In seeking cost reduction and competitiveness, firms have resorted to globalisation and outsourcing, which have led to increased connectivity and interdependency (Amoo Durowoju, Kai Chan & Wang 2012:999; Le, et al. 2013:783). As a result, risk exposure has increased because of shorter product life cycles, higher dependency on suppliers and other external players in their supply chain. These affect supply chain performance by disrupting the smooth flow of materials and information in the supply chain in turn causing financial losses (Chakravarty 2013:39; Punniyamoorthy, Thamaraiselvan & Manikandan 2013:80; Rajesh, Ravi & Venkata Rao 2014:246).

According to Liu, Lin and Hayes (2010:224), risks are any exposure posing a threat to the existence of a business (Spiegler, Naim & Wikner 2012:6162). Firm risks can be divided into four main areas, namely financial, operational, strategic and compliance risks. However, supply chain risks comprise disruptions that interfere with the consistent movement of materials, information and finances, which may negatively influence the achievement of a firm’s goals, as well as the supply chain, with regard to cost, quality and time (Colin et al. 2011:840; Hofmann et al. 2014:162; Spiegler et al. 2012:6162). According to Wilding et al. (2012:413), supply chain risks are categorised as internal and external risks. Internal risks include forecast inaccuracy, worker accidents, distorted information, quality issues and capacity cost, while external risks include price fluctuations, plant fires, labour disputes, customs and regulations and economic downturns (Dash Wu, Olson & Dash Wu 2010:698; Lin & Zhou 2011:177).

Risk drivers are the sources of supply chain risks. They determine the degree of risk and have different avenues from which they arise: from internal operations, the supply chain and the external environment (Olson & Wu 2011:402; Pfohl, Köhler & Thomas 2010:35). The drivers from the external environment include wars and global financial crises. Drivers from internal operations include product quality capabilities and financial solvency, and supply chain drivers include globalisation and increased outsourcing (Dash Wu et al. 2010:695; Thun, Drüke & Hoenig 2011:516).

Real-world business scenarios of risks and their effects include Toyota’s recall of gas pedals (Choy et al. 2011:1004; Rotaru, Wilkin & Ceglowski 2014:1246) and Boeing’s shortage of building parts for the 787 planes because of a disruption with their Advanced Integration Technology (Saghafian & Van Oyen 2012:834). Apple suffered a shortage of DRAM chips because of an earthquake in Taiwan leading to customer loss (Amundson et al. 2013:3944; Chakravarty 2013:39; Liu, Li & Wu 2014:1201). A port strike that lasted 40 days in Hong Kong from April to May 2013 also disrupted the movements of goods affecting lead time of various firms whose operations passed through the port (The Global Supply Chain Institute 2014:23).

The Barloworld supply chain foresight reported that labour unrest and inefficiency of ports and harbours in South Africa are a few of the major risks faced by South African firms. Furthermore, the report stated that South African firms tend to apply reactive strategies when faced with such challenges instead of anticipating and aligning the firms’ strategies to be flexible and responsive to changes occurring in the market. The lack of effective processes within firms was cited as a constraint to implementing proactive strategies to mitigate risks (Barloworld 2014:16).

Because of the above-mentioned risks and their negative effects on firm operations and performance, firms need resilience capabilities to avoid, mitigate and reduce the effects of disruptions (Johnson, Elliott & Drake 2013:333; Urciuoli et al. 2014:57). The need for resilient firms in South Africa, especially, is evident and this research aims to address this issue by studying South African grocery manufacturers; the SCRM processes they have in place; and importantly, to determine whether the supply chain resilience capability is present as a result of these processes.

As mentioned previously, supply chain resilience has been growing as a research focus because of its importance in preparing firms for disruptions that negatively affect their supply chain productivity, profitability and competitiveness (Töyli et al. 2013:311; Urciuoli et al. 2014:47). It is therefore necessary to discuss supply chain resilience within risk management.

Supply chain resilience is an adaptive capability that enables preparation for unexpected events, counters disruptions and returns operations to a stable state through continuity of operations at the expected level of connectedness and control over structure and function (Johnson et al. 2013:325; Ponomarov & Holcomb 2009:131; Töyli et al. 2013:301). Resilience is not only reactive but also a proactive, structured and an incorporated consideration of proficiencies that a supply chain possesses to deal with unforeseen events (Johnson et al. 2013:333; Wilding et al. 2012:404).

Supply chain resilience consists of two main capabilities, namely flexibility and redundancy. Redundancy focuses on limiting risks and its consequences by keeping reserves such as safety stock and sourcing from multiple suppliers (Jüttner & Maklan 2011:247; Zsidisin & Wagner 2010:3). Flexibility ensures speedy responses to risk that may materialise. From a supply management context, firms can invest in strong buyer–supplier relationships that motivate suppliers to take extraordinary measures to mitigate risks (Mensah & Merkuryev 2014:316; Zsidisin & Wagner 2010:3). Thus, to increase resilience, businesses should invest in mechanisms that facilitate both flexibility and redundancy. This is because a strategy that implements only redundancy or only flexibility would increase the risk occurrence costs (Wieland 2013:660). While the two capabilities are both important, their applicability in terms of the risks differs. Redundancy is preferable for everyday risks because of high frequency of occurrence and low impact while flexibility is preferable for exceptional risks usually of low probability and high impact which require rapid response (Kumar, Himes & Kritzer 2014:887; Wieland 2013:662). Other capabilities facilitating resilience include visibility, collaboration and velocity (Jüttner & Maklan 2011:252). By applying these capabilities to the supply chain, risk impact is reduced. The capabilities of resilience are intertwined with those of SCRM because they mitigate risks throughout the supply chain (Leat & Revoredo-Giha 2013:229). Additionally, some research shows that SCRM is the most pronounced resilience driver because it builds coordination within relationships in the supply chain which are essential to building resilience (Breuer et al. 2013:332; Jüttner & Maklan 2011:255; Töyli et al. 2013:312).

SCRM is the implementation of strategies that assist in managing both daily and exceptional risks facing the supply chain through continuous risk assessment to reduce vulnerability and ensure continuity (Breuer et al. 2013:333; Wieland & Marcus Wallenburg 2012:888). The relationship of SCRM to resilience has been supported in literature. For example, risk-oriented actions such as supply chain risk effect management and supply chain risk knowledge management have been shown to have a positive impact on resilience capabilities such as flexibility, velocity, visibility and collaboration (Jüttner & Maklan 2011:252; Töyli et al. 2013:310).

Apart from strategies that may be implemented to manage risks in the supply chain, SCRM also comprises the SCRM process. Xie et al. (2011:477) construe the SCRM process to include risk identification, risk assessment, risk mitigation and risk monitoring, as illustrated in Figure 1. These steps equip managers with strategic information to select strategies that mitigate different risks to improve overall performance of the supply chain (Chapman, Bernon & Haggett 2011:1030; Xie et al. 2011:481). The four phases are discussed in the next sections.

A descriptive qualitative research design was adopted for the study. This research design provides rich and detailed information from the participants’ perspective and experiences on the focal topic (Neergaard et al. 2009:2). The thematic analysis technique used in this research design was flexible and therefore allowed the researcher to discover new insights through the use of semi-structured interviews (Sandelowski 2000:338).

The unit of analysis for this study was FMCG grocery manufacturers in South Africa. Homogenous sampling was used where resembling individuals and sites were selected based on their capacity to provide rich information that assisted in understanding the focus topic (Creswell 2012:206–208). Supply chain executives, general managers and logistics directors were among the participants interviewed in the study. For purposes of collecting relevant information, the interviewee selection was of utmost importance. Participants had to possess strategic and operational knowledge of the firm’s supply chain and willing to share openly on risk, disruption and the mitigation strategies used. This specific sampling also permitted the understanding of the FMCG grocery manufacturing industry with product categories including frozen, canned and packed foods, confectionary, beverages, hygiene and personal products. Because of the sensitive and perishable nature of these products, the industry is vulnerable to a number of disruptions.

Twelve firms participated, permitting a total of 12 face-to-face semi-structured interviews. The final sample size was decided based on the guidelines by Guest, Bunce and Johnson (2006:61), stating that 6–12 interviews are satisfactory for the development of meaningful themes, valuable interpretations and the occurrence of saturation in the data, whereby no more meaningful information is drawn out of the interviews and information obtained from further interviews proves to be repetitive. Data saturation occurred on the tenth interview conducted in this study.

Based on the literature review, a discussion guide was compiled followed by a pilot study with one industry practitioner to verify the suitability of the questions as well as the probable duration of the interviews. From the pilot study, minor changes were made to the discussion guide, allowing for the initiation of data collection. Twelve face-to-face interviews were conducted at the participants’ offices. In approaching the participants, the researchers made telephone calls, which were followed by an email with the discussion guide and informed consent form attached. A convenient time and venue were arranged through email and telephone calls.

Each interview started with a brief introduction of the interviewers, the purpose of the study, clarification of confidentiality and anonymity and a request to digitally record the interview. Each interview lasted about an hour. The researchers transcribed 10 of the 12 interviews. Two remaining interviews were transcribed, proof read and certified by a transcription service because of time constraints. The researchers checked all transcriptions while listening to the digital recording and made changes where mismatches were found with the digital recordings. The participant profiles are shown in Table 2.

A thematic analysis was conducted to analyse the data collected in this study. Thematic analysis identifies, organises and reports patterns within data called themes. It is flexible enough to provide rich and detailed accounts of data (Braun & Clarke 2006:79; Penney et al. 2011:3). Initial exploratory analysis was carried out by listening to the digital recordings and matching against the transcripts in order to familiarise and engage with the data and generate codes (Creswell 2012:243). Sections of the data that included applicable information were labelled to outline the meaning of the section in particular. A broad list of codes, forming patterns, was generated and an analysis was performed to select and combine related codes. Thereafter, the related codes were combined to form bigger themes, which provided deeper meaning. The final themes were determined through their applicability in answering the study’s research questions (Braun & Clarke 2012:6365).

The research reliability is supported through a detailed description of the research design to enable the replicability of the research by future researchers. A descriptive background to the study was provided, an interview discussion guide was developed and the process for data analysis was discussed. A rich, thick description of the sites and participants was provided followed by the deliberate use of verbatim quotes from the participants which added to the authenticity of this study (Polit & Beck 2012:595). Furthermore, to ensure credibility, peer debriefing sessions were held with detached individuals at the researcher’s university. The study was scrutinised by an experienced supply chain academic and a research methodology expert to eliminate any biases and preferences by the researchers. A detailed explanation of the grocery manufacturers who participated in this study was provided by clearly indicating the various product categories represented by each manufacturer. An audit trail, including the interview transcripts, recordings as well as the themes and subthemes, was kept. Furthermore, triangulation through individual interviews whereby some company documents on risk assessment were provided to supplement information gathered. Interviewing 12 participants from the 12 firms provided verification of the SCRM practices across grocery manufacturers because many of the practices were repeated in different firms.

Risk identification is the first essential step of the SCRM process whereby potential risks are identified and relationships established between internal and external risks (Breuer et al. 2013:335; Sachdeva et al. 2012:83). Under risk identification, two subthemes are discussed, namely risk drivers and risk identification tools. Fourteen risk drivers were identified during the study. These were divided into internal and external risk drivers. Internal risks are risks associated with decisions and actions taken from within a firm, while external risks are those that are out of the scope of control of the firm (Trkman & McCormack 2009:247; Zamora et al. 2012:396). Typically, firms employ different methods to identify risks and these are discussed next.

Most of the firms investigated lacked formal risk identification tools. The tools were both reactive and proactive. Reactive methods discover risks only after they have occurred, while proactive methods discover risks before they occur (Scholten et al. 2014:216; Thun et al. 2011:5514). The reactive method to risks is illustrated by the following quotes:

Yeah so I think identifying the risks uhmm … (Pauses) yeah reactively is always easy because it kind of hits you in the face. (P1, Male, Planning Manager)

And then you get your ad-hoc ones that just happen and then you go into a bit of a crisis management. (P3, Male, Customer Service and Logistics Director)

Proactive methods consist of FMEA, feedback, audits, brainstorming and observations. Feedback, for example, is illustrated in this quote:

So we get you know continuous feedback. We try and develop sort of contingency plans ahead of time and we expect our suppliers to do the same. (P6, Male, Integrated Business Planning Manager)

In the South African context specifically, it was found that labour risks are reoccurring, and as such these risks are identified from experience. This method of risk identification was not identified in previous literature. A reason for this could be that experience as well as reoccurrence of the labour unrest risk is specific to the South African context. The quote below illustrates this point:

probably through experience have learnt what are the things that we need to watch out for so we would uhm have plans in place by our own labour unrest … So we know once a year your wage negotiations that’s a volatile period. (P3, Male, Customer Service and Logistics Director)

These methods assist grocery manufacturers in South Africa to identify potential risks for mitigation.

Risk assessment assists firms to prioritise risks based on likelihood, frequency and the impact (Amundson et al. 2013:3945; Bandaly et al. 2012:265). In order to understand risk assessment, two subthemes were investigated, namely the risk assessment scales and risk assessment tools implemented by firms.

Risk mitigation centres on formulating strategies that reduce the risk impact and likelihood or both (Liu et al. 2014:1203; Sodhi et al. 2012:6; Wagner & Neshat 2012:2888). These strategies are categorised according to redundant and flexible strategies which are appropriate for different types of risks (Kumar et al. 2014:887; Wieland 2013:662).

Redundant strategies identified included safety stock, strategic stock and centralisation. Examples of safety stock and strategic stock are illustrated respectively:

Yes. So example, the potential Transporter’s strike that’s happening now in August, we would definitely increase our stock levels in case it was going to be a full-blown strike that we couldn’t service retail. (P8, Male, International Supply Chain Manager)

In times we know there’s gonna be an event like strikes and stuff we will then preposition stock to then just lift the whole supply chain. We can’t keep it at one site so we’ve got a few key 3PL warehousing companies that helps us with flex. But obviously, you speak to your customer’s right? Again, you preload them as well. (P2, Male, Supply Chain Executive)

The second sub-theme of flexibility strategies is discussed in the following section.

The most frequently mentioned flexibility strategies were multi-sourcing and flexible distribution. These can be shown respectively in these participant quotes:

… we are always make sure that we have more than one supplier for a specific good or service … and it’s normally up to three suppliers. (P12, Male, General Manager: Supply Chain)

So when we enter the contract with the 3PLs, within the 3PL contract we’ve got various models. So you move from a fixed dedicated fleet that is yours full-time that’s operated by a third party into a model where you only make use of a broker from external. So again it gives you flexibility as well. So if broker A can’t help you, you’ve got broker B, C, D, E, F on the books. (P3, Male, General Manager)

The use of flexibility and redundant mitigation strategies in reducing the impact and likelihood of risks faced in firm’s operations is supported in literature (Kumar et al. 2014:887; Wieland 2013:662).

One firm lacked multi-sourcing strategies, which increased their vulnerability shown by:

Yeah you have supplier risks in terms of so the biggest issue that we have is um kind of all our eggs are in one basket if you get where I’m coming from. We haven’t got a broad base of suppliers. So the risk is that the supplier can literally do with us what he wants to when he wants to. That’s the biggest risk right. (P11, Male, Integrated Business Planning Lead)

In the process of selecting mitigation strategies, there are some criteria on which strategies are assessed to find the most appropriate strategy for the risk at hand (Diehl & Spinler 2013:317; Kumar Sharma & Bhat 2014:1032). Some of the criteria mentioned by the participants included cost, risk and customer service. Cost and customer service were the often repeated factors to consider when selecting a mitigation strategy. Cost and customer service are supported by these statements respectively:

So it really boils down to the bottom line effect to the business and it’s a financial decision at the end of the day. (P6, Male, Integrated Business Planning Manager)

The potential cost of lost sales, should the risk materialise versus the cost of holding that additional stock, yeah those, that’s the simple calculation. (P10, Male, Supply Chain Manager)

These criteria are representative of the cost–benefit analysis shown by the literature as factors to consider when selecting a mitigation strategy (Diehl & Spinler 2013:317; Kumar Sharma & Bhat 2014:1032).

Risk monitoring is the final process of the SCRM process. Risk monitoring assesses the effectiveness of mitigation strategies, seeks to correct deviations and discovers new strategies that mitigate risks (Saghafian & Van Oyen 2012:835; Xie et al. 2011:480). Three themes were observed and are discussed in the following sections.

In the study, some of the tools mentioned included benchmarking, supplier site reviews and market analysis. These assisted them to monitor risks both within and outside their operations. The main focus of risk-monitoring activities was suppliers, although some firms identified monitoring activities that they carried out on their retailers. The use of assessment tools is highlighted below:

The other way we find out is that we oversee on a regular basis from time to time do benchmarking exercises so we go out there and do not benchmarking but we also do market analysis, try to figure out what’s going on out there in the market and bottom end, what is going to happen to it in the next couple of years and so forth you know. So and those factors tell us what’s going on in the market. (P12, Male, General Manager: Supply chain)

Therefore, some of the tools identified in this study are similar to those identified in literature (Curkovic et al. 2013:25; Scannell et al. 2013:372).

Firms perform monitoring activities on their partners and risks on a daily, weekly, monthly, quarterly and annual basis depending on the risk type. The participants’ statements showing their risk-monitoring activities in their operations and their partners are:

And those operational risks, there are some that we look at on a weekly basis, some we look at on a daily basis. (P9, Male, Plant Manager)

Well, again I don’t think we do a risk monitoring. But you say like a price increase or a promotion that’s likely to happen, it’s more that we sit together, we have like a, depends on what criteria you look. We have a 3-year outlook or 1-year or 3-months or a few weeks outlook. (P7, Male, Head of Supply Chain)

Grocery manufacturers in this study prioritise their monitoring activities of risks and their partners as discussed in the literature (Curkovic et al. 2013:25; Jung et al. 2011:624), based on the criticality of the suppliers. The monitoring process identifies new risks within the firm and its partners. This follows the literature on the role of the risk-monitoring process in identifying new risks (Saghafian & Van Oyen 2012:835; Xie et al. 2011:480).

Only one firm differed. They monitored their less reliable suppliers supported by this statement:

And then we’ve got some farmers who’s not as consistent, you would not, you’d probably pay more attention to them to be honest. You know you’d get the extension officers to spend more time with these farmers to make sure that they are doing the stuff right and their pivot hasn’t maybe fallen over or the pump broke and they can’t irrigate. So they might be more factors. (P6, Male, Integrated Business Planning Manager)

This is something to consider for several firms because programmes that increase the reliability of non-critical suppliers could be a benefit to the firm in cases where their more reliable suppliers may face a disruption.

Supply chain resilience describes the capability of a firm to recover from a disruption back to its normal or a better state of operation (Johnson et al. 2013:325; Ponomarov & Holcomb 2009:131; Töyli et al. 2013:301). The participants showed the role of SCRM in creating resilience as follows:

I think that, or more than a hundred years that C5 is running, I think we have very limited, where we could say we had major impacts on the business, which we could not manage or mitigate. (P5, Male, Supply Chain Development Manager)

I know safety stock is probably our biggest our biggest that helps us recover. That that is the biggest strategy that helps us recover because that ensures continuous supply. (P11, Male, Integrated Business Lead)

The study shows that the SCRM process is a resilience capability as shown in literature (Breuer et al. 2013:332; Jüttner & Maklan 2011:255; Töyli et al. 2013:312).

Despite the effectiveness of the SCRM processes in several firms in the study, one firm suffered a disruption where it was not able to recover back to its normal steady state. Interestingly enough, this firm did not have a formal SCRM process in place. An illustrative quote follows describing the risk assessment tools implemented followed by an incident which occurred where the firm was unable to recover:

Um right now to be honest with you when you say tools, it’s very much, we have a management tool but a process that we use is excel based. So in other words, we don’t go there’s a system and we punch in something in the system and the system whips up something, no. (P12, Male, General Manager: Supply Chain)

There was a particular item. Now I’m not technical so in the mill, like a compressor, somebody forgot to replenish in stock into stock. The one in the mill broke down and there was nothing. A mill was not operational uh for 12 hours. That in our industry, I don’t wanna say like it’s a cardinal sin. It’s a sin. It cannot allow that kind of thing to happen… The impact of that is remember we’ve got safety stock of two weeks, 12 hours. So you can say 2 weeks minus 12 hours. You can almost never recover that in our, from our perspective…. Unfortunately, we don’t produce it in the quantities that we produced it before so it’s much smaller quantities so yes that element is an impact our ability to supply the market this year. We just don’t know by how much right now. (P12, Male, General Manager: Supply Chain)

The above example illustrates that in cases where the SCRM process was absent in a few of its steps, the firm was unable to be resilient, thus confirming that the SCRM process is indeed a capability of supply chain resilience.

The purpose of this research was to determine whether the SCRM process enables supply chain resilience within grocery manufacturers. By firstly identifying the risks faced by each grocery manufacturer, the study reveals three main risks, namely labour unrest, volatile demand and supplier risks. These risks were categorised by their frequency of occurrence and impact on the firm. It was discovered that the SCRM process elements of risk identification, risk assessment, risk mitigation and risk monitoring were present within the grocery manufacturing firms. Some risk identification methods used were feedback from customers, experience and brainstorming. Risk assessment tools included internal assessments such as joint scorecards, and external assessments included benchmarking. However, some of the firms lacked formal risk assessment tools, which is a crucial step of the SCRM process as this is the stage where risks are unidentified and the next steps are planned out. Moreover, it was discovered that supply chain risks specifically lacked attention from the firms’ executives. Priority is given to financial risks whereby formal procedures are in place.

The two main scales most often used for assessment were the likelihood of occurrence and impact of the risk. Mitigation strategies were several, and both redundant and flexible strategies were implemented by many grocery manufacturers, which are aligned with strategies for supply chain resilience. This is supported by previous literature showing that both types of mitigation are necessary for versatile risk mitigation (Kumar et al. 2014:887; Wieland 2013:662). Lastly, risk-monitoring methods identified included benchmarking and supplier reviews. These are acceptable as they directly relate to the main risks faced by the industry. Monitoring activities were carried out during different schedules such as daily, weekly, quarterly and annually, depending on the type of risk.

From the above process elements, the SCRM process and its role in facilitating resilience was shown, supported by literature from other countries (Breuer et al. 2013:333; Leat & Revoredo-Giha 2013:220). This study provides evidence for the existence of the SCRM processes of risk identification, risk assessment, risk mitigation and risk monitoring within grocery manufacturers, and it shows that aspects covered by the SCRM process are in fact in line with strategies that facilitate resilience among grocery manufacturers in South Africa. In so doing, the study adds to the scope of studies in supply chain management with regard to the SCRM process and resilience.

While most of the firms in the study implemented several SCRM processes, a few lacked formal assessment scales. Assessment scales are crucial because they prioritise risks. This, in turn, allows effective allocation of resources to mitigate the highest impact risks and prevents waste of resources on low impact, low likelihood risks. Therefore, it is imperative for firms especially those in the FMCG industry focusing on cost effectiveness to have proper risk assessment scales. Secondly, a structured approach to SCRM process is not in place at the firms although they use the process elements. A structured approach would benefit firms in the following ways; managers would have a similar basis of discussion and cooperate on risk mitigation. Thirdly, it would create a boundary between SCRM and other supply chain operations, which would assist in managing risks more effectively because there would be a focus division for risks. Fourthly, some firms could look at allocating a division specifically responsible for the SCRM process. This would create uniformity in dealing with disruptions. Lastly, supplier monitoring was most prevalent while their customers, retailers in this case, received less attention. Firms could increase their retailer monitoring through collaboration with retailers. This would, in turn, reduce some risks especially with regard to forecasting and would drive a resilient supply chain altogether.

The focus of this study was limited to FMCG grocery manufacturers. However, this provides several opportunities for future research, especially in other risk-prone contexts. Different manufacturers of consumer goods may be researched such as electronics and clothing or different industry contexts such as the automotive industry. Furthermore, the study could be replicated to include other tiers of the FMCG grocery industry, such as wholesalers and grocery retailers in order to paint a clearer picture of the SCRM processes for resilience. Because the research was based in South Africa, it would be interesting to see whether similar results would be obtained if the study were to be replicated in other countries in Africa with similar economies such as Kenya, Nigeria and Angola.