International Journal of Physical Distribution & Logistics Management

Key areas, causes and contingency planning of corporate vulnerability in supply chains:
A qualitative approach
Göran Svensson
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IJPDLM
34,9 Key areas, causes and
contingency planning of corporate
vulnerability in supply chains
728
A qualitative approach
Received January 2003
Revised May 2003
Göran Svensson
Accepted February 2004 School of Management and Economics, Växjö University, Växjö, Sweden

Keywords Corporate strategy, Risk management, Supply chain management,

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Contingency planning
Abstract The article examines companies’ perception of corporate vulnerability in supply chains.
The areas, the causes and the contingency planning of corporate vulnerability in upstream and
downstream supply chains are examined. The study is based on qualitative data, and it differs
from other studies on the vulnerability construct in supply chains in that most have been
quantitative. An insight of the research is that sub-contractors in the automotive industry tend to
be limited to myopic and vertical views of the key areas, and to the causes and contingency planning
of corporate vulnerability in the upstream and downstream supply chains.

Introduction
Supply chains in many industries suffer from high levels of dependencies between
companies’ business activities. In order to stay competitive, maintain cost-effectiveness,
and achieve reasonable profitability, companies have for many years used business
philosophies (e.g. supply chain management (SCM), just-in-time (JIT), quick response
(QR) and efficient consumer response (ECR)) that take into consideration time,
functional and relational dependencies between business activities in supply chains.
From time to time, these business philosophies comprise the overall channel from the
point of origin to the point of final consumption, and therefore reinforce the time,
functional and relationaldependencies in supply chains. Vulnerability in supply chains
is a direct result of these dependencies between companies’ business activities.
Research of the vulnerability construct in supply chains is limited. A few efforts
have been done in the field. For example, Svensson (2000) develops a conceptual
framework and a model for the analysis of vulnerability in supply chains. The model
consists of three principal components, namely: source of disturbance, category of
disturbance, and type of logistics flow. The conceptual framework is limited to the
inbound logistic flow of vehicle manufacturers and consists of two dimensions,
namely: category of disturbance and source of disturbance. Furthermore, Svensson
(2002a) introduces a different conceptual framework for the vulnerability construct
that consists of two components: disturbance and the negative consequence of
International Journal of Physical disturbance. From the point of view of a focal company, it is proposed that the
Distribution & Logistics Management vulnerability in the inbound logistics flows from sub-contractors, and the vulnerability
Vol. 34 No. 9, 2004
pp. 728-748
q Emerald Group Publishing Limited
0960-0035
The author wishes to acknowledge the Centre of Industrial Competitiveness (CIC), Växjö
DOI 10.1108/09600030410567496 University, Sweden for its support.
 in the outbound logistics flows to customers, may be measured and evaluated by four Corporate
principal dimensions, namely service level, deviation, consequence and trend. In vulnerability
addition, Svensson (2002b) develops another conceptual framework for the
vulnerability construct based upon time-dependence and relational-dependence.
Time dependence refers to sequential dependence between business activities in
supply chains, while relational dependence refers the interaction process between
business activities in supply chains. 729
This research is dedicated to the construct of corporate vulnerability in supply
chains that consists of three components, namely time dependence, functional
dependence and relational dependence in companies’ upstream and downstream supply
chains. Time and functional dependencies refer to the fact that there is a chronological
or sequential dependence in supply chains; this might depend on the activities per se, or
on the resources that are available to perform the intended business activities in supply
chains. Relational dependence refers to other relationship-specific factors that influence
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the interaction in supply chains. By the aid of these three components the corporate
vulnerability construct in supply chains of this research has been defined thus:
corporate vulnerability is a condition that is caused by time, functional and relational
dependencies in a supply chain. The degree of corporate vulnerability may be
interpreted as proportional to the degree of time, functional and relational dependencies,
and the negative consequence of these dependencies, in a supply chain.

Research objective
The construct of corporate vulnerability of this research refers to the focal companies’
upstream and downstream supply chains in terms of the key areas, the causes and the
contingency planning (CP). Berman (1996) writes that CP specifies a series of events
that are designed to take full advantage of a business opportunity or to reduce the
impact of an event that generally would be disastrous to a firm. In general, it may be
understood that companies’ CP reduces corporate vulnerability in supply chains.
Therefore, the awareness of the key areas and the causes thereof is crucial to the
understanding of corporate vulnerability
Corporate vulnerability is of immediate importance due to the fact that supply
chains in many industries strive to be lean, responsive and agile. The UPS strikes in
the USA in the late 1990s demonstrated to JIT buyers and sellers alike that companies’
business activities are both highly dependent on each other and also very vulnerable in
today’s highly integrated supply chains (Coleman and Jennings, 1998). The construct of
vulnerability is still rather unexplored. So far, the construct of vulnerability has been
principally been explored quantitatively (e.g. Svensson, 2000, 2002a, b). Therefore,
further research is required into the qualitative features of the construct of
vulnerability. The objective of this research is to describe the key areas, the causes and
the CP of corporate vulnerability in companies’ upstream and downstream supply
chains. A major restriction of the applied qualitative approach is that it does not
support the examination of cause-effect relationships of corporate vulnerability.

Frame of reference
SCM is the overall frame of reference of this research on corporate vulnerability in
supply chains. The significance of SCM has been of substantial importance since the
early 1990s, although the approach, or rather the concept, was in fact introduced in the
 IJPDLM early 1980s (i.e. by Oliver and Webber, 1982 in Christopher, 1992, pp. 63-75). Various
34,9 statements about SCM appear in literature (see Table I). Mentzer et al. (2001) argue that
the statements or definitions of SCM can be classified into three categories, namely: a
management philosophy, the implementation of a management philosophy, and a set
of management processes.
Most statements in literature (see Table I) regard SCM as a management philosophy
730 that strives to integrate the dependent activities, actors, and resources between the
point-of-origin and the point-of-final-consumption (i.e. a vertical emphasis). Svensson
(2002c) argues that SCM should also have a horizontal emphasis. This means that SCM
ought to comprise different kinds of dependencies in, between and across companies in
and between marketing channels. Practitioners strive to implement the underlying
ideas of this business philosophy, as well as the underlying principles of JIT in the
automotive industry, QR in the textile industry and ECR in the retail industry. The
overall theoretical framework of the vulnerability construct of this research is SCM,
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while more specifically it is derived from JIT (e.g. Sugimore et al., 1977) and the other
lean business philosophies such as QR (e.g. Stern et al., 1996) and ECR (e.g. Kurt
Salmon Associates, 1993).
In particular, the theoretical basis of this research is derived from the fact that there
are dependencies between companies’ business activities in supply chains (Lambert
et al., 1998; Håkansson and Snehota, 1995; Stern, 1969; Alderson, 1965, 1957;
McCammon and Little, 1965, Weld, 1916). In this research, dependence refers to the fact
that there is a link, a tie, or a bond between one company in relation to another
(Lambert et al., 1998; Håkansson and Snehota, 1995). Hammarkvist et al. (1982) discuss
different types of dependencies between companies’ business activities such as
technical adaptations, time issues, coordination, knowledge about each other, social
bonds and economical as well as judicial ties. Furthermore, Mattsson (1999) writes
about market-related and IT-technological dependencies between companies’ business
activities. These different dependencies may be categorized into three groups, namely
time, functional and relational dependencies. Relational dependence comprises
knowledge about each other, social bonds and economical as well as judicial ties,
but not explicitly time issues. Functional-dependence includes technical adaptations
and coordination, Nevertheless there is implicitly an aspect of time dependence in all
these other dependencies, e.g. in terms of long- and short-term dependencies. For this
reason, the time, functional and relational dependencies between companies’ business
activities turn out to be three categories of substantial importance to be taken into
consideration in this research of corporate vulnerability in supply chains. These
dependencies can become crucial from the point of view of an overall supply chain
network structure (Lambert et al., 1998).

Time dependence
The relevance of time dependence is motivated by the fact that time issues have
become increasingly important in recent supply chain network structures in different
industries that emphasize leanness (Lambert et al., 1998). For example, the supply
chains of the automotive industry are influenced by JIT principles (Sugimore et al.,
1977; Toyoda, 1987).
There are also some supply chains in the automotive industry in the USA, Europe
and Japan that apply just-in-sequence (JIS). JIS implies that the customers’ desired and
 Source Statement about SCM
Corporate
vulnerability
Svensson (2002c) “. . . the overall bi-directional dependencies of activities, actors, and
resources on an operative, tactical, and strategic level between the
points of consumption and origin in and between marketing channels
in the marketplace . . .”
Mentzer et al. (2001) “. . . the systematic, strategic co-ordination of the traditional business 731
functions and the tactics across these business functions within a
particular company and across businesses within the supply chain, for
the purposes of improving the long-term performance of the individual
companies and the supply chain as a whole . . .”
Lummus et al. (2001) “. . . includes the logistics flows, customer order management, the
production processes, and the information flows necessary to monitor
all the activities at the supply chain nodes . . .”
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Mentzer et al. (2000) “. . . the management of close interfirm relationships, and that
understanding partnering is important in developing successful retail
supply chain relationships . . .”
Min and Mentzer (2000) “. . . to manage the flow of a distribution channel from the supplier to
the ultimate user . . .”
Lambert et al. (1998) “. . . to maximise competitiveness and profitability for the company as
well as the whole supply chain network, including the end-customer
. . .”
Carter et al. (1995) “. . . a co-ordinated approach for managing the flow of goods from
suppliers to ultimate consumers . . .”
Ellram and Cooper (1993) “. . . an approach whereby the entire network, from the supplier
through to the ultimate customer, is analysed and managed in order to
achieve the best outcome for the whole system . . .”
Turner (1993) “. . . a technique that looks at all the links in the chain from raw
materials suppliers, through the various levels of manufacturing, to
warehousing and distribution to the final customer . . .”
Christopher (1992) “. . . supply chain is the network of organisations that are involved,
through upstream and downstream linkages, in the different processes
and activities that each produce value in the form of products and
services in the hands of the ultimate consumer . . .”
Lambert (1992) “. . . the supply chain is a single entity that aims at satisfying the needs
and wants of the customer, and eventually the ultimate consumer . . .”
Cavinato (1992) “. . . the supply chain consists of actively managed channels of
procurement and distribution and that it is made up of a group of
firms that adds value along the product flow from original raw
materials to final customer . . .”
Lee and Billington (1993) “. . . networks of manufacturing and distribution sites that procure
raw materials, transform them into intermediate and finished
products, and finally distribute the finished products to customers . . .”
Scott and Westbrook (1991) “. . . the supply chain is used to refer to the chain linking each element
of the production and supply processes from raw materials through to
the end customer . . .”
Table I.
(continued) Statements about SCM
 IJPDLM Source Statement about SCM
34,9
Novack and Simco (1991) “. . . covers the flow of goods from the supplier through the
manufacturer and distributor to the end user . . .”
Langley and Holcomb (1992) “. . . focusing attention on the interactions of channel members to
produce an end product or service that will provide best comparative
732 value for the end user . . .”
Stevens (1990) “. . . controls the flow of material from suppliers, through the
value-adding processes and distribution channels, to customers . . .”
Ritchie (1990) “. . . considers the supply chain to be a single entity and argues that the
end performance of delivering satisfaction to customers will only be as
good as the weakest link in the supply chain . . .“
Ellram and Cooper (1990) “. . . an integrating philosophy to manage the total flow of a
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distribution channel from supplier to ultimate customer . . .”

Houlihan (1988) “. . . covers the flow of goods from supplier through manufacturer and
distributor to the end user . . .”
Jones and Riley (1985) “. . . deals with the total flow of materials from suppliers right through
to the end users . . .”
Oliver and Webber (1982) in “. . . the marketing channel should be seen as an integrated single
Table I. Christopher (1992, pp. 63-75) entity . . .”

derived materials and components are brought into the assembly line not only just in
time, but in a pre-determined sequence. This signifies that deliveries are tailored
according to the order of production for the cars required using a unique vehicle
identification number (VIN), e.g. in terms of the color of seats, the kind of wheels, the
layout of mirrors, and additional accessories such as safety equipment and electronic
devices. JIS has thus made it possible to produce customized cars while still
maintaining the economy of scales. The time-dependencies between companies’
business activities in JIS-based supply chains are higher than with JIT, which generally
requires deliveries to be supplied on time, but not necessarily in sequence.
The supply chains of the retail industry are inspired by highly time-based and
consumer-driven supply chains that are pronounced in the business philosophy
entitled ECR (e.g. Kurt Salmon Associates, 1993). In the textile industry, the ideas of
QR has gained acknowledgement among practitioners, which also emphasizes the
importance of time issues and lean supply chains (e.g. Fernie, 1994; Stern et al., 1996).
Time dependence issues are crucial in these business philosophies as they strive to
achieve lean supply chain network structures from raw material to the ultimate
consumer.

Functional dependence
There is also a functional dependence between companies’ business activities in supply
chains (Gattorna, 1978; Bucklin, 1966; Alderson, 1954; Stigler, 1951). Functional
dependence refers to where companies’ business activities are specialized and
complement each other in channels or networks. For example, there is a functional
diffusion between companies in networks (Håkansson and Snehota, 1995).
Furthermore, there is a sequential co-ordination of business activities between
 companies in supply chains (Bucklin, 1966; Alderson, 1954). This functional Corporate
dependence between companies might be explained by the division of labor which vulnerability
usually develops and takes place in supply chains (Stern and El-Ansary, 1992; Stigler,
1951) and networks (Lambert et al., 1998).
These functional dependencies lead to the necessity of co-operation and
co-ordination between companies’ business activities in order to achieve internal,
and in some cases, mutual goals (Bowersox and Closs, 1996). Christopher (1992) writes 733
that the supply chain is a network of organizations that are involved, through
upstream and downstream linkages, in the different processes and activities that
produce value in the form of products and services in the hands of the ultimate
consumer. Coyle et al. (1996) conclude that there is recognition that companies are
usually part of a pipeline or supply chain that brings a product to the ultimate user.
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Relational dependence
There is also a relational dependence between companies’ business activities in supply
chains (Håkansson and Snehota, 1995; Morgan and Hunt, 1994; Grönroos, 1990;
Bucklin, 1966; Alderson, 1954; Stigler, 1951). Relational dependence refers to business
activities being dependent on the interaction process in supply chains. The relevance of
relational dependence is motivated by the fact that relationship issues have been
emphasized in different academic fields of theory for several decades. Time and
functional dependence issues have been frequently considered in logistics research,
although relational dependence issues have been less frequently researched.
In particular, marketing theory has acknowledged relational dependencies in
relationships, marketing channels, and business networks. For example, in the
interaction and network approach, or the IMP group (e.g. Håkansson, 1982; Håkansson
and Snehota, 1995) relational dependencies are recognized as important to be taken into
consideration when buyer-seller relationships are explored. Furthermore, the services
marketing approach also emphasizes the relational dependencies in service encounters
(e.g. Shostack, 1977; Grönroos, 1990). Relationship marketing explicitly pronounces the
importance of relational dependence issues in business relationships (e.g. Gummesson,
1995; Morgan and Hunt, 1994). Consequently, the relational dependence is of interest in
industrial marketing, the marketing of services and international marketing. It has also
gained an increased attention in the marketing of consumer goods (e.g. Kotler, 2000), as
well as being of importance in planning, implementation, and control of lean
buyer-seller relationships. The relational dependence issues are crucial in marketing
theory, as well as being of importance in logistics research in terms of lean supply
chain network structures.

Methodology
The study was performed as a survey containing six formulated questions about the
key areas, the causes, and the CP of corporate vulnerability in companies’ upstream
and downstream supply chains:
(1) Upstream supply chains:
.
What are the key areas of corporate vulnerability in your company’s
upstream supply chains?
 IJPDLM .
What are the causes of corporate vulnerability in your company’s upstream
34,9 supply chains?
.
What kind of CP for corporate vulnerability does your company perform in
the upstream supply chains?
(2) Downstream supply chains:
734 .
What are the key areas of corporate vulnerability in your company’s
downstream supply chains?
.
What are the causes of corporate vulnerability in your company’s
downstream supply chains?
.
What kind of CP for corporate vulnerability does your company perform in
the downstream supply chains?
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Initially, two independent respondents at each company were identified, in order to

collect separately the data for the companies’ upstream and downstream supply
chains. Each company and each respondent was initially contacted by phone in order
to select the two most adequate executives for the questions (i.e. three questions each).
The selection of the studied companies was based upon an identified population of
sub-contractors in the Swedish vehicle industry. The population was limited to
companies within the automotive industry, i.e. companies that produce materials and
components for car manufacturers. Therefore, a judgmental sampling was applied in
order to include only companies within the automotive industry. Furthermore,
companies in the automotive industry having more than 20 employees are included in
the final sample. The sample consisted of 229 companies. Thus 458 executives were
supposed to be selected in the survey.
Two matched sets of questions were developed (i.e. the three questions to each
respondent concerning the company’s key areas, causes, and CP of corporate
vulnerability in the upstream and downstream supply chains respectively). A set of
questions was sent to each of the executives. The selected executives for the upstream
supply chains, dealing with the company’s corporate vulnerability, were mainly the
principal purchasing manager, the production manager or the manager in charge of
logistics. In the downstream supply chains the manager in charge of the quality and
quantity assurance, or the sales manager, was primarily selected in each company.
A share of 68.5 percent of the companies responded to at least one of the two sets of
questions. A total of 215 responses (total response rate: 46.9 percent) were collected
from the population. The number of responses collected for the set of questions of the
upstream supply chains was 108 units (response rate: 47.2 percent). The number of
responses collected for the set of questions of the downstream supply chains was 107
units (response rate: 46.7 percent). The number of answers and the average answers
per respondent for the key areas, the causes and the CP of corporate vulnerability are
illustrated in Table II.
An analysis of non-response bias was performed in order to clarify if the
non-response bias in the survey might affect the results of this study, or if there were
any dependencies or differences between the companies who answered or participated
in the survey, and the few who did not. The analysis of non-response bias included all
the non-response companies (72 of 72 companies) that did not answer any of the two
sets of questions. A non-parametric test (Chi square-test: Pearson) was used for the
 analysis of non-response bias, using such variables as number of employees and total Corporate
company sales. There did not exist any significant dependence or difference vulnerability
(Significance: , 5 percent) between the obtained responses and non-responses.

Definitional framework of content analysis

The framework of content analysis for the examination of corporate vulnerability is 735
based upon different categories, such as time, functional and relational dependencies in
companies’ upstream and downstream supply chains (Hammarkvist et al., 1982;
Liljander and Strandvik, 1995; Mattsson, 1999; Svensson, 2002c). The framework also
consists of internal versus external categories and atomistic versus holistic categories.
The framework of content analysis of the key areas, the causes and the CP of
corporate vulnerability is divided into a sub-framework of the following defined
categories (see Figure 1):
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.
Time dependence. A category which comprises explicit reference to time plans,
delays, lead times, delivery schedules and prognoses in the companies’ upstream
and downstream supply chains.
.
Functional dependence. A category which comprises corporate functions, such as
the upstream and downstream inventories, production, products, transports,
third party logistics, maintenance, capacity and preventive activities. This
category also comprises certain certifications such as ISO 9000, ISO 14000 and
QS 9000. Furthermore, the qualitative and quantitative assurances of companies’
business activities belong to this category.
.
Relational dependence. A category which comprises issues of CP such as
economics, legal aspects, technology, knowledge, social aspects, the market, IT,
information, communication, variability and planning. Suppliers and customers,
as well as staff issues, belong to this category.

Number of
responses/ Number of answers/average answers
response rate per respondent
Population n ¼ 458 Set of questions Key areas Causes CP
Supply chain n % n % n % n %
Table II.
Upstream 108 47.2 169 1.6 298 2.8 313 2.9 Statistics of qualitative
Downstream 107 46.7 135 1.3 328 3.0 341 3.2 data

Figure 1.
Framework of content
analysis – qualitative data
 IJPDLM The sub-framework of content analysis also consists of the categorical boundaries
34,9 illustrated in Figure 2.
The category boundaries in supply chains of the sub-framework are mutually
exclusive and possess the following characteristics:
.
Internal. A category which comprises a company’s internal business activities
between inbound and outbound logistics flows, that is, from the point of
736 reception into a company through to the point of dispatch out of a company.
.
Externl. A category which comprises a companies’ external inbound and
outbound business activities in the supply chains, that is the upstream business
activities beyond the point of reception of a company and downstream business
activities beyond the point of dispatch out of a company.
.
Atomistic. A category which comprises a company’s business activities between
the 1st tier suppliers and the 1st tier customers in the supply chain. It is limited to
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the direct and vertical considerations in the supply chains.

. Holistic. This category comprises a company’s business activities beyond the 1st
tier suppliers and beyond the 1st tier customers in the supply chain. The
horizontal and indirect considerations in the supply chain are included in this
category, such as other supply chains and other suppliers/customers.

Empirical findings
This section uses the questions and framework of the survey questionnaire illustrated
in Table I and Figure 1 as a fundament and structure for the content analysis. The
qualitative data have been coded into these categories and cross-tabulated (e.g.
Norusis, 1993). Each heading of the topic questions considers the companies’ upstream
and downstream supply chains. The statistics and examples of corporate vulnerability
from the content analysis are shown in Tables III-XIV.

Figure 2.
Sub-framework’s
categorical boundaries in
supply chains

Key areas – upstream supply chains

Internal External Atomistic Holistic
Dependence n % n % n % n %

Time 31 18.3 0 0 31 18.3 0 0

Table III. Functional 92 54.5 7 4.1 99 58.6 0 0
Key areas of perceived Relational 33 19.5 6 3.6 39 23.1 2 0
corporate vulnerability in Sub-total 156 92.3 13 7.7 167 98.8 2 1.2
upstream supply chains Total 156 þ 13 ¼ 169/100% 167 þ 2 ¼ 169/100%
 Frequent areas – upstream supply chains
Corporate
Dependence Internal External Atomistic Holistic vulnerability
Time e.g. delay, lead time No example generated e.g. delay, lead time, No example
and time compression time and compression generated
Functional e.g. quality, quantity, e.g. supplier, sourcing e.g. quality, quantity, No example
wrong/missing goods, and transport missing/wrong goods, generated 737
production, stock capacity, stock level,
level, maintenance and maintenance and
capacity transport
Table IV.
Relational e.g. information, e.g. supply variability e.g. information, e.g. industry Frequent areas of
communication, and price fluctuation variability, planning cycle perceived corporate
planning, and and order procedure vulnerability in upstream
specification supply chains
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Key areas – downstream supply chains

Internal External Atomistic Holistic
Dependence n % n % n % n %

Time 21 15.6 0 0 21 15.6 0 0 Table V.

Functional 50 37.0 15 11.1 65 48.1 0 0 Key areas of perceived
Relational 44 32.6 5 3.7 49 36.3 1 0.7 corporate vulnerability in
Sub-total 115 85.2 20 14.8 134 99.3 1 0.7 downstream supply
Total 115 þ 20 ¼ 135/100% 134 þ 1 ¼ 135/100% chains

Frequent areas – downstream supply chains

Dependence Internal External Atomistic Holistic

Time e.g. delay, lead time No example generated e.g. delay, lead time No example
and prognosis and time compression generated
Functional e.g. quality, quantity, e.g. supplier, sourcing e.g. quality, quantity, No example
production, stock level and transport supplier, sourcing, generated
and capacity stock level,
production, capacity
and transport
Table VI.
Relational e.g. staff, planning, e.g. demand e.g. staff, planning, e.g. industry Frequent areas of
information and variability and price information, cycle perceived corporate
error/mistakes fluctuation variability, price vulnerability in
fluctuation and downstream supply
error/mistakes chains

Content analysis – key areas of corporate vulnerability

The statistics and frequent areas of perceived corporate vulnerability in upstream and
downstream supply chains, based upon the content analyses, are shown in
Tables III-VI.
 IJPDLM The empirical findings indicate that the companies’ perception of dependence
34,9 within the key areas of corporate vulnerability in the upstream supply chains is to a
large extent functional (see Table III). Relational and time dependencies follow it. The
key areas of corporate vulnerability in the upstream supply chains are to a great extent
internal (92.3 percent). Furthermore, the key areas of corporate vulnerability in
upstream supply chains are also mostly atomistic (98.8 percent). This means that the
738 corporate focus in the upstream supply chain is limited to the companies’ judicial
boundaries.

Causes – upstream supply chains

Internal External Atomistic Holistic
Dependence n % n % n % n %
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Time 17 5.7 25 8.4 42 14.1 0 0

Table VII. Functional 6 2.0 166 55.7 172 57.7 0 0
Causes of perceived Relational 45 15.1 39 13.1 82 27.5 2 0
corporate vulnerability in Sub-total 68 22.8 230 77.2 296 99.3 2 0.7
upstream supply chains Total 68 þ 230 ¼ 298/100% 296 þ 2 ¼ 298=100%

Frequent causes – upstream supply chains

Dependence Internal External Atomistic Holistic

Time e.g. prognosis and e.g. delayed delivery e.g. delayed delivery, No example
delivery schedule and delivery schedule delivery schedule and generated
prognosis
Functional e.g. capacity and stock e.g. quality, quantity, e.g. quality, quantity, No example
level missing/wrong good, missing/wrong goods, generated
supplier’s capacity supplier’s capacity
and transport and transport
Table VIII.
Frequent causes of Relational e.g. information, order e.g. supply variability, e.g. information, e.g. strike and
perceived corporate procedure, need information, planning, variability, planning supplier’s
vulnerability in upstream variability and communication and order procedure supplier
supply chains planning

Causes – downstream supply chains

Internal External Atomistic Holistic
Dependence n % n % n % n %

Time 23 7.0 12 3.7 23 7.0 0 0

Functional 74 22.6 41 12.5 115 35.2 0 0
Table IX. Relational 100 30.6 77 23.5 186 56.9 3 0.1
Causes of perceived Sub-total 197 60.2 130 39.8 324 99.1 3 0.9
a a
corporate vulnerability in Total 197 þ 130 ¼ 327 /100% 324 þ 3 ¼ 327 /100%
downstream supply Notes: a n 2 1 ¼ 327; One answer was not possible to categorize into the framework of content
chains analysis, namely 1) “tight organization”
 Frequent causes – downstream supply chains
Corporate
Dependence Internal External Atomistic Holistic vulnerability
Time e.g. time e.g. delayed e.g. delayed No example
compression, delivery, time delivery, time generated
delivery schedule, compression and compression,
delayed delivery and prognosis delivery schedule
prognosis and prognosis
739
Functional e.g. production, e.g. supplier, quality, e.g. supplier, No example
capacity, quality quantity, and production, quality, generated
and quantity transport quantity, capacity,
transport Table X.
Frequent causes of
Relational e.g. staff, e.g. demand e.g. staff, variability, e.g. industry cycle, perceived corporate
information, supply variability and information and competition and vulnerability in
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variability and information planning supplier’s supplier downstream supply

planning chains

Contingency planning – upstream supply chains

Internal External Atomistic Holistic
Dependence n % n % n % n %

Time 18 5.8 17 5.4 35 11.2 0 0 Table XI.

Functional 65 20.8 16 5.1 81 25.9 0 0 Contingency planning of
Relational 105 33.5 92 29.4 196 62.6 1 0.1 perceived corporate
Sub-total 188 60.1 125 39.9 312 99.7 1 0.3 vulnerability in upstream
Total 188 þ 125 ¼ 313=100% 312 þ 1 ¼ 313=100% supply chains

Frequent contingency planning – upstream supply chains

Dependence Internal External Atomistic Holistic

Time e.g. prognosis, delivery e.g. prognosis, lead e.g. prognosis, delivery No example
schedule and lead time time and delivery schedule and lead time generated
schedule
Functional e.g. stock level, quality e.g. sourcing, quality e.g. sourcing, stock No example
assurance, quantity assurance, quantity level, quality generated
assurance assurance, prevention, assurance, quantity
and transport assurance, prevention
and transport
Relational e.g. control, order e.g. communication, e.g. communication, e.g. ultimate Table XII.
procedure, IT, control, information, control, order consumer Frequent contingency
planning, cooperation and procedure, information planning of perceived
communication and judicial and cooperation corporate vulnerability in
information upstream supply chains
 IJPDLM The content analysis also generated a selection of the more frequent areas of corporate
34,9 vulnerability in upstream supply chains (see Table VI). There are also other less
frequent areas such as:
.
time – e.g. time plan, time coordination and delivery schedule;
.
functional – e.g. transport damage and product; and
740 .
relational – judicial, strike, IT and mistake/error.
The empirical findings indicate that the companies’ perception of dependence within the
key areas of corporate vulnerability in the downstream supply chains is to a large extent
functional and relational (see Table V). It is only to a minor extent time-based. The key areas
of corporate vulnerability in the downstream supply chains are to a large extent internal
(85.2 percent). Furthermore, the key areas of corporate vulnerability in the downstream
supply chains are also atomistic (99.3 percent). This means that the corporate focus in the
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downstream supply chain is mainly limited to the companies’ judicial boundaries.

Contingency planning – downstream supply chains

Internal External Atomistic Holistic
Dependence n % n % n % n %

Time 20 5.9 10 3.0 30 8.9 0 0

Functional 86 25.4 9 12.5 110 32.5 0 0
Table XIII. Relational 146 43.2 67 19.8 195 57.7 3 0.1
Contingency planning of Sub-total 252 74.6 86 25.4 335 99.1 3 0.9
perceived corporate Total 252 þ 86 ¼ 338a/100% a
335 þ 3 ¼ 338 /100%
vulnerability in Notes: a n 2 3 ¼ 338: Three answers were not possible to categorize into the framework of content
downstream supply analysis, namely 1) “dare to say no when the organization has not given its approval”; 2) “change
chains principal owners and to avoid conflicts in company”; and 3) “moral”

Frequent contingency planning – downstream supply chains

Dependence Internal External Atomistic Holistic

Time e.g. prognosis, lead e.g. prognosis and e.g. prognosis, lead No example
time and time lead time time and time generated
compression compression
Functional e.g. production, e.g. supplier sourcing e.g. maintenance, No example
maintenance, (!), supplier delivery (!) stock level, generated
process, stock level, and transport sourcing, process,
prevention and production,
capacity capacity,
prevention and
Table XIV. transport
Frequent contingency
planning of perceived Relational e.g. staff, control, e.g. control, e.g. control, staff, e.g. competitive
corporate vulnerability in IT, planning and cooperation, IT, planning, issues and
downstream supply certification communication and cooperation and cooperation with
chains market research judicial universities
 The content analysis also generated a selection of the more frequent areas of corporate Corporate
vulnerability in downstream supply chains (see Table VI). There are also other less vulnerability
frequent areas such as:
.
time – e.g. time compression and time plan;
.
functional – e.g. transport damage and product; and
.
relational – resource, dependence, maintenance, IT, specification and inflexibility. 741
Content analysis – causes of corporate vulnerability
The statistics and frequent causes of perceived corporate vulnerability in upstream
and downstream supply chains, based upon the content analyses, are shown in
Tables VII-X.
The empirical findings indicate that the companies’ perception of dependence
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within the causes of corporate vulnerability in the upstream supply chains is to some
extent functional (see Table VII). Relational and time dependencies follow this. The
causes of corporate vulnerability in the upstream supply chains are to a large extent
external (77.2 percent) and to a lesser extent internal (22.8 percent). Furthermore, the
causes of corporate vulnerability in the upstream supply chains are also atomistic (99.3
percent). The holistic causes of corporate vulnerability are rarely perceived (0.7
percent). This means that the companies’ understanding of the upstream causes of
corporate vulnerability in the supply chain is towards the companies’ 1st tier suppliers.
The content analysis also generated a selection of the more frequent causes of
corporate vulnerability in upstream supply chains (see Table VIII). There are also other
less frequent causes such as:
.
time – e.g. time constraint;
.
functional – e.g. transport damage, third party logistics, production error,
delivery change and product recall; and
.
relational – technical specification, routine, procedure, price change,
organizational structure and staff.
The empirical findings indicate that the companies’ perception of dependence within the
causes of corporate vulnerability in the downstream supply chains is to a large extent
functional and relational (see Table IX). It is only to a minor extent time-based. The
causes of corporate vulnerability in the downstream supply chains are to a large extent
internal (60.2 percent) and to a lesser extent external (39.8 percent). Furthermore, the
causes of corporate vulnerability in the downstream supply chains are also atomistic
(99.1 percent). The holistic causes of corporate vulnerability are rarely perceived (0.9
percent). This means that the companies’ understanding of the downstream causes of
corporate vulnerability in the supply chain is towards the companies’ 1st tier customers.
The content analysis also generated a selection of the more frequent causes of
corporate vulnerability in upstream supply chains (see Table X). There are also other
less frequent causes such as:
.
time – e.g. time plan;
.
functional – e.g. stock, product and transport damage; and
. relational – technical specification, communication, technological change, staff,
knowledge and competence.
 IJPDLM Content analysis – CP of corporate vulnerability
34,9 The statistics and frequent CP of perceived corporate vulnerability in upstream and
downstream supply chains, based on the content analyses, is shown in Tables XI-XIV.
The empirical findings indicate that the companies’ perception of dependence
within the CP of corporate vulnerability in the upstream supply chains is to a large
extent relational and functional (see Table XI). It is also to a minor extent time-based.
742 The companies’ CP of corporate vulnerability in the upstream supply chains is to a
large extent internal (60.1 percent) and to a minor extent external (39.9 percent).
Furthermore, the CP of corporate vulnerability in the upstream supply chains is also
atomistic (99.7 percent). The holistic CP of corporate vulnerability is rarely considered
(0.3 percent). This means that the companies’ upstream CP of corporate vulnerability in
the supply chain is toward the companies’ 1st tier suppliers.
The content analysis also generated a selection of the more frequent kinds of CP of
corporate vulnerability in upstream supply chains (see Table XII). There is also other
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less frequent kinds of CP such as:

.
time – e.g. time plan and time compression;
.
functional – e.g. assortment and delivery; and
.
relational – certification, technical specification and staff.
The empirical findings indicate that the companies’ perception of dependence within
the CP of corporate vulnerability in the downstream supply chains is to a large extent
functional and relational (see Table XIII). It is also to a minor extent time-based. The
companies’ CP of corporate vulnerability in the downstream supply chains is to a large
extent internal (74.6 percent) and to a minor extent external (25.4 percent).
Furthermore, the CP of corporate vulnerability in the downstream supply chains is also
atomistic (99.1 percent). The holistic CP of corporate vulnerability is rarely considered
(0.9 percent). This means that the companies’ downstream CP of corporate
vulnerability in the supply chain is towards the companies’ 1st tier customers.
The content analysis also generated a selection of the more frequent kinds of CP of
corporate vulnerability in downstream supply chains (see Table XIV). There are also
other less frequent kinds of CP such as:
.
time – e.g. time coordination;
. functional – e.g. quantity and quality assurance, and product; and
.
relational – technical specification, information, competence, order procedure
towards supplier(!) and routine.

Content analyses – final remark

Generally, the companies’ perceptions of the key areas, the causes and the CP of
corporate vulnerability in the upstream and downstream supply chains are myopic. In
addition, the companies’ perceptions have vertical emphasis. This is troublesome, since
the supply chains of the automotive industry are usually affected by time, functional
and relational dependencies between companies’ business activities. The myopic and
vertical views do not go beyond the 1st tier suppliers and the 1st tier customers.
Probably, this is a consequence caused by the fact that the companies’ tend to push the
responsibility upstream and downstream in the supply chains. For example, the
companies’ 1st tier suppliers have an obligation to assure the quantity and the quality
 of business activities further upstream in the supply chains. Equally, the companies’ Corporate
1st tier customers are assumed to assure the quantity and the quality of business vulnerability
activities further downstream in the supply chains.

Theoretical and managerial implications

A number of theoretical and managerial implications are provided in this section based
on the empirical findings of corporate vulnerability in supply chains. In the first place, 743
the visibility of corporate vulnerability in supply chain is conceptualized in a generic
model based on two perceptual determinants. In the second place, both the lessons
learned and the managerial implications of corporate vulnerability in the companies’
upstream and downstream supply chains are provided.

A visibility model of corporate vulnerability in supply chains – transparency versus

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obscurity
Two generic determinants influence the perception of corporate vulnerability in the
upstream and downstream supply chains, namely the degree of transparency and the
degree of obscurity. On the one hand, the degree of transparency increases as the
accuracy of the information diffused in the supply chain improves. On the other hand,
the degree of obscurity increases as the accuracy of the information diffused in the
supply chain deteriorates. In conjunction, these two perceptual determinants create a
generic conceptual framework and also contribute to describe the dilemma of corporate
vulnerability in companies’ upstream and downstream supply chains (see Figure 3).
As the corporate understanding of the importance of external and holistic
considerations prevail among the companies’ in the supply chain, so the insight into
the dilemma of corporate vulnerability becomes transparent. Likewise, as the
understanding of corporate vulnerability is limited to the internal and the atomistic
considerations among the companies’ in the supply chain, the obscurity prevents
disclosure of the key areas, the causes and the CP of corporate vulnerability in the
companies’ upstream and downstream supply chains.
The empirical findings of this research indicate that there is a troublesome
obscurity within key areas, and of the causes and the CP beyond the 1st tier suppliers
and 1st tiers customers in the studied supply chains (see the incorporated visibility line
in Figure 3). This means that the visibility line has not been thoroughly pushed
upstream or downstream from the point of view of the sub-contractors in the
automotive industry. Consequently, the access to accurate information in the upstream
and downstream supply chains is ambiguous beyond the 1st tier suppliers and the 1st
tier customers. The lack of accurate information can cause certain negative
consequences such as the “bullwhip-effect” in supply chains (Lee et al., 1997a, bb).

Figure 3.
The visibility model of
corporate vulnerability in
upstream and downstream
supply chains
 IJPDLM Lessons learned
34,9 The empirical findings of this study in the automotive industry indicate the prevalence
of a myopic view of corporate vulnerability in the companies’ upstream and downstream
supply chains. Furthermore, the view is vertical, and ignores horizontal considerations.
These insights should be taken into consideration in the companies’ strategic agenda of
corporate vulnerability in supply chains. The lessons learned, and the managerial
744 implications of corporate vulnerability of this research following the framework of
content analysis consisting of the key areas, the causes and the CP, are summarized in
Table VII. The sub-framework of dependencies, internal versus external considerations
and atomistic versus holistic considerations are also shown in the Table XV.
The lessons learned from this research in terms of corporate vulnerability in
upstream and downstream supply chains are rather uniform. For example, the myopic
and vertical views prevail in both the upstream and downstream supply chains.
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Lessons learned Managerial implications of corporate vulnerability

Upstream Key areas

Supply chain Dependence
Myopic and vertical views e.g. the functional-dependence dominates followed by the relational
prevail and time dependencies in both the upstream and downstream supply
chains
Downstream
Supply chains Internal versus external
Myopic and vertical views e.g. limited to internal considerations in both the upstream and
prevail downstream
Atomistic versus holistic
e.g. limited to atomistic considerations in both the upstream and
downstream supply chains
Causes
Dependence
e.g. the functional-dependence dominates followed by the relational
and time dependencies in the upstream supply chains, while in the
downstream supply chains relational-dependence dominates followed
by the functional and time dependencies
Internal versus external
e.g. mostly external in the upstream supply chains but mostly internal
in the downstream supply chains
Atomistic versus holistic
e.g. atomistic in both the upstream and downstream supply chains
Contingency planning
Dependence
e.g. the relational-dependence dominates followed by the functional
and time dependencies in both the upstream and downstream supply
chains
Internal versus external
Table XV. e.g. mostly internal in both the upstream and downstream supply
Lessons learned and chains
managerial implications Atomistic versus holistic
of corporate vulnerability e.g. atomistic in both the upstream and downstream supply chains
 However, the managerial implications of corporate vulnerability differ. For example, Corporate
the functional dependence dominates the key areas of corporate vulnerability, followed vulnerability
by the relational and time dependencies in both the upstream and downstream supply
chains. The key areas are mainly limited to internal and atomistic considerations in
both the upstream and downstream supply chains. Furthermore, the functional
dependence dominates the causes of corporate vulnerability, followed by the relational
and time dependencies in the upstream supply chains, while in the downstream supply 745
chains relational dependence dominates, followed by the functional and time
dependencies. The causes of corporate vulnerability are mostly external in the
upstream supply chains but mostly internal in the downstream supply chains, and
atomistic in both the upstream and downstream supply chains. Finally, the relational
dependence dominates the CP of corporate vulnerability followed by the functional-
and time-dependencies in both the upstream and downstream supply chains. In
addition, the CP of corporate vulnerability is mostly internal and atomistic in both the
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upstream and downstream supply chains.

The impact of corporate vulnerability in supply chains is affected by circumstances
in the business environment on national, international and global levels. The reigning
situation of economics on macro and micro levels also influences the impact of
corporate vulnerability in supply chains in different industries. Corporate vulnerability
may be influenced by the current and potential direct and indirect dependencies, the
vertical and horizontal dependencies, as well as the unidirectional and bi-directional
dependencies, between business activities in and between supply chains (Svensson,
2002c). Generic determinants of corporate vulnerability in supply chains are time,
functional and relational dependencies, internal versus external and atomistic versus
holistic considerations. The causes and CP of corporate vulnerability have
consequences on companies’ costs/productivity, competitiveness, profitability, and
capacity to survive in the business environment. Therefore, the companies’ strategic
agenda has to be dedicated to the internal strengths and weaknesses, as well as to the
external opportunities and the threats, in current supply chains.

Contributions and suggestions for further research

A contribution of this research is the insight that sub-contractors in the automotive
industry tend to be restricted to myopic and vertical views in the key areas, the causes,
and the CP of corporate vulnerability in the upstream and downstream supply chains.
This is troublesome, since supply chains in the automotive industry are assumed to be
lean (e.g. based on JIT). Another contribution is the visibility model of corporate
vulnerability in supply chains. The degree of transparency and the degree of obscurity
may be used to describe and analyze corporate vulnerability in supply chains, taking
into consideration the extent of the key areas, the causes and the CP impact companies’
upstream and downstream supply chains. The visibility model of corporate
vulnerability in supply chains may also be used for teaching and training purposes,
as well as to position and compare the outcome of other replicating studies of corporate
vulnerability in supply chains. This research has also contributed methodologically to
the qualitative exploration of the vulnerability construct in supply chains. Previous
research has been mainly based on quantitative data. Consequently, these
contributions serve as a fundament and structure for further research into the
corporate vulnerability construct in supply chains.
 IJPDLM The fact that this research was based upon qualitative data implies that the
34,9 empirical findings of this research should not be generalized beyond the automotive
industry. The theoretical and empirical contributions serve as a fundament and
structure for further research of corporate vulnerability in other supply chains.
Therefore, the empirical findings have to be further explored in different supply chains
across industries. The impact of the visibility line (i.e. the degree of transparency or
746 obscurity) on corporate vulnerability in supply chains may also be further explored.

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