Managing Supply Chain Risks. The Example of Successful Sourcing from China

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Abstract

China today is the most important newly industrialized country in the world. It is also one of the most important sourcing markets and a quickly developing sales market. This development is reflected in the interest of many Swiss and German companies to become more active and act more professionally in the Chinese sourcing market. This thesis addresses four areas: the importance of supply chain risk management in global sourcing, the development of specific supply chain risk management methods, the supply chain risks, and their mitigation measures when sourcing from China. Although the focus of this thesis is on companies that source from China for their production in Europe, it is in large parts also applicable for companies that source and/or produce locally in China.
A brief introduction is given to the recent developments due to globalization, the role of the comparative advantage as a main driver for global sourcing, and the current state and developments in China. The relevance of supply chain risk management when sourcing in China is demonstrated based on the needs of the industry partners and its important role in the reference process for global sourcing and total cost of ownership analyses. Current supply chain risk management methods are improved by adding elements of systems thinking. The supply chain risk structure and supply chain risk dynamics models help to
model and understand complex risk situations. Their applicability to real-life supply chain risks and the advantages that they bring with them are demonstrated. The potential supply chain risks that companies face in China are summarized in four interrelated risk scenarios. These are: „total cost too high‟, „insufficient delivery reliability‟, „insufficient quality‟ and „damage to reputation‟. The measures developed with the industry partners to mitigate selected supply chain risks are presented in the thesis. These are the „management of bargaining power in buyer-supplier relationships‟, „IT integration in supply market research and supplier evaluation‟, „collaboration support in global design-manufacturing relationships‟, „human resource management in China‟, „introduction of global VMI and CPFR systems‟, „proactive climate protection schemes‟ and the introduction of a „supplier code of conduct‟. As this is a cumulative dissertation, the relevant 11 publications as main author are
discussed and summarized, as are for additional information the 10 publications as coauthor and the 9 larger dissemination activities. The reproductions of the printed publications as main and co-author are included in this thesis. As a cumulative dissertation, large parts of the publications are quoted verbatim in the discussion of the results. The sources are identified at the beginning of the respective chapters and sections.
Original languageEnglish
PublisherEidgenössische Technische Hochschule Zürich (ETH)
Number of pages175
Publication statusPublished - 2009
Externally publishedYes
SeriesDiss. ETH
Number18536

Cite this

Oehmen, J. (2009). Managing Supply Chain Risks. The Example of Successful Sourcing from China. Eidgenössische Technische Hochschule Zürich (ETH). Diss. ETH, No. 18536