The impact of supply chain risks on firm performance: An application in the automotive parts manufacturers

Technological developments have provided the spread of goods and services to the global areas and gradually made the markets more dynamic. The emergence of the industrialization in 19th century and its rapid development has caused very quick changes and development in the production techniques and increase in social needs. This, on the other hand, has increased the importance of supply chain management. Within this framework, a negative event occurring in the supply chain (machine failure, insufficient labor force, delays in the distribution of the product etc.) may affect the performance of all supply chain. Therefore, the risk arises in the supply chain in case of facing such events. The risk is expressed generally as an undesirable, negative condition. However, if it is managed successfully, it may be used as a tool to increase profit. In this scope, when assessing the performance of the supply chain, the identification of the supply chain risks and tracking them continuously become crucial. There are four purposes of this study. The first is to put forth the composition of risks. The second is to determine if there is a significant difference between the level of perceived risk and the effects of these risks in the business performance. The third is to identify if there is an impact of environmental risk, economic risk, and security risk and supplier risks on the operational risk. And finally, the last objective is to determine whether there is an impact of process management and supplier relations, which are considered as risk-reducing strategies, on the operational and supplier risks. For this study, data was collected from 106 firms operating in the automotive sector which are members of Association of Automotive Parts and Components Manufacturers (TAYSAD) and which are operating in Bursa Nilüfer Organized Industrial Zone (NOSAB) by utilizing convenience sampling method and by having face-to-face interviews. Findings show that there is a significant difference between the perceived levels of supplier risk (delivery on time and delivery by the quantity requested), operational risk (system disruption, inventory, and planning risk), security risk (risk of terrorist activities, risk of fire and risk of act of god) and environmental risks (financial risk, demand risk) and their impact on the business performance. In addition, it is determined that economic risk, security risk, and supplier risk influences the operational risk. Another finding of this study is that good supplier relations and process management reduce the operational and supplier risk.