Supply risk management vs supplier selection to manage the supply risk in the EPC supply chain

Abstract

Purpose

– The purpose of this paper is to understand whether a link between the use of supplier selection (SS) and supply risk management (SRM) exists and whether further contextual factors which lead to the use of SRM and of SS exist in the engineering, procurement and construction (EPC) sector.

Design/methodology/approach

– A multiple case study has been undertaken as an empirical analysis to answer a series of research questions. The data have been collected through structured interviews to corporate procurement directors of companies belonging to the Italian EPC sector and operating in an engineer‐to‐order fashion.

Findings

– The results of the research point out that supply risk can be managed through both SS and SRM. These two different approaches are used alternatively by the companies investigated under resource constraints. A further set of contextual factors leading to the use of SRM (project orientation in supply management, use of partnerships with suppliers, corporate standardisation), and a contextual factor leading to the use of SS (need of co‐design) are highlighted in the EPC sector.

Research limitations/implications

– Although the sample of the in‐depth research is representative of the Italian EPC sector, its size implies care in drawing a fully generalizable conclusion. Moreover, the research focuses on companies belonging only to the EPC sector, but the behaviours could significantly vary in other sectors.

Originality/value

– The paper is of value in identifying product‐ and supplier‐related factors for SRM including cultural (project orientation in supply management), strategic (use of partnerships with suppliers), and organizational (corporate standardisation).