2021

Research Proposal on

Supply side risk Assessment of

Fertilizer Industry Supply
Chain

A case study on Karnaphuli

Fertilizer Company Limited

PROPOSED BY
S. M. FAISAL MAHMUD
ID: 583
MBA (EXECUTIVE FOR ENGINEERS)
USTC

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1.0 Rationale of proposal/Research question
Supply chain management is an essential part of business success. It involves every part of
business operations that includes logistics, purchasing, production, information technology and
so on. In fact, it integrates materials, finances, suppliers, manufacturing facilities, wholesalers,
retailers and consumers into a unified system. A well-managed supply chain can significantly
reduce a company’s operating expenses and increases supply chain surplus. Hence, it drives up
profits. Supply chain management works by coordinating procurement, suppliers, manufacturing
facilities, retailers, distributors and customers as they move together through the production,
sales and buying cycles. The supply chain requires active management because it is affected by
many factors outside the control of the business, such as gas prices, pandemics and
environmental conditions. When a company is acutely aware of those factors, it can manage
them more effectively.

Modern supply chains are often complex with a lot of moving parts, and each stage involved in
the production flow can affect the performance and success of the business. That’s why supply-
chain risk management has never been more important. With so many stages and suppliers
involved in supply chains, disruptions and vulnerabilities can occur at any point. Risks need to
be assessed, monitored and managed to avoid disruptions. It will also ensure the stability of
performance, compliance and reputation of the business.

With the globalization of supply chains, the complexity within supply chain has increased,
substantially. However, business strategies such as outsourcing, supplier consolidation, and low-
cost sourcing offer immense opportunities but have several risks associated with them. This has
forced decision-makers to think about the importance of supply chain management. Decision-
makers have also been forced to find out the best practices to mitigate supply chain risk.

With companies across the globe focusing on becoming more efficient, supply chains have
become extremely vulnerable to risks. Most firms fail to perform an effective supply chain risk
assessment before outsourcing their products and services. At times, they simply rely on annual
risk registers, which are usually created for insurance companies. A failure to identify and
minimize these risks can lead to supply chain disruptions and profit losses. By improving supply

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chain risk management capabilities, companies can easily analyze dynamic factors that may lead
to risks.

International trade leads to global supply chains. Here, risks are inherent in supply chain
management (SCM). Globalization and trade openness have intensified the vulnerability in SCM
and amplified the risks. It is to be noted that the fiscal value of supply chain expenditures is the
maximum in manufacturing organizations (Al-Doori and Ahmed, 2019). Nevertheless, SCM
risks are presumed to be non-monetary risks in the traditional sense of risk in the finance and
insurance industries.

Supply Chain Risk management refers to the implementation of strategies and plans to manage
supply chain networks through constant risk assessment and decrease vulnerabilities to guarantee
flexibility in supply chains. All supply chains do not have the same risks, but some risks are
common. The risks are also specific to an area of business or the field of study (Fan and
Stevenson, 2018). A supply chain is as strong as the most vulnerable member of the supply
chain. Therefore, the longer a supply chain, the greater the risk of failure of the supply chain.
Supply chains have many players. A high number of players present more risks in the supply
chain (Oliveira et. al., 2019). However, building a robust supply chain is expensive (Fahimnia et.
al., 2018). Numerous research articles have suggested the need for such supply chains risk
management due to the magnitude of the adverse effects of risk on its performance (Govindan et.
al., 2020).

Supply chain risk management (SCRM) is a methodical and phased tactic for recognizing,
evaluating, ranking, mitigating, and monitoring possible disruptions in supply chains (Tummala
and Schoenherr, 2011). SCRM is an important fact because of an event’s cascading impacts on
logistics networks (Revilla and Saenz, 2017). Some examples of such events include September
11, the Gulf War, the outbreak of a pandemic (e.g., bovine spongiform encephalopathy, and
coronavirus disease 2019, COVID-19), the millennium bug. These disruptive happenings have
forced practitioners to discover the vulnerabilities in supply chains and assess risks.
Vulnerabilities in a supply chain depend on the supply chain mainly (Li et. al., 2021). Moreover,
the COVID-19 pandemic has resulted in disruption to the mechanism of most economies,
regardless their size and phase of development.

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There are different types of risks associated in supply chain. Examples of supply chain risks are
globalization, shorter product lifecycles, multifaceted networks of trade partners located in many
countries, uncertainty in market demands, cost pressures, outsourcing, and offshoring (Kotabe
and Murray, 2004; Tam et. al., 2007). The intricacies of SCM are increasing. Moreover, the
networks are becoming more multifaceted. As a result, more uncertainty is accumulating in the
business atmosphere (Mustafa and Irani, 2014). These represent risk events in supply chains that
impact the entire supply chain network (Gaonkar and Viswanadham, 2007). A risk event is an
indicator of a threat that disrupts a supply chain (Marley et. al., 2014). Global supply chains have
many challenges and greater risks (Kleindorfer and Saad, 2009). This requires greater
transparency and sharing of information among supply chain players (Saberi et. al., 2018).

Global production practices have changed due to globalization and nations’ economic
engagements with partner countries. These have increased complexities and various forms of
risks in supply chains. Organizations have created warehouse facilities, production plants, and
fulfillment centers across countries to achieve cost benefits, access to cheaper raw material
sources, or specialist skills and capabilities (Buckley, 2009). The distribution centers in the
modern era of global supply chains are also known as fulfillment centers. A fulfillment center is
where customer demands are fulfilled. Therefore, these centers must be efficient because these
centers’ efficiency affects the entire SCM value (Håkansson and Persson, 2004). Significant
emphasis is to be employed on the impact of disasters distressing the supply chain and ensuring
effects on operational performance (Gurtu and Johny, 2021). Craighead et. al. (2007) suggested
that, “supply chain interruptions and the associated operational and financial risks represent the
most pressing concern facing firms that compete in today’s worldwide marketplace.” Risk in a
supply chain is “the likelihood of an adverse and unexpected event that can occur, and either
directly or indirectly result in a supply chain disruption” (DuHadway et. al. 2017). However,
there is a difference between disruption and risk. Disruption is an indicator of risk in supply
chains. Nonetheless, risks exist without disruption. The 2011 tsunami in Japan affected the auto
industry globally for months. Furthermore, floods in Thailand later in the same year affected the
supply chains of semiconductors and auto manufacturing plants in Thailand (Chongvilaivan,
2021).

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Risks cause disruption, which ripples through the network of the supply chains. SCRM ensures
the smooth functioning of supply chains (Lapko et. al., 2018). Risk can be termed as
vulnerability, uncertainty, disruption, disaster, peril, or hazard. A lack of foresight about a likely
disruption in a supply chain and its causes makes a supply chain vulnerable, and the SCM
leaders less effective (Lechler et. al. 2019). Uncertainty and risk have been used interchangeably
in SCM. Uncertainty has more than one possibility and, therefore, is difficult to calculate (Peck,
2006). Risk comes from uncertainty, which has a few possibilities (Perminova et. al., 2008).
However, risks can be quantified. SCRM is a strategic view of supply chains in an organization,
and SCRM includes supply chain security (Lavastre et. al., 2014).

Sustainability factors (economic, environmental and social) will have a larger influence on how
supply chains are designed in the future (Markley and Davis, 2007). This also leads to an
inference that noncompliance with sustainability factors could provide supply chains risks
and disruptions (Świerczek, 2014). Risks derived from enhanced reverse logistics activities for
remanufacturing and recycling of materials and new government legislations on supply chains
will be an important area for future research (Marsillac, 2008). Hence, although companies are
increasingly focused on remaining profitable, there is greater need to mitigate risks and
implement sustainability practices.

Holistic supply chain risk management is found to be lacking in current literature and
systems approach has the potential to guide in that direction. An integrated approach to SCRM
needs to incorporate the risk issues from industry practice (Tarei et. al., 2020). Research on
redesigning SC strategies is a fertile area in current global, uncertain and dynamic environment.
It is to be noted that there is no paper exists which relates product life cycle to SCRM. Quality
risks like vehicle recalls, poor customer service are regular and primarily associated with the
design and development aspects in the product lifecycle management (Marucheck et. al., 2011).
The multidimensional perspective focusing on management processes, risk dimensions, impact
flows and mitigation alternatives are some emerging issues corresponding to supply chain risk
management.

Based on the discussions above, following research questions have been developed:

1. What kind of risks in the supply side of KAFCO supply chain can be identified?
2. How can supply side risks of KAFCO supply chain be assessed?

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 3. How can supply side risks of KAFCO supply chain be mitigated?

2.0 Methodology
Research philosophy: In this research, Interpretivist research philosophy will be adopted.

Research approach: In this research, Inductive research approach will be adopted. Inductive
reasoning works by moving from specific observations to broader generalizations and theories.

Research design: In this research, Case study type research design will be used.

Research method: In this research, mixed type (Qualitative and quantitative) research method
will be used.

Data collection and data analysis: In this research, data collection and data analysis will be
Case analysis type.

3. Tentative result
The tentative result of this research is to find out the connection of SCRM on product life-cycle
in process industry. When the connection will be established, the types of risks will be identified
and finally, the required steps to mitigate those risks will be identified. The overall result will be
the identification and mitigation of supply chain risk in process industries.

4. Timeline
The tentative timeline for this research is as follows:

Literature review: 20-25 days

Data Collection: 15-20 days

Data Analysis: 15-20 days

Result Analysis: 10-15 days

Report preparation: 10-15 days

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 Total: 70-95 days

This timeline may vary due to unavoidable circumstances. So, a 10% time allowance is expected.

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