-
nents as well as signicant commodity price increases. In
addition, the outcomes of this event resulted in the loss
of customer business, the failure to meet customer
demand, and negative effects on prot targets. The
managerial implications of this nding parallels the
research of Hallikas et al. (2002), who discovered
vicious circles of supply network risk due to factors
such as pricing, forecasting, delivery performance, and
nancial implications. Therefore, it is imperative for
supply management professionals to understand both
the sources as well as outcomes that incorporate supply
risk because the effects of detrimental supply events can
have ramications throughout a rms supply chains or
networks. The insights for understanding what supply
risk means provides a starting point for managing that
risk.
In dening supply risk, most of the research
participants went beyond viewing risk inherent in dyadic
interorganizational relationships with suppliers. This
was reected in the ndings that supply management
professionals understand the effects of risk on meeting
their customer requirements. In addition, several exam-
ples of supply risk provided by the research participants
involved supply failures from second and third tier
suppliers, such as the negative ramications of the
Taiwan earthquake in 1999 and tantalum capacitor
shortage of 2000. This view of supply risk becomes a
cornerstone for understanding supply chain or supply
network risk, which would involve dening and studying
risk at numerous inter- and intra-organizational levels.
Future research would be necessary for providing
academicians and practitioners alike insight for dening,
and eventually assessing and managing, supply chain or
supply network risk. These studies can investigate risk in
additional industry areas as well, such as automotive,
telecommunication, and pharmaceutical rms, to deter-
mine if additional nuances for dening supply and
supply chain risk exist.
8. Conclusion
Risk exists in virtually all rms, and has been
extensively studied in various business contexts. How-
ever, a gap exists in studying risk within purchasing and
supply management. This study has investigated,
through the use of case study data, how risk is dened
within a supply management context. Supply risk was
perceived by purchasing organizations to incorporate its
sources and outcomes. In addition, industry differences
were found in the case study data, where suppliers in the
aerospace industry focus on the threats to customer life
and safety. From the case study data, an empirically
grounded denition of supply risk was provided.
ARTICLE IN PRESS
Map supply
network
Identify risk and its
current location
Assess Risk
Manage Risk
Form collaborative supply
network risk strategy
Implement
supply network
risk strategy
Fig. 1. Supply network risk tool (Harland et al., 2003).
G.A. Zsidisin / Journal of Purchasing & Supply Management 9 (2003) 217224 223
Theoretical and managerial implications were also
discussed. By establishing a grounded denition of
supply risk, purchasing professionals have a starting
point for creating strategies, which include assessing and
managing supply risk, to better meet customer rm and
consumer requirements.
Acknowledgements
The author wishes to acknowledge the Institute for
Supply Management for the doctoral grant that helped
fund the study described in this article, and Professor
Lisa M. Ellram for her contributions to this research.
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