Title: Translating the supply chain uncertainty into a firm new value

Authors: Federica Cucchiella, Massimo Gastaldi, Arunachalam Subramaniam, Tom Page

Addresses: Department of Electrical and Information Engineering, University of L'Aquila, Monteluco di Roio, L'Aquila 67040, Italy. ' Department of Electrical and Information Engineering, University of L'Aquila, Monteluco di Roio, L'Aquila 67040, Italy. ' University of East London, Longbridge Road, Dagenham, Essex RM8 2AS, UK. ' Department of Design and Technology, Loughborough University, Loughborough, Leics LE11 3TU, UK

Abstract: In recent years, the supply chain has attracted much attention from researchers because effective management of the supply chain enables a firm to gain a competitive advantage within the marketplace. Furthermore, the development of the new technologies has created increased complexity over the management of supply chain. Nevertheless, such technologies cannot eliminate every source of uncertainty and their connected risks in the network. For this reason, in this paper, a methodology is put forward, based on the theory of real options which can be applied to protect the supply network from risks that it faces. The paper considers the increasing relevance of the supply chain on business performance. In addition, it examines the sources of uncertainty inside the supply chain for every source of uncertainty, the associated risks are identified and links among them and real options are examined. Finally, the paper concludes with an useful framework identifying the type of possible options a firm can take in order to protect it from the risks growing from every source of uncertainty.

Keywords: supply chains; supply chain management; SCM; real options; supply chain uncertainty; new value; supply chain risk; business performance.

DOI: 10.1504/IJASM.2008.021209

International Journal of Agile Systems and Management, 2008 Vol.3 No.3/4, pp.192 - 215

Published online: 11 Nov 2008 *

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