Paper
Publication Date
Authored By
Topic(s) Covered:
  • Risk Management
Abstract

In the fall of 2009 MIT CTL conducted a global survey of supply chain risk experiences, attitudes, and risk management practices. Over 1400 supply chain professionals from 70 countries participated. The survey asked business and supply chain managers their opinions about the importance of risk prevention compared to response preparedness. Overall, 54% of respondents considered risk prevention more important, 30% viewed them as equal, and 16% considered response preparedness more important. However, there were some interesting cultural and functional differences. For example, Brazil, and to a lesser degree Portugal, considered response preparedness to be more important than risk prevention. Also, transportation managers assigned much greater importance to response preparedness than did respondents from other job functions.

The survey also examined risk tolerance attitudes. Everyone has a unique level of risk tolerance and mismatches between trading partners in this area can quickly ruin a relationship. The survey showed that most companies believe that they are successfully mirroring their customers’ sense of urgency for supply chain performance. However, the same respondents reported that their own suppliers were doing a mediocre job of this metric. The mismatch underscores that companies are out of touch with their customers and are actually performing worse than they believe.

Significant differences in attitudes about risk management exist between global trading partners based on regional, cultural, and industry influences. Most companies likely only find out about these differences when faced with a risk event. The researchers recommend that companies discuss supply chain risks, their prevention, and response preparedness with their suppliers, customers, and their own employees routinely, before a crisis occurs.

This white paper is part of a series of three papers that describe the results of the MIT CTL risk survey. Each paper is accompanied by a short video. The papers and videos are available at: http://ctl.mit.edu/research/global_scale_risk_initiative.