The Supply Chain Risks

Words: 1912
Topic: Business & Economics
Updated:

Background information

The stiffening competition among firms in the various industries has necessitated the need to manage the supply chain. Supply chain management refers to the management of the entire process of acquisition of the required resources. It involves the effective management of the labor and material supplies to achieve savings through their timely delivery (Kerzner, 2013).

Managing the supply chain by the project managers is a hectic task due to the lack of literature on the topic. In managing the supply chain, the managers must have the right skills to identify and solve the risks associated with the supply chain.

The risks in the supply chain include every risk that compromises with the effective supply of the necessary raw materials (Kerzner, 2013). This paper proposes research into the risks imminent in the supply chain concerning projects.

Problem statement

The contemporary project managers are faced with various challenges when dispensing their management functions. The managers have to manage the numerous risks that come along the way. In that regard, they have to possess the necessary skills to enable them assess the risks and devise ways to deal with the issues.

The numerous risks associated with project execution often causes delays in the completion of the projects. The delays are often associated with increased costs limiting the profitability of the concerned firms. Meredith and Mantel (2011) identify the following risks as the major risk factors that project managers have to deal with

  1. Risks emanating from Acts of God
  2. Physical factors
  3. Political factors
  4. Changes in legislations
  5. Design constraints

The importance of identifying and managing the project risks associated with the supply chain has not received much attention from researchers. Most researchers have focused on the general risks involved in projects, but they tend to overlook the specific risks inherent in the supply chain. This research shall seek to unravel the risks inherent in the supply chain.

This paper proposes research designed to unravel the various risks associated with a project’s supply chain and uncover the solutions. In the achievement of the stated purpose, the research shall utilize both the qualitative and the quantitative research methods to collect and analyze the relevant data.

Why the topic is important

The topic of project risks has attracted numerous studies over the past few decades owing to the increased number of projects in the construction industry. Many project managers have stated the challenges they encounter in the process of ensuring the successful execution of projects. The researchers who have embarked on research on this topic have generalized the risks, and they have ignored the specialty of the risks in the supply chain management (Kerzner, 2013).

This research paper seeks to identify the risks associated with the supply chain as opposed to the general risks that project managers face. The study seeks to add to the existing knowledge regarding the effective management of the supply chain regarding projects.

When is the research going to be used?

This study is scheduled to continue for 6 months to allow for the collection and analysis of all the data. The research shall offer recommendations based on the findings from both the interviews and the literature review. The research is scheduled to commence in January 2015, and it will be completed in June the same year. In that regard, the findings shall be published in July 2015.

Who shall benefit from the research?

This research seeks to add to the existing literature regarding the management of project risks associated with the supply chain. Upon the publication of the findings and the recommendations thereof, all project managers in the globe shall benefit from the additional knowledge provided by the study.

How is the research going to be conducted?

Both the quantitative and the qualitative research methods shall be employed in this study to collect and analyze data. The application of the two methods shall be explained in details later in this paper.

Where will the research be conducted?

The study shall be conducted in the Miami city in the US. The selection of the city is informed by the fact that the city hosts major construction firms owing to the numerous construction projects that are ongoing in the mentioned city.

Literature review

Marcelo-Coho and Fernandez-Diego (2007) state that Risks under the purview of the Acts of God denotes all the uncertainties emanating from the natural environment and which cannot be controlled by the humans. The risks include heavy rains, earthquakes, floods, and other natural calamities.

The occurrence of any of the listed events may cause delays in the supply of the construction commodities thus delaying the completion of the project. The stoppage of the operations may cost the construction firm huge amounts of money since the firm continues to incur the standing costs even as the construction is not ongoing. The standing costs include the salaries of the permanent employees, rental expenses, licensing fees and other similar costs.

The other form of risk falls under the purview of physical risks. Physical risks according to Khan and Burnes (2007) include all the risks present in the construction site. Such risks emanate from injuries to the workforce inflicted by the machines and equipment involved in the execution of the project.

During the process of project execution, the employees operate dangerous machines that may inflict injuries or cause death to them. The infliction of such injuries may result in the poor supply of labor due to the incapacitation caused by the injuries. In that regard, the project managers must use their management skills to detect and deter such risks before they service.

The design constraints refer to the challenges emanating from the workforce, and they may include poor skills by the workforce, poor communication, and poor motivation (Meredith & Mantel, 2011). Employees are the suppliers of technical and manual labor capital and deficiencies in their productivity may lead to delays in the completion of the project.

Managers need to recruit the best employees and ensure that incentives exist to motivate them to work to achieve the objectives set by the project manager. Communication failure between the project manager and the engineers and the manager may equally hamper the execution process leading to cost overrun.

Kerzner (2013) identifies changes in the legislations as one of the great challenges that affect the execution of a project. Legislations keep on changing depending on the political atmosphere evident in the execution period of a project. Changes in the procurement laws may specifically affect the supply chain in that the costs for the basic materials and equipment may increase.

The increase in the cost of such items leads to financial constraints since the budgeted amount may exceed the actual costs. Changes in the legislations may result in changes in the procurement formalities. Such changes may result in delays in the supply of the essential commodities causing stoppages in the operations. Such delays in turn increase the costs, and they may interfere with the completion of the critical path activities.

Methodology

Research question

The research question for this study shall be “what supply chain risks are associated with project execution?”

Participants

The study shall recruit respondents from a cross-section of project managers from reputable construction firms in Miami. Fifty CEOs and managers of construction companies shall be recruited for this research. The participants will have to meet the following inclusion criteria:

  1. One must have a minimum of 5 years as a manager or a CEO of a construction company
  2. One must be well versed with the supply chain risk

The language shall not be considered as an inclusion criteria and instead a translator shall be hired for non-English speakers

Qualitative methods

The study shall recruit a sample population from among the engineers involved in the construction and other forms of projects. The construction industry is one of the sectors that face numerous risks due to the huge amounts of finances and the length of time involved. In that regard, the study shall recruit 50 project managers drawn from a cross-section of construction firms in Miami.

The qualitative method involves the use of interviews and questionnaires to collect data from the participants. Each participant shall be required to fill in questionnaires containing pre-formulated questions designed to unearth the risks associated with the execution of the various projects.

Since the study aims at determining the risks involved in the supply chain management, the questions shall focus on the risks evident in the supply chain. Some of the questions that will be posed in the questionnaires include:

  1. What are the specific risks associated with the supply chain
  2. How do you manage the risks?
  3. How do you assess the risks?

Interviews shall be conducted on each participant whereby each person shall be allowed 45 minutes to respond to the questions posed by the study panel. Interviews shall be conducted on a one-on-one basis for the contractors who will not have a tight schedule. Telephone calls, emails, and the Skype shall also be used to collect data from the participants depending on their preferential mode.

Quantitative methods

The quantitative method shall involve a review of the literature to find out the risks associated with project execution. Twenty-five (25) articles shall be reviewed in this study. To qualify for inclusion, an article will have to meet the following criteria:

  1. It must identify the supply management risks associated with projects
  2. It must be based on research findings
  3. It has to be authored within a period of 10 years

Justification of the methods

The study shall use both the quantitative and the qualitative research methods to unravel the risks inherent in project management. The use of the two methods contemporaneously will allow the collection of reliable and verifiable data that will facilitate the generalization of the results. Interviews and questionnaire shall be used as part of the qualitative methods whereby the research team shall conduct one-on-one interviews to unravel the risks.

Interviews give first-hand information regarding the topic in question, and they allow the researchers to seek clarification on the various issues that present in the course of the study (Khan & Burnes, 2007). Literature reviews, on the other hand, allows the acquisition of varying opinions regarding the topic of study. The two methods shall thus facilitate the acquisition of reliable data for the topic under investigation.

Limitations

Data collection shall be done from a sample population of 50 contractors drawn from Miami. The sample size is too small to provide reliable results that may facilitate the generalization. The research shall only act as a foundation on which future researchers may base their studies to unravel the risks associated with the supply chain.

Language barriers may also hinder the collection of reliable data. It is important to note that the services of a translator may be inevitable for non-English speakers in this study. In that regard, important data may be lost in the process of the translation leading to the collection of unreliable data. Lastly, the participants shall be drawn from contractors in Miami city. The limitation of the sample population to one city may limit the quality of data collected since the risks vary from one project to another.

Future research

The future researchers should recruit a larger sample size from a cross section of construction firms situated in different parts of the globe to collect reliable and voluminous data on which to base their research. The use of a larger sample shall facilitate the collection of large amounts of data that may allow for the generalization of the results.

References

Kerzner, H. R. (2013). Project management: a systems approach to planning, scheduling, and controlling. New York, NY: John Wiley & Sons.

Khan, O., & Burnes, B. (2007). Risk and supply chain management: creating a research agenda. The International Journal of Logistics Management, 18(2), 197-216.

Marcelo-Coho, J., & Fernandez-Diego, M. (2007). Risks and Project Management. The European Journal of the Informatics Professional, 4(8), 36-41.

Meredith, J. R., & Mantel, S. J. (2011). Project management: a managerial approach. New York, NY: John Wiley & Sons.