Supplier development with benchmarking as part of a comprehensive supplier risk management framework

Purpose - The purpose of the paper is to present and empirically support a theoretically sound, operational, and easy-to-implement supplier risk management framework that focuses on supplier development using a benchmarking approach. Design/methodology/approach - The paper develops a five stage framework for supplier risk management, entailing supplier risk identification, assessment of supplier risks, reporting and decision of supplier risks, supplier risk management responses, and supplier risk performance outcomes, that builds on the conceptual approach of Ritchie and Bridley and the approach of the Association of Insurance and Risk Managers (AIRMIC). The operation of the framework is illustrated in a single case study of a UK firm. Findings - The paper contributes to research in operations management and particularly in risk management in the specific field of supplier risk management. The study presents details of one of the later stages of the risk framework (i.e. management responses stage) and enhances understanding of how the development of suppliers can be conducted so as to create a viable supplier base. Research limitations/implications - As an analytical method, the use of factor analysis generally requires metric scaled data, but ordinal-scaled data were applied to it. Therefore, two-factor solution with non-metric multidimensional scaling was confirmed. In addition, the operation of supplier risk framework is demonstrated within one firm only. Further case studies are therefore needed to strengthen the research findings. Practical implications - Managers can use the supplier risk management framework to develop firm-specific risk management programs, and to create management responses that influence and improve their relationships with suppliers. The framework is fully operational, easy to implement; and facilitates proactive supplier risk management, rather than reactive crisis management. Originality/value - The study goes beyond the conceptual discussion of supplier risk management, and demonstrates the activities a firm can undertake in response to supplier risk ratings and assessments.