Value focused process engineering

Supply chain risks contribute to the overall business risks. An example that illustrates this arises in strategic outsourcing engagements. Firms outsource for a variety of reasons$-$cost reduction, need for strategic agility, innovation and to increase their ability to respond to rapidly changing customer demands. In the case of innovation based outsourcing engagement, achieving business objectives requires effective use of integrative supply management practices. These include information integration, knowledge integration and design integration. It is apparent that in these engagements, there is risk of knowledge leak, since the firms cannot have complete control over knowledge inflows and knowledge outflows. In this situation, while the firm might achieve its innovation objective, it might run the risk of disclosing proprietary knowledge that might reduce its competitiveness in the future or the firm might find itself in a "lock$-$in$"$ situation with the supplier. These supply management risks must be carefully identified and evaluated vis$--$vis the business objectives. Some of these issues have been considered in the literature $($Christopher and Peck, $2004$; Narasimhan et al$.,2008$; Gaudenzi and Borghesi, $2006).$ The strategic outsourcing context is but one instance where the need to identify and relate risks to supply chain activities is manifested.

In the article "Supply Chain Risk Identification with Value$-$Focused Process Engineering," the authors explicate a novel methodology for identifying process$-$based supply chain risk. The importance of supply chain risk identification methodology has been recognized in the literature. As the authors comment, it is important to have a coherent representation of supply chain structure and use it to express how different risks are related to the various components of the supply chain structure. It is also essential to classify the nature of the risks before embarking on full blown risk assessment and developing risk mitigation strategies. The paper addresses supply chain risk management under the rubric of managing organizational uncertainty.

Much of the literature on supply chain risk has dealt with various types of risk and sources of such risk $($Norrman and Lindroth, $2004$; Speckman and Davis, $2004).$ They have not taken a multidimensional view of risk that encompasses supply management processes, objectives and risk source. It is recognized in the literature