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International Journal of LogisticsResearch and Applications: A LeadingJournal of Supply Chain ManagementPublication details, including instructions for authors andsubscription information:http://www.tandfonline.com/loi/cjol20

Supply chain risk management: thelessons learned from the Egyptianrevolution 2011Sara M. Elzarkaa

a Department of Supply Chain Management, College ofInternational Transport & Logistics, Arab Academy for Science,Technology & Maritime Transport, Alexandria, EgyptPublished online: 16 Dec 2013.

To cite this article: Sara M. Elzarka (2013) Supply chain risk management: the lessons learnedfrom the Egyptian revolution 2011, International Journal of Logistics Research and Applications: ALeading Journal of Supply Chain Management, 16:6, 482-492, DOI: 10.1080/13675567.2013.846307

To link to this article: http://dx.doi.org/10.1080/13675567.2013.846307

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International Journal of Logistics: Research and Applications, 2013Vol. 16, No. 6, 482–492, http://dx.doi.org/10.1080/13675567.2013.846307

Supply chain risk management: the lessons learned from theEgyptian revolution 2011

Sara M. Elzarka∗

Department of Supply Chain Management, College of International Transport & Logistics,Arab Academy for Science, Technology & Maritime Transport, Alexandria, Egypt

(Received 11 January 2013; accepted 16 September 2013)

This research investigates the impact of the Egyptian revolution on the supply chain (SC) of a numberof companies in different business sectors for the purpose of evaluating the degree of their preparednessto SC risk. The study focuses on the three main components to a SC risk programme: (1) the ability toforecast/discover potential disruptions, (2) the ability to recover from the disruption, and (3) SC designstrategies for resilience. The research is exploratory and descriptive in nature using semi-structured inter-views for data collection. The sample of companies targeted in this study is of a purposive nature as thestudy focuses on a number of companies belonging to the manufacturing, retailing, and the transport andlogistics sectors due to the direct impact they have on customers especially during turbulent economic andpolitical situations. The main finding of this study is that supply chain risk management (SCRM) aware-ness is still poor in Egypt. Egyptian companies are strongly recommended to adapt SCRM by improvingcollaboration between the different departments/functions to analyse risks and to set the appropriate plans;and to fully understand their role as a vital link in the SCs of other companies.

Keywords: supply chain risk management; Egypt; political disruption; Arab spring

1. Introduction

Since the end of the year 2010, a wave of uprisings has been sweeping across the Middle East andNorth African Region (MENA) against political repression and deteriorating living conditions.In Egypt, large crowds gathered in the country’s main cities to protest against corruption andauthoritarianism.

For several days there were shortages of food and fuel, internet access was blocked, phone communications weresubject to severe disruptions, and access to ports was suspended, with several shipping companies re-routing theircontainer ships to other regional port facilities. (Fabiani 2011, 4)

During the protests, most businesses remained closed, retailers were affected by looting, and thetourism sector recorded major losses as tourists fled the country (Fabiani 2011). After 18 days ofdemonstrations, President Hosni Mubarak stepped down and handed over power to the SupremeCouncil of the Armed Forces.

The wave of uprising in Egypt and other MENA countries had a major impact on the risk ofdoing business. Political instability and economic breakdown not only affected businesses in thetroubled countries, but extended to impact on supply chains (SCs) around the world, particularlyagri-food and textile companies in Europe and consumer goods producers in Asian economies

∗Email: sara_elzarka@aast.edu

© 2013 Taylor & Francis

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International Journal of Logistics: Research and Applications 483

(Fabiani 2011). This research will thus investigate the impact of the Egyptian revolution on theSC of a number of companies in the manufacturing sector, retailing, and transport and logisticsservices. The purpose of this investigation is to examine the degree of the businesses’preparednessto SC risk in terms of: (1) the ability to forecast potential disruptions, (2) the ability to recoverfrom the disruption, and (3) the ability to design a resilient SC.

2. Literature review

The fierce competition in the global markets, the decreasing life cycles of products, and theheightened expectations of customers have directed organisations towards investing and focusingattention on their SCs (Simchi-Levi 2003; Quayle 2006). Supply chain management (SCM) is avery complex function that faces an enormous range of inherent risks, ranging from the minorirritation of delays through to the destruction of an entire chain. SC risk is defined by Waters(2007) as any event that might affect the movement and disrupt the planned flow of materialsfrom the initial suppliers to the final customers. Risks, according to Waters (2007), come in manyforms and can appear at any point in a SC from initial suppliers to final customers. He furtheradded that risks:

can interrupt the supply of materials or the demand for products; they can cause sudden peaks in demand or collapses;they can range in scope from a minor delay through to a natural disaster; their effects can range from short-term andlasting only a few minutes through to permanent damage; their effects might be localised in one part of a supplychain, or passed on to threaten the whole chain.

SC risks have been categorised differently by various authors. Goh, Lim, and Meng (2007), andWaters (2007) stated that there are basically two kinds of risk to a SC: (1) ‘internal risks’ thatappear in normal operations, such as late deliveries, excess stock, poor forecasts, financial risks,minor accidents, human error, faults in information technology systems, etc. and (2) ‘externalrisks’ that come from outside the SC, such as earthquakes, hurricanes, industrial action, wars,terrorist attacks, outbreaks of disease, price rises, problems with trading partners, shortage of rawmaterials, crime, financial irregularities, etc. Tang (2006) classified SC risks into: (1) operationsrisks which are associated with uncertainties inherent in a SC which include demand, supply,and cost uncertainties; and (2) disruptions risks which are caused by major natural and man-madedisasters such as flood, earthquake, tsunami, and major economic crisis. Deleris and Erhun (2007)further classified SC risks into five categories as shown in Table 1.

A survey of the literature revealed that the term SC risk management (SCRM) has been defineddifferently in a number of researches. Handfield (2007) defined the term as ‘the integration and

Table 1. SC risks.

Category Examples

Operational/technological Forecast errors, material shortages, machine failure/downtime, transportation risks,storage risks, budget overrun, communication/information technology (IT)disruptions, and quality problems

Social Labour shortages, loss of key personnel, strikes, accidents, absenteeism, human errors,union/labour relations, negative media coverage, fraud, sabotage, and terrorism

Natural hazard Fire, wild fire, severe thunderstorm, flood, monsoon, blizzard, drought, heat wave,tornado, hurricane, earthquake, tsunami, epidemic, and famine

Economy/competition Interest rate/exchange rate fluctuation, commodity price fluctuation, price andincentive wars, bankruptcy of partners, stock market collapse, and recession

Legal/political Liabilities, law suits, governmental incentives/restrictions, new regulations, lobbyingfrom customer groups, instability overseas, confiscations abroad, war, tax structures,and customs risks (inspection delay and missing data on documentation)

Source: Adapted from Deleris and Erhun (2007).

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management of organisations within a supply chain to minimise risk and reduce the likelihoodof disruptions through cooperative organisational relationships, effective business processes, andhigh levels of information sharing’. Norrman and Lindroth (2004) stated that SCRM ‘involvesthe collaborative application of risk management process tools for the purpose of dealing withuncertainties related to logistics activities’. Jüttner (2005) defined SCRM as ‘the identificationof potential sources of risk and implementation of appropriate strategies through a coordinatedapproach among supply chain members, to reduce supply chain vulnerability’. SC risk has alsobeen defined as any risk to the information, material, and product flow from original suppliers tothe delivery of the final product (Christopher et al. 2003).

Waters (2007) defined SCRM as ‘the process of systematically identifying, analysing anddealing with risks to supply chains’. Therefore, it is clear that the various definitions of SCRMare centralised on the concept of SC members’ cooperation to forecast risk in order to design andimplement the appropriate strategies to design a resilient SC that would be capable of overcomingthe challenges resulting from disruptions.

According to Hillman and Keltz (2007) and Ponomarov and Holcomb (2009), a number ofmajor trends contributed to the increased importance of SCRM during the last decade such asglobalisation, outsourcing, lean and agile operations, volatility and variability of demand, highercustomer expectations, and natural disasters and increased terrorist threats.

There is no doubt that risk adjusted SCM can translate into improved financial performance andcompetitive advantage (Hauser 2003; Mitroff and Alpasan 2003). Waters (2007) indicated thatSCRM has numerous benefits to organisations which include but not limited to: the identificationof risks before events actually occur and create a crisis; early assessment of risks allows betterplanning, prioritisation and allocation of resources; alternative responses to risks can be designed,evaluated, compared, and planned; and improved financial performance as a result of uninterruptedoperations. However, it is worth noting that despite the planning and preparation, sometimesorganisations are faced with major challenges as a result of either an unanticipated event or amitigation strategy that did not work as planned. In such cases, organisations must be capable ofreacting quickly and take the necessary measures to determine the best response and implementit in a timely manner (Waters 2007). According to Chopra and Sodhi (2004), most companiesdevelop plans to protect against frequent low-impact risks in their SCs, but Manuj and Mentzer(2008) indicated that many ignore high-impact, low-likelihood risks such as natural disasters.Pochard (2003) recommended that managers must be careful not to solely focus on exceptionalevents and neglect smaller highly frequent risks as small disruptions can be very severe if theyare numerous and can lead to stock-out and lost customers.

Therefore, in order to design a resilient SC, companies need to follow the core elements ofSCRM as described by Waters (2007):

(1) Identify risks to the SC: This step involves the examination of the SC, defining the separateactivities and their relationships, and systematically studying these to find areas of risk. Theoutput from this first step is a list of risks facing the SC.

(2) Analyse the risks: This step defines the potential impact of the risks identified in the firststep based on two factors – the probability that a risky event will occur and the severity ofconsequences when it does occur. Consequently, risks are prioritised according to the impactwhere attention is primarily given to risks with the highest impact. The output from thissecond step is a prioritised list of risks and their expected consequences.

(3) Design appropriate responses to the risk: This step outlines the different responses to dealwith the identified risks. These responses include: prevention (to reduce the probability ofa risky event occurring), mitigation (to reduce the consequences), and response (waiting toevaluate actual events before deciding on a response). The output from this third step is aplanned response to each risk.

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Table 2. Strategies to manage risks.

Strategy Definition

Avoidance Managers are aware of the supply-demand and operation trade-offs associated with the optionsand chose to avoid or drop some of these risks, that is, delay of entry into a market/marketsegment or participating only in low uncertainty markets

Postponement Entails delaying the actual commitment of resources to maintain flexibility and delay the incurringcosts. The extent of postponement depends on demand customisation, component costs, productlife cycle, and product modularity

Speculation It is the opposite of postponement where decisions are made on anticipated customer demandHedging Having a globally dispersed portfolio of suppliers, customers, and facilities such that a single

event, for example, natural disaster does not affect all the entities at the same time and at thesame level

Control Executing certain functions in-house rather than outsourcingTransferring risk The transfer or sharing of risks in a SC can be achieved through outsourcing, offshoring, or

contractingSecurity It is the identification of at-risk shipments through the use of technology

Source: Adapted from Manuj, Dittmann, and Gaudenzi (2007).

Manuj, Dittmann, and Gaudenzi (2007) also suggested a five-step model for SCRM whichincludes: risk identification, risk assessment and evaluation, selection of appropriate riskmanagement strategies, strategy implementation, and mitigation of risks.

It is clear that the first two steps in the previously mentioned models are common, that is, riskidentification and risk analysis, but Manuj, Dittmann, and Gaudenzi (2007) provided more detailsspecifically in the third step which is the selection of appropriate risk management strategies. Theyoutlined the seven strategies shown in Table 2 that can be employed to manage risks: avoidance,postponement, speculation, hedging, control, sharing or transferring, and security.

In step four ‘strategy implementation’, Manuj, Dittmann, and Gaudenzi (2007) stated thatcertain fundamental structural and procedural changes are required in order for organisations toadopt the set of strategies for risk management. Such structural and procedural changes includeflexibility, organisational learning, information systems, and performance metrics. As for thefinal step ‘mitigation of risks’, they declared that even after planning risk management strategies,‘all the risk events cannot be covered . . . to address such risk events, it is important to plan forthe unexpected’ (Manuj, Dittmann, and Gaudenzi 2007). This is consequently done through thedevelopment of contingency plans for worst-case scenarios.

3. Research methodology

In the recent literature, SCRM research mainly focused on investigating the impact of specificsources of disruption and proposed methods for mitigation namely for terrorists’ attacks, naturaldisasters, outbreaks, and regional power outages. However, there was an apparent lack of researchthat investigated the impact of political risks and the resulting disruptions on SCM and the recom-mended strategies for mitigation especially for the MENA region that has been witnessing politicalunrest since December 2010. Therefore, in order to fill this gap in knowledge, this research will beexploratory to describe and identify the impact of the Egyptian revolution on the SC of a numberof companies. Exploration is chosen for this research to gather preliminary information aboutthe topic being investigated. Through the use of semi-structured interviews, this investigationfocuses on examining the degree of the businesses’ preparedness to SC risk in terms of: (1) theability to forecast potential disruptions, (2) the ability to recover from the disruption, and (3) theability to design a resilient SC. The study targeted companies belonging to three main sectors –manufacturing, retailing, and transport and logistics services – to provide a comprehensive and

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yet a multi-faceted view of the topic being investigated. The interview questions focused on thefollowing points:

• The existence of a risk management or SCRM strategy in the firm.• The types of risks generally faced by the firm.• The ability to forecast the events/disruptions resulted from the revolution.• The impact of the revolution on the firm’s operations.• The actions taken by the firm to respond to the disruptions arising from the revolution.• The measures to be taken in the future to design a resilient SC.

Purposive sampling was used in this research to contact potential interviewees. Phone calls weremade to 30 companies that were chosen on the basis of their size and market reputation andonly eight agreed to participate in the study. Companies which refused to participate regarded theresearch topic as a sensitive subject that would lead to the disclosure of confidential informationwhile others showed a lack of interest. The semi-structured interviews were conducted by phone

Table 3. Description of participating companies.

IntervieweeCompany Sector Description Size Operation function

A Manufacturing A global fast moving consumergoods (FMCG) manufacturer with400 brands. It has achieved 10thplace in the 2012 Gartner SupplyChain Top 25 which recognisesthe world’s leading SC across allindustries

Large Global Procurementmanager

B Manufacturing A bottled water manufacturer thatbelongs to a well-establishedbusiness group. This companyholds the second position in themarket in terms of brand equity, aswell as awareness and usage levels

Large Regional Operationsmanager

C Retailing A network of megastores dedicatedto D&IT products and services. Itoffers the best value for money onthe Egyptian market

Large Regional Operationsmanager

D Retailing A chain of supermarkets that spansacross major Egyptian cities andis well known of its low-pricedproducts

Large Local Assistant director

E Transport andlogisticsservices

It is the world’s third largest containershipping company, and it offersdifferent activities, for example,shipping, handling facilities in portas well as logistics on land

Large Global Operationsmanager

F Transport andlogistics

A leading global shipping line, rankedas the second largest carrier inrespect of container slot capacityand of the number of containervessels operated

Large Global Operationsmanager

G Transport andlogistics

An international freight forwardingcompany which provides logisticsand materials management services

Large Global Operationsmanager

H Transport andlogistics

A freight forwarding companywhich mainly acts as an agent fortransporting import and exportcargo through an extensive networkof sub agents around the world

Large Global Chairman

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and each interview lasted for approximately 45 minutes. It is worth noting that the identities ofthe individual companies have not been disclosed on the basis of protecting commercial confi-dentiality. It is anticipated that sufficient information is provided to understand the nature of thecompanies’ operations within each of the three sectors mentioned previously and to draw relevantconclusions without revealing individual identities. This is followed by an evaluation structuredaround the interviews’ questions.

Eight companies participated in this research where four belonged to the transport and logisticsservices sector, two in the manufacturing sector, and two in the retailing sector. Respondentswere Egyptians who belonged to top management and are heavily involved in decision-making.Table 3 provides a brief description of the companies for the purpose of understanding their scopeof operations.

4. Research analysis and findings

4.1. SCRM in Egyptian companies

The interviews first started by asking the respondents about SCRM within their companies andthe common types of risks they face in the market. All the respondents stated that their companiesdo not have a comprehensive risk management strategy, and in the case of a disruptive event, theytend to be reactive rather than proactive in managing the arising situation. Their justification forbeing ‘reactive’ to arising disruptions instead of being ‘proactive’ could be summarised in twomain statements: ‘we do not face a lot of risks’ and ‘our employees are highly experienced indealing with disruptive events’. Therefore, they tend to regard SCRM as not an issue of primeimportance that requires earlier planning because they do not face a lot of risks and because theyhave the necessary expertise to handle disruptive events.

It was also apparent from the respondents’ answers that their companies’ perception towardsrisk management is very functional, no apparent integration was demonstrated among the compa-nies’ different departments in facing risks and consequently collaboration with suppliers or othermembers in the SC is almost nonexistent. Company B further emphasised this observation bystating that ‘the company does not have a SCRM strategy and each department deals with its ownrisks only’. Company F, however, had another point of view on SCRM by stating that:

it is true that our company does not have a proactive SCRM strategy, as we tend to deal with each arising situationseparately. But, consequently, each situation is analysed and then we decide on the best response to be taken if thisdisruption happens in the future.

Company D further added that ‘management is mostly concerned with highly frequent disruptions,and these are the ones we prepare for the most’.

Generally in Egypt, the concept of risk management is yet in its infancy. Possible reasons couldinclude culture, lack of education, the businesses’ primary focus on short term operations andprofit, lack of innovation, and exposure to best practice.

It is also worth noting at this point that risk management in Egypt is not just uncommon inbusiness but also in research. A search on risk management in Egypt revealed very limited resultsprimarily discussing risk management in relation to investment and finance.

As for the risks that the respondents face in the market, it was clear from the responses thatrisks differ from one sector to another. Table 4 shows the types of risks faced by each sector.

4.2. The impact of the Egyptian revolution on the respondents’ operations

The impact of the revolution differed in the three examined sectors. In the transport and logisticssector, the respondents stated that work stopped completely for 10 days, which in turn paralysed

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Table 4. Risks in the different business sectors.

Sector Risks

Manufacturing Shortage of supply, strikes, wrong documentation, and recessionRetailing Short product life cycle, shortage of supply, theft, sudden decrease in prices, shifting

consumer demands, and competitionTransport and logistics Damaged cargo, transshipment delay, carrier delay, hijacking, theft, lack of security

procedures, new trade legislations, personnel performance, climate, and political unrest

the material and information flows throughout many SCs. According to company H, the closureof banks for several days stopped financial transactions between all the parties involved in thetransportation and logistics process. Company E further added that ‘the flow of imports was highlyaffected as foreign exporters were reluctant in shipping their goods to Egypt, fearing cargo lossand payment delays’. This consequently had an impact on transport and logistics companies andon factories which rely heavily on imported raw materials and supplies. As for the companies inthe transport and logistics sector, this translated into a sharp decrease in the number of containerstransported leading to a substantial decrease in revenue. And as for the factories which relyon imported supplies and operate on a just in time (JIT) basis, this resulted in the shutting ofnumerous production lines which later resumed work after two/three weeks’ time, suffering fromsignificant losses. Company F also noted that even after resuming work when containers wereshipped and banks were open, strikes in seaports delayed cargo shipment especially exports. Inaddition, company G highlighted that their road transport services were affected as ‘there wasa shortage of trucks and trailers because operators feared the theft of their vehicles due to theabsence of security and the increase of armed robberies’.

For the retailing sector, the situation was different. Company D which manages a chain ofsupermarkets stated that they suffered from stock-outs on the first two days as customers rushedto buy groceries and necessary products as events escalated, fearing the unavailability of productsin the market and the probability of soaring prices as a result of supply shortage. But althoughdemand was significantly high, company D was not capable of replenishing its supermarketsdue to the closure of their local suppliers and banks. The respondent also indicated that some oftheir stores were damaged and some products were stolen. As for company C, whose products’characteristics are different from company D, suffered from a sharp decrease in sales as digital andinformation technology (D&IT) products are regarded as luxurious and not crucial for customersin time of crisis. Also their stores were targeted for robberies due to the high value of the productsbeing sold and some of their stores suffered from vandalism.

In the manufacturing sector, the absence of security was the root cause of many problems.Companies A and B stated that:

since factories are located in remote areas outside major cities, workers and employees were not capable of going towork due to the absence of security on the road and due to the occurrence of many incidents where people in privateand public vehicles were robbed and sometimes injured by out-laws.

Company A further added that: ‘the absence of security also affected our commitment to deliverproducts whether to local retailers or to seaports for exporting as we preferred to suspend deliveriesto ensure the security of our drivers, trucks and shipments’. Company B also mentioned that thecontents of some warehouses were stolen, and added ‘there are other companies who sufferedfrom the theft of fully loaded trucks especially in Upper Egypt’. As for the delays in production,company A commented that some production lines had to stop due to the shortage of importedsupplies.

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4.3. Evaluating the respondents’ preparedness in facing SC risks

Since respondents previously stated that their companies do not have a comprehensive SCRMstrategy, and dealing with risks is limited within the scope of each department with no apparentintegration between the different functions within the company or with other partners in the SC,it is clear that these companies are not adapting a sound methodology for SCRM. Therefore, afterexploring the respondents’ perceptions towards SCRM, identifying the different types of risksthey face in the market and the impact of the Egyptian revolution on their SC operations, it wasnecessary to evaluate their preparedness to SC risk in terms of the ability to forecast disruptions,the ability to recover from the disruption and the ability to design resilient SCs.

As for their ability to forecast disruption, all the respondents agreed that they neither forecastedthe revolution nor the arising disruptions. For instance, company G stated that ‘although eventsstarted on the 25th of January, it was not until the 28th that we realised that these events are notgoing to end soon’. Company B also added that:

it was beyond our imagination that such a revolution would happen in Egypt and we did not know what the futurewill hold especially with the internet and mobile communication being blocked and the intense violence betweenthe rebels and the police.

It is worth noting at this point that there were clear signs that indicated the probability of occurrenceof such events but companies failed to detect it due to their negligence towards risk management.If these companies were adapting the core elements of SCRM as indicated by Waters (2007),they would have observed that the Tunisian revolution that started in December 2010 due to highunemployment, corruption, poor living conditions, and lack of political freedoms, could inspireother countries in the region suffering from the same deteriorating conditions, nevertheless Egypt.In addition, if these companies were closely monitoring the local market, not just in terms ofeconomic and business conditions but also in terms of social aspects, they would have expectedsuch events to happen and it would not have been ‘beyond our imagination’ as indicated bycompany B.

Subsequently, respondents were asked about the measures they took to respond to the arisingdisruption to examine their ability to recover. Companies G and H in the freight forwardingbusiness indicated that they had to search for alternative trucking companies, which would agreeon transporting containers to and from seaports. Company H added that ‘we had to accept thehigh freight rate they have imposed just to keep the flow of our business going’. In the retailingsector, company D stated that ‘in order to compensate for the lost sales which were due to the veryearly stock outs, we had to make promotional offers on alternative products to boost sales’. Alsocompany C, which suffered from a sharp decrease in sales, stated that they focused on two mainelements to recover: the first was to decrease prices to attract customers and the second was tokeep loyal customers through offering special advantages and service. In the manufacturing sector,company A followed a rather smart strategy to compensate for the losses in the local market and tosafeguard against future recession. CompanyA ran its production lines at full capacity and targetedAfrican and Middle Eastern markets for exports, and in a few months they succeeded in doublingtheir profit. Company B on the other hand was not capable of recovering quickly and they sufferedfrom significant losses. It was not until eight months later that production started to gain somemomentum, according to respondent B. The respondent also added ‘due to the lack of security onthe road, we hired security personnel to accompany our drivers’. Therefore, it could be concludedthat the actions taken by the respondents to recover from disruption are in a way adequate takinginto consideration the fact that they are reactive and did not have previous plans to mitigate risks.

Finally, respondents were asked about what they would have done differently to mitigate thedisruption and the measures needed to design a resilient SC. In the retailing and the manufacturingsectors, respondents indicated that they would implement new security systems to protect theirassets against theft and vandalism. They also stated that they would regularly monitor their SCs

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Table 5. The impact of the revolution on the three sectors.

Revolutions’ Recovery Measures to mitigateSector impact measures taken future disruptions

Manufacturing • Insecurity to transferworkers to factories

• Suspended deliveries• Theft• Production line shutdown• Shortage of imported

materials

• Full capacity production

• Hire security companies• Increase exports

• Regular SC monitoring

• Implementation of securitysystems

Retailing • Stock-outs

• Damaged stores

• Theft• Sharp decrease in sales

• Promotional offers onalternative products

• Decrease prices ofnon-essential goods

• Regular SC monitoring

• Implementation of securitysystems

• Higher safety stock level• Selling store branded items

Transport and logistics • Operations stopped10 days

• Postponement of financialtransactions

• Cancelled orders• Delay in shipment• Shortage of outsourced

trucks• Sharp decrease in number

of containers

• Outsourced highlypriced trucks

• Increase trucks’ fleet

• Decrease dependenceon outsourcing

• Improve communicationwith stakeholders

in order to detect the early signs of any potential risk; however, they did not indicate the methodsthrough which they would do so. Company D stressed that they would keep more safety stockand they would think of new plans to guarantee the continuous flow of supplies. The respondentalso mentioned that they would consider making their own brands in order to decrease the risksassociated with suppliers and to increase their marginal profit. As for companies in the transportand logistics sector, company E stated that they will increase their fleet of trucks and reduce theirdependence on outsourcing to have better control over their operations. And all the respondentswithin this sector agreed that they would also keep a ‘close eye’ on the market and improve theircommunication with stakeholders to do the necessary changes to operations. Table 5 summarisesthe findings of the revolution’s impact on the interviewees’ firms, the recovery measures takenand the measures to mitigate future disruptions.

Comparing the respondents’ answers with the risk management strategies mentioned earlierby Manuj, Dittmann, and Gaudenzi (2007), it could be noted that out of the seven strategiesoutlined earlier, only two were mentioned by the respondents. The first was ‘control’ as indi-cated by companies E and D, where the former will reduce outsourcing through the purchase ofmore trucks, and where the latter will be producing selected products in-house. The second was‘security’ which was mentioned by all the respondents to protect their assets against theft andvandalism.

5. Recommendations

Despite the growing concern for SCRM in academia and the business world, SCRM awarenessis still poor in Egypt. Due to the small sample of the companies targeted in this study, the resultscannot be generalised to the population, but it is safe to state that the results serve as an indicatorof the degree of awareness and importance of SCRM in the Egyptian society.

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Even after more than two years of the revolution, the political situation in Egypt is still unstablewhich stresses the need for comprehensive SCRM strategies for the various sectors in the Egyptianeconomy. Silo operations as indicated by the respondents can no longer continue and companieswould need to foster a culture of collaboration to start across the company’s different departmentsand expand to include SC partners. For companies to start adapting a SCRM methodology, threeissues need to be resolved. The first is to involve experts of political science or politics’consultantsin the process of identifying and analysing SC risks as they would be able to provide insights onthe local and international political situation better than other business experts. The second is toimprove collaboration between the different functions within the company to analyse risks andto set appropriate plans, in addition to identify the role of each party in case of disruption. Thethird is the awareness of their role as a vital link in the SCs of other companies. This awareness ishighly important as it will improve communication and relationships with other SC partners andsupport collaboration in mitigating risks.

It is worth noting at this point that the link between the academia and the business sector isof prime importance. Universities and professional training/research institutes can play a vitalrole in hosting events and training sessions on SCRM to spread the necessary knowledge tothe business sector. Nevertheless, they can also have a positive contribution through conductinglarge-scale SCRM research projects that would target specific or different sectors in the Egyptianeconomy. Examples of these projects could include an examination of the state of SCRM in Egyptand a study on the best SCRM strategies to mitigate disruptions arising from political instability.These large-scale projects would consequently attract and encourage business firms to participate.Furthermore, research could also be conducted to validate the findings from this study by targetinga larger sample of companies from more business sectors to examine the impact of the revolutionon their operations through a survey.

And as the philosopher Desiderius Erasmus stated back in the fourteenth century ‘preventionis better than cure’.

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