Chapter 2: Assessing the Vulnerability of Supply

Chains

Bjørn Egil Asbjørnslett

Senior Consultant, MARINTEK Solutions

2.1 Introduction

Supply chain systems are becoming increasingly lengthy and complex, reflecting
the dynamic and global marketplace. Adopting a more proactive approach to
dealing with new and changing risks and vulnerabilities emerging within or
influencing the system may be a wise action to secure the mission of the supply
chain system.
In this chapter, an approach to analysing vulnerability in a supply chain system
is presented as a means to reduce risk, to become better prepared to manage the
system’s vulnerabilities and to improve the system’s resilience. The analysis
establishes the relationship between relevant threats and risks, and the potential
scenarios and consequences that determine the vulnerability of the supply chain
system. This is designed to generate a deliberate and conscious management
process, seeking to establish an acceptable degree of vulnerability and risk within
the supply chain system.
The approach proposed comprises two basic preliminary steps. Firstly, a choice
has to be made with respect to the focus and magnitude of the study, or the scope
of work the analysis shall cover. Secondly, a description of the supply chain
context to be analysed is required, including the specific supply chain manage-
ment roles, functions and activities currently present or prospectively required.
Both steps are important in establishing a sound basis for further analysis. The
approach focuses on understanding the context from another angle, a vulnerability
angle. This facilitates a more scalable approach, permitting a more conscious
decision to be taken on which part of the demand and supply chain(s) and SCM is
most appropriate to address.
16 Bjørn Egil Asbjørnslett

2.1.1 Background

The industrial world as we know it today has become a global network of demand
and supply nodes, interlinked through interacting logistics systems. The Internet
and related ‘e-services’ have opened up the demand and supply markets of the
world, so that the ‘next-door’ marketplace could as well be the ‘next-continent’
marketplace. The supply chain systems are complex entities with multiple physical
and virtual relationships, and multiple internal and external interfaces. High
demands are put on both the quality of the products and services, and on the
supply chain regularity and dependability. Whether the product is to be a part of a
more complex product, or the final product for consumption or use by consumers
or professional users, the product is expected to be available when needed, and as
promised. In the search for improved effectiveness and efficiency the supply chain
systems are reengineered according to modern concepts, and made more speciali-
zed and dependent with less tolerance for failure.
Supply chain systems are subject to changes originating both from within their
market place, as a result of changes in inter-organisational constructions, and from
changes in demand from external sources. Such changes are a natural part of
business and should be planned and prepared for, and dealt with proactively.
Addressing such changes is the primary theme of vulnerability analysis presented
in this chapter. As supply chains become longer and parts of larger networks of
demand and supply nodes and interacting logistics nodes and modes, they become
more prone to the negative attributes of systems; indeterminacy, complexity,
flexibility, sensitivity, reliability and vulnerability (Meister 1991). A question then
arises: How can we develop or revise supply chain systems so that we realise the
inherent opportunities without taking on unacceptable vulnerability?

2.1.2 Objective

The main objective of vulnerability analysis presented in this chapter is to bring to

light scenarios, and thereby threats and risks that make the supply chain system
vulnerable, together with actions that may make the system more resilient in
dealing with these risks and vulnerabilities. The analysis should be regarded as a
means to becoming more proactive, dealing with relevant vulnerability issues
prior to the occurrence of critical events, incidents or accidents. This may be seen
as part of change and the change management procedures engaged in supply chain
management. This essentially proactive approach may enable decision makers to
uncover new areas or factors of risk and vulnerability, before implementing and
operating a revised supply chain system.
The approach and structure of vulnerability analysis is designed to reach these
overall objectives through achievement of the following sub-objectives;
1. Understand the nature and types of factors that may pose threats and risks to
the achievement of the supply chain system’s short and long term mission.