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Over the years, the importance of supply chains has increased. The reason of this surge in
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As the need of supply chains increases, the need to manage risk also increases. Risk is an
unforeseen incident that leads to disruption in the flow of supply chains. For example, Nike
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management, but as the world is advancing and the need of supply chain is increasing, there
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supply chain and a general view of supply chain risk management process. The objective of
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Over the years, the importance of supply chains has increased. The reason of this surge in
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As the need of supply chains increases, the need to manage risk also increases. Risk is an
unforeseen incident that leads to disruption in the flow of supply chains. For example, Nike
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Production was hindered due to constraints on shipment and shortages of manpower.
Disruptions in supply chain be internal and external. To control disruptions, companies employ
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management, but as the world is advancing and the need of supply chain is increasing, there
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overview of supply chain management, definitions and classifications of risks associated with
supply chain and a general view of supply chain risk management process. The objective of
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ASSESSING THE SUPPLY CHAIN RISK MANAGEMENT IN THE MINING INDUSTRY IN GHANA AS A CASE STUDY OF TARKWA GOLDFIELDS
1. i
KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY
COLLEGE OF ARTS AND SOCIAL SCIENCES
SCHOOL OF BUSINESS
ASSESSING THE SUPPLY CHAIN RISK MANAGEMENT IN THE
MINING INDUSTRY IN GHANA
AS A CASE STUDY OF TARKWA GOLDFIELDS
A DISSERTATION SUBMITTED TO THE DEPARTMENT OF INFORMATION
SYSTEMS AND DECISION SCIENCES, KNUST SCHOOL OF BUSINESS AS A
PARTIAL FULFILLMENT FOR THE AWARD OF BSC BUSINESS
ADMINISTRATION, LOGISTICS AND SUPPLY CHAIN MANAGEMENT OPTIONS
BY
ANTHONY NANA AMOFA SAPONG
PHILIP AWUDI
FRANCIS DABONNER
NANA POKU AFRIYIE
2. ii
DECLARATION
We hereby declare that, the presentation is our own work towards of BSc. Business
Administration, submitted to the department of Information System and Decision Sciences,
KNUST, school of Business and that, to the best of our knowledge, it contains no material
previously published by another person nor material which has been accepted for the award
of other degree of the university, except where due knowledge has been made in the text.
3. iii
ANTHONY SAPONG (7560312) ……………………... ……………………
Student & Index No. Signature Date
PHILIP AWUDI (7572012) ……………………. …………………..
Student & Index No. Signature Date
FRANCIS DABONNER(2668108) …….……………… …………………..
Student & Index No. Signature Date
NANA POKU AFRIYIE (7586912) …………………….. …………………..
Student & Index No. Signature Date
Certified by;
MR. EMMANUEL QUANSAH …………………… …………………..
Supervisor Signature Date
Certified by
MR. DAVID ASAMOAH ……………………. …………………..
Head of Department Signature Date
4. iv
DEDICATION
We dedicate this work to our parents, families and supervisor for their love, support and
sacrifice throughout our pursuit of this degree programme.
5. v
ACKNOWLEDGEMENT
Our most profound and sincere appreciation goes to the Almighty God for seeing us through
this project. We also want to appreciate our supervisor, Mr. Emmanuel Quansah for his
sacrifice, patience and guidance. We would also like to thank the management and workers of
Goldfields Ghana Limited for granting us the opportunity to conduct the research at their
stations. This dissertation could not have been completed without the tremendous help of our
parents and academic sponsors who have helped us financially.
6. vi
ABSTRACT
Supply chain risk management has become a major concern in the business world due to
globalization, increased product variety, outsourcing and competition. Therefore the purpose
of this study was to assess supply chain risk management in the mining industry with Gold
Fields Ghana Limited (GFGL) as our case study. In so doing our objective was to map out the
supply chain of GFGL‟S, and identify the various risks affecting supply chain as well as
analyse and evaluate the impact of these risks on the supply chain. And finally examine its
supply chain risk management procedure in relation to relevant literature.
This study develops a qualitative and quantitative approach and uses an interview guide to
collect primary data. A systematic review of literature is presented to throw more light on
supply chain management process.
The primary data gathered was analysed in light of the reviewed literature to establish
patterns and relationships. Several issues resulted from the study including the fact that some
identified risks like suplier failure, accidents,warehouse inadequecy and deffective supplys by
GFGL in its supply chain have very critical impact on its operations and could cause the
company to shut down. Others are the fact that company does not focus on risk management
in its supply chain but rather focuses on managing hazards.
Based on the literature and the findings from the primary data collection, it is recommended
that GFGL collaborate effectively with its partners so as to reduce the level of risk that affect
its supply chain and also have risk response or management plan in order to effectively
respond to risk in its supply chain and achieve its objective as a result.
7. vii
TABLE OF CONTENTS
DECLARATION.......................................................................................................................ii
DEDICATION..........................................................................................................................iv
ACKNOWLEDGEMENT.........................................................................................................v
ABSTRACT..............................................................................................................................vi
TABLE OF CONTENTS.........................................................................................................vii
LIST OF FIGURES ..................................................................................................................ix
LIST OF TABLES.....................................................................................................................x
CHAPTER ONE........................................................................................................................1
GENERAL INTRODUCTION..................................................................................................1
1.0 INTRODUCTION ...............................................................................................................1
1.1 BACKGROUND OF STUDY.............................................................................................1
1.2 PROBLEM STATEMENT..................................................................................................3
1.3 OBJECTIVES OF STUDY..................................................................................................4
1.4 RESEARCH QUESTIONS .................................................................................................5
1.5 SCOPE OF STUDY.............................................................................................................5
1.6 METHODOLOGY ..............................................................................................................6
1.7 LIMITATIONS OF STUDY ...............................................................................................6
1.8 SIGNIFICANCE OF STUDY .............................................................................................7
1.9 ORGANIZATION OF STUDY...........................................................................................8
CHAPTER TWO .......................................................................................................................9
LITERATURE REVIEW ..........................................................................................................9
2.0 INTRODUCTION ...............................................................................................................9
2.1 SUPPLY CHAIN MANAGEMENT ...................................................................................9
2.2 SUPPLY CHAIN RISK MANAGEMENT.......................................................................12
2.2.1 SUPPLY CHAIN RISK SOURCES...............................................................................12
2.2.2 Supply Chain Risk Management Process .......................................................................14
2.2.3 Conceptual framework of Supply Chain Risk Management ..........................................19
2.2.4 Supply Chain Risk Management Strategies....................................................................19
2.3 SUPPLY CHAIN RISK MANAGEMENT IN THE GLOBAL ECONOMY...................22
CHAPTER THREE .................................................................................................................25
METHODOLOGY ..................................................................................................................25
3.0 INTRODUCTION .............................................................................................................25
3.1 RESEARCH DESIGN.......................................................................................................25
3.2 RESEARCH STRATEGY.................................................................................................25
8. viii
3.3 POPULATION OF STUDY..............................................................................................26
3.4 SAMPLING PROCEDURE ..............................................................................................26
3.4.1 Sampling Technique .......................................................................................................26
3.4.2 Sampling Size .................................................................................................................26
3.5 DATA COLLECTION ......................................................................................................27
3.5.1 Types of Data Used.........................................................................................................27
3.5.2 Method of Data Collection..............................................................................................27
3.6 DATA ANALYSIS............................................................................................................28
3.7 VALIDITY AND RELIABILITY.....................................................................................28
CHAPTER FOUR....................................................................................................................29
PRESENTATION OF FINDINGS, ANALYSIS AND DISCUSSIONS................................29
4.0 Introduction........................................................................................................................29
4.1 Supply Chain Map of Gold Fields Ghana Limited and Associated Risks.........................29
4.1.1 Upstream Supply Chain..................................................................................................29
4.1.2 Internal Supply Chain .....................................................................................................30
4.1.3 Downstream Supply Chain .............................................................................................31
4.1.4 Gold Fields Ghana Limited Supply Chain Mapping and Associated Risk.....................32
4.2 Risk Analysis and Evaluation............................................................................................34
4.2.1 Risk Analysis ..................................................................................................................34
4.2.2 Risk Evaluation...............................................................................................................38
4.3 Risk mitigation...................................................................................................................39
4.4 Examine Gold Fields Ghana Limited‟s Supply Chain Risk Management Procedure .......41
CHAPTER FIVE .....................................................................................................................43
SUMMARY, CONCLUSION, AND RECOMMENDATION...............................................43
5.1 Introduction........................................................................................................................43
5.2 Summary of Findings.........................................................................................................43
5.2.1 Supply chain map of Gold Fields Ghana Limited and associated risks..........................43
5.2.2 Risk analysis and evaluation...........................................................................................44
5.2.3 Risk treatment and mitigation.........................................................................................44
5.2.4 Examine the risk management procedure of Gold Fields Ghana Limited‟s supply chain.
..................................................................................................................................................44
5.3 Conclusion .........................................................................................................................45
5.4 Recommendations..............................................................................................................45
REFERENCES ........................................................................................................................48
APPENDIX..............................................................................................................................54
9. ix
LIST OF FIGURES
Figure 2.1 Structure of the supply chain network (Adapted from: Lambert et al, 1998) ........11
Figure 2.2 Supply chain risk management (Adapted from: ISO 31000, 2009) .......................19
Figure 4.1 Supply Chain Map and Associated(GOLDFIELDS GHANA LTD).....................33
Figure 4.2 Upstream Supply ....................................................................................................35
Figure 4.3 Internal....................................................................................................................36
Figure 4.4 Downstream Supply Chain.....................................................................................37
10. x
LIST OF TABLES
Table 4.1 Risk Evaluation........................................................................................................38
Table 4.2 Risk Mitigation ........................................................................................................40
11. 1
CHAPTER ONE
GENERAL INTRODUCTION
1.0 INTRODUCTION
The purpose of this chapter is to give an overview to the study on the supply chain risk
management in the Ghanaian mining industry, using Gold Fields Ghana Limited (GFGL),
Tarkwa as the case study. The chapter seeks to identify the background study, the objectives,
research questions, scope of study, limitation of the study, significance of study and
organization of study.
1.1 BACKGROUND OF STUDY
The development of a highly efficient and completely integrated global supply chain in recent
years has been a great boon to industrial stakeholders worldwide (Lee, 2008). Obviously, the
lifeblood of any business is the delivery of products and services on-time. The last 20 years
has seen supply chain management practices evolving toward more lean process approaches
so as to reduce waste within the overall chain. Vanany et.al (2009) asserts that, the
intensifying business competition since the 1990‟s has forced firms to improving efficiency
in many aspects of their business. Concepts such as zero inventory, just-in-time production,
reductions in the number of distribution facilities and supplier rationalization have decreased
total supply chain costs, but increased risk has been the result. In the best possible world
according to Lee (2008), if one plans accordingly, disruptions do not occur. In the real world
nonetheless, disruptions do and will occur; and the best business plans are those that forestall
and prepare for this inevitability.
12. 2
A popular instance of Supply Chain Risk Management is when in 2000, fire destroyed an
electronics component plant in New Mexico. This plant supplied both Eriksson and Nokia.
Nokia promptly reacted, securing components from the market. On the contrary, Eriksson
was left with supply shortages which transformed into direct lost sales appraised at $390
million according to Berger et al. (2004). The resultant loss of Eriksson‟s market share
supremacy to Nokia may have been the most significant consequence of this event (Tang,
2006). To Chopra and Chopra et al. (2004), the diverse reactions from comparable players to
a single event at a particular time have become a crucial illustration point, which shows the
importance of monitoring and managing risks in the supply chain.
Also, in reference to Lee and Pierson (2011), the Tohoku earthquake and later tsunami in
March 2011 in Japan exposed how one event could disrupt many components of global
supply chains, including supply, distribution and communications. In further demonstration,
the case of Bosch in 2005 cannot be overlooked. A damage worth millions of dollars to the
German components supplier which delivered defective high- pressure pumps to customers
for diesel fuel injection systems. Although a sub-supplier of Bosch was responsible for this, it
affected the entire supply chain (Thun et al 2011).
The above instances highlight that optimized financial performance requires a constant
analysis of the main risks spanning this progressively complex supply network which
connects suppliers, manufacturers, distributors, retailers and customers. Supplier bankruptcy,
fluctuating exchange rates and supply disruptions due to labor strikes as variables may cause
disorder on the supply chain. Using the perspective of risk in evaluating supply chains result
in a greater understanding of the possible sources and most significantly, the probable costs
of a disruption. According to Lee (2008), by adopting a risk-adjusted technique to supply
chain management, organizations can effectively ensure the efficient supply of products and
services, while taking into account the possibilities of costly delays and stoppages.
13. 3
Supply Chain Risk Management (SCRM) forms the connection between the organization,
suppliers, customers and the business environment. It promotes synergy and reduces
dependency. The interest for supply chain risks and how to handle them has been growing in
the last few years especially in the mining industry due to its operations considered as
hazardous. And more so, such hazards not being completely obliterated thereby posing a
considerably high risk to the health and safety of employees and even other assets used on
sites. In industry, particularly sectors moving towards extensive supply chains (e.g. due to
outsourcing) and being faced with increasing uncertain demand and supply as well, the
subject of supply chain risk handling and risk sharing along the supply chain is a very
important topic.
1.2 PROBLEM STATEMENT
In today‟s crisis prone and rickety business environment, a principal issue of concern for
researchers and supply chain practitioners alike is risk management. Supply chain risk
management (SCRM) is made up of the field in relation to the identification and elimination
of components of uncertainty in the supply chain spread by fluctuations in demand and/or
supply e.g. demand variability, unstable supply lead times etc. According to Kleindorfer &
Saad (2005), SCRM in general focuses on three areas to alleviate risks: the design of product
supported by the supply chain; the supply chain itself, comprising the location of inventories,
the transportation modes, and the sourcing arrangements; and the operational control of
supply chain, comprising emergency/crisis response.
The field has attracted many researchers and practitioners, due to crises emerging more often
in the modern era and supply chains having to face them (Manuj & Mentzer, 2008; Ponis &
Koronis, 2012). Numerous researchers wanting to develop SCRM strategies presented SCRM
14. 4
frameworks and models. In the words of Soni & Kodali (2011), frameworks and models are
constituted of functional elements or constructs.
The harsh economic environment caused by the depreciations in the Ghana Cedi, high
inflation and interest rates, erratic power supply led to the collapse of many firms in the
country in recent times. The surviving firms adopted techniques which enabled them to at
least break-even by minimizing risks and maintaining their composure in this highly
competitive Ghanaian economy. In reference to a publication in The Ghanaian Times (2014),
the mining industry in Ghana was experiencing difficult times due to the decline in gold price
worldwide, increase in inflation rate, the upward review of statutory fees and charges, which
had affected inputs and business processes.
Hallikas et al. (2004) asserts that, many firms inadvertently introduce more risks in the supply
chain networks, striving for efficiency or trying to act independently. It is therefore based on
this premise that this study is focused on the supply chain risk management in the Ghanaian
mining industry, using Gold Fields Ghana Limited, Tarkwa as the case study.
1.3 OBJECTIVES OF STUDY
The general purpose of the study is to assess the supply chain risk management in the mining
industry in Ghana, using Tarkwa Goldfields as a case study. The specific objectives of the
study are:
1. To map out the supply chain of Goldfields and identify the various risks affecting
the supply chain.
2. To analyse and evaluate the impact of these risks on Goldfields overall supply
chain objective.
15. 5
3. To find out how Goldfields mitigate these risks.
4. To examine the risk management procedure of Goldfields.
1.4 RESEARCH QUESTIONS
These questions would be answered by the proposed research;
1. What is the supply chain of Goldfields and what risks affect this supply chain?
2. What impact will these risks have on the overall supply chain objective of
Goldfields?
3. How can these risks affecting the supply chain of Goldfields be mitigated?
4. What is the risk management procedure at Goldfields?
1. 5 SCOPE OF STUDY
Contextually, assessing the supply chain risk management in Gold Fields Ghana Limited.,
Tarkwa will be the focus of this study. The management of the supply chain risk is grounded
on the implementation of strategies to manage both every day and exceptional risks along
the supply chain based on continuous risk assessment with the objective of reducing
vulnerability and ensuring continuity, hence the scope. The Tarkwa Gold Mine of Gold
Fields Ghana Limited is the largest mine in Ghana. Mining currently takes place from six
pits, Pepe, Mantraim, Atuabo, Teberebie, Kottraverchy and Akontansi. The project also
consists of two heap leach facilities and a CIL plant. The scope will therefore cover the
capacity of the supply chain managers and all other stakeholders in effectively applying risk
management process tools to deal with risks and uncertainties caused by, or impacting on,
logistics related activities or resources in the supply chain of the organization under study
16. 6
1.6 METHODOLOGY
This study uses case study as its research approach. The collection of information for this
research will be based on interviews and self-administered questionnaires. This is a
quantitative study. Data will be collected from 30 respondents of the procurement,
production, logistics and distribution departments of Gold Fields Ghana Limited, Tarkwa.
Collection of data will be done through the use of both primary and secondary sources. For
the primary source, data will be collected from respondents on the field by the use of
interviews and self-administered questionnaires. In addition, journals, books, newspapers,
published documents, and also the internet will be consulted to supplement the information
collected from the field serving as the secondary source of data. The data collected will be
analyzed quantitatively by the use of descriptive statistical tools. This will provide a more
graphical representation for the analysis of the data. The researcher intends using the
Statistical Package for Social Science (SPSS) software to process the collected data.
1.7 LIMITATIONS OF STUDY
The allotted time for this study‟s completion was a problem. This is due to the fact that the
respondents had to be conversant with researcher before they would even relay information
sought by the researchers. Data was not only collected from respondents but also from
journals, articles, books and other publications on this study topic or similar from sources
including the internet and the library. This took an enormous amount of time.
Certain information from the workers of the Gold Fields Ghana Limited, Tarkwa were very
difficult to get. Some of the respondents withheld some vital informal when they were
approached by the researchers during the data collection process. Others also gave the
researcher a very tough time before giving out all the relevant information.
17. 7
Costs of transportation, printing of material and internet research was extremely high. There
was an increase in the budgeted amount before the study was completed. And this was a
financial hindrance to the researchers.
Though these limitations were considered as a drawback, it did not affect the outcome of this
study in any way. The researcher was able to complete the research within the allotted time;
all relevant information from workers was gained; and extra funding from philanthropists
secured finances for the completion of the study.
1.8 SIGNIFICANCE OF STUDY
This study provides an outline for supply chain risk management in the Ghanaian mining
industry and the world at large especially stakeholders of the Gold Fields Ghana Limited
(GFGL), which operates in Tarkwa.
In expectation, the study helps policy makers such as the government of Ghana, the Ghana
Chamber of mines, the Ghana Minerals Commission and any other stakeholder(s) in
regulating the activities of the mining companies operational in the country. The results
would be of relevance to other industries which are faced with supply chain risks and will
serve as a guide on what strategies to adopt in its management.
This study will again contribute tremendously to the academia. Knowledge ascertained goes a
long way of brightening similar research already conducted; serving as a benchmark for
further research to be conducted and even references to future researchers who would
conduct studies in this or any other related field
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1.9 ORGANIZATION OF STUDY
The study was organized into five chapters. The chapter one is made up of the introduction,
the background of the study, the problem statement, the objectives, the research questions,
the scope of the study, the limitations of the study, the significant of the study and the
organization of the study. The chapter two scrutinizes the review of both the theoretical and
empirical literature on the study. With the chapter three, how the research was conducted
laying emphasis on the research methodology was discussed. The chapter four is where the
data collected was analyzed and discussed. And the last being the chapter five, summarizes
the findings, concludes and makes recommendations on the study.
19. 9
CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
This chapter reviews literature on the theories of supply chain management and supply chain
risk management. It also explores supply chain risk management in the mining industry and
other industries across the globe and in Ghana as well.
2.1 SUPPLY CHAIN MANAGEMENT
Mentzel et al (2001), defines supply chain management as the systematic, strategic
coordination of the traditional business functions and tactics across such business functions
within a particular company and across businesses within the supply, for the purpose of
improving the long term performance of the individual companies and supply chain as a
whole. With Handfield et al. (2002), supply chain management is the integration of the
activities associated with flow and transformation of goods and information through
improved supply chain relationships to achieve a competitive advantage.
With this, it could have said supply chain management has been defined without spot but
Chen et al (2000) propounded that supply chain management is the set of methods utilized to
efficiently integrate suppliers, manufactures, warehouses and stores so that goods are
manufactured and distributed at the right quantities, to the right locations and at a right time,
in order to reduce system-wide costs while satisfying service level requirements.
Based on these definitions, the objective of the management of supply chain can be said to be
the synchronizing of the customer‟s requirement with the material flow from suppliers so as
to affect a balance between the mostly considered conflicting goals of high customer service,
the low inventory management and the low unit cost. But in attaining this, supply chain
20. 10
management is faced with risks which are of crucial significance because ineffective
management of these can cripple the whole organization.
Stressing on Min & Zhou (2002), when a supply chain network is being structured, it is
necessary to recognize who the supply chain partners are. Meanwhile Cooper et al. (1997),
propose a guideline on a supply chain network should be structured. These structures are: the
type of a supply chain partnership; a supply chain network‟s structural dimensions; and the
characteristics of process link among supply chain partners.
A requirement for building the supply chain link is the understanding of the structural
dimensions of a supply chain (Min, 2015) .The supply chain can be analyzed in two
dimensions; horizontal structure and vertical structure. Lambert et al. (1998) asserts that the
horizontal structure denotes to the number of tiers across the supply chain, whereas the
vertical structure denotes the represented numbers of suppliers and customers within each
tier. The figure below depicts this structure.
21. 11
Figure 2.1 Structure of the supply chain network (Adapted from: Lambert et al, 1998)
In its simplest form, a supply chain is comprised of a company and its suppliers and
customers. This is the elementary group of participants that forms a simple supply chain
(Alor-Hernandez et al., 2011). As such, an increase or decrease in the number of suppliers
and/or customers will change the dimension of the supply chain. An instance is when the
supply chain becomes narrower as some companies make tactical moves toward supply base
reduction or customer selectivity. Outsourcing thus the inclusion of third-party logistics
providers or functional spin-offs will also amend the dimension of the supply chain by
lengthening and widening the supply chain (Min, 2015).
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2.2 SUPPLY CHAIN RISK MANAGEMENT
The Supply Chain Risk Leadership Council (2011) defines supply-chain risk as the likelihood
and consequence of events at any point in the end-to-end supply chain from raw materials
sources to end use of customers. SCRLC (2011) further go on to define supply-chain risk
management (SCRM) as coordinating activities so as to directing and controlling an
enterprise‟s end-to-end supply chain, regarding its supply-chain risks. The International
Organization for Standardization (2005) asserts that supply-chain risk management integrates
numerous previous or ongoing initiatives, comprising those for supply-chain security and
business continuity. Supply chain security management system seeks to resist intentional,
unapproved act(s) designed to cause damage or harm to, or by, the supply chain (ISO, 2007).
According to ASIS International and BSI, (2010) SCRM goes beyond this by not only
seeking to address such acts but also to stimulate business continuity and to mitigate any
disruptions, that is, events that interrupt normal business, operations, activities, or processes.
Events as such may only be intentional acts as sabotage and/or unintentional acts as a
hurricane. They could both be anticipated events, such as political unrest or unanticipated
events, such as an earthquake.
2.2.1 SUPPLY CHAIN RISK SOURCES
Variables which are unpredictable or even so with certainty, and from which disruptions can
occur to an organization are known as sources of supply chain risks. Mason-Jones and Towill
(1998) from an understanding of inter-organizational supply chain suggested five (5)
overlapping supply chain risk sources categories, namely: environmental risk sources;
demand and supply risk sources; control risk sources; and process risk sources. This study
23. 13
however distinguishes among environmental, supply and demand risk sources on one hand,
and processes and control mechanisms on the other hand as a risk amplifier or absorber.
According to Zsidisin et al. (2000), environmental risk sources encompass any external
uncertainties emanating from the supply chain like disruption caused by political (eg. fuel
crisis), natural (eg. earthquake) or social (eg. terrorist attacks) uncertainties. Environmental
risks may cause demand or supply risk for the supply chain, and this makes these three
sources overlap. To the supply chain, in comparison to external, environmental, demand and
supply risks sources are internal.
Supply risk in the words of Svensson (2002) is the uncertainty related to supplier activities
and supplier relationships in general, thus the transpiration of important and/or unsatisfactory
failures with inbounds goods and services. Likewise, demand risk is any risk concomitant
with outbound logistics flows and product demand that can either be caused by inbound
disruptions or by volatility of fads, seasonality, short product life cycles or new product
adoptions (Johnson, 2001). From the supply chain perspective, demand and supply risks
describe the route of potential disruptive effects and are not limited to dyadic relationships
among two directly associated vendor and customer organizations.
Process risk sources refer to the design and application of processes intra and inter entities in
the supply chain and can either intensify or absorb the effect(s) of risks in the supply chain.
It is suggested here that a characteristic of supply chain risk sources is that they can be
inseparably linked to the supply chain structure. Also, supply chain control mechanisms like
policies and decision rules in regard to order quantities, safety stocks and batch sizes can
either increase or absorb risk effects.
Intensifying the idea of supply chain risk, it can be debated a supply chains‟ risk exposure
determines its vulnerability. Therefore, supply chain vulnerability is defined as an exposure
24. 14
to any serious disturbance rising from supply chain risks and upsetting the supply chain‟s
ability to effectively serving the end customer market (Juttner, 2005).
2.2.2 Supply Chain Risk Management Process
The process of supply chain risk management according to SCRLC (2011) is in four (4) steps
as elaborated in the following:
1. Identifying Internal and External Environments
The process of SCRM arises with identifying internal and external environments. Within an
organization, risks may be present at discrete levels and entities. Mining risks exist at mining
sites. Supplier risks exist at supplier sites. Distribution risks exist at the suppliers and in
downstream and upstream transportation and logistics systems. Legislative, intellectual
property, compliance, and regulatory risks exist at the regional or country level for
multinational firms. Lastly, strategic risks exist at corporate level or business-unit.
Organizations may unintentionally overlook internal risks. Such risks may include those
presented by a rogue employee, and also those as a result of inadequate organizational
structures, strategies, or policies. The external environment in which an organization and its
suppliers must operate can also pose differing risks. An example is when some suppliers face
meteorological risks, and others, due to distance, may have higher transportation risks.
Mapping the organization‟s supply chain can help it identify the risks faced and how best to
order and tackle them.
Firms need to identify the criteria for determining what might pose a risk to operations so as
to prioritize and address risks. A potential preliminary point is the supply chains for the
products mostly affecting firm profitability. Firms may use several criteria to identify risks
25. 15
(Williams et al. 2007). The Pareto analysis also known as the A-B-C analysis can help firms
in identifying the proportion of goods and suppliers on which it most depends in profitability
or criticality terms, and hence the goods and suppliers which can pose the most risk to its
supply chain.
2. Risk Assessment Process
Once a firm comprehends how to recognize risks, it may undertake risk identification, risk
analysis and risk evaluation.
Risk Identification
Risk identification may comprise using a list of common risks containing external risks such
as natural disasters, labor uncertainty, sabotage or accidents; supplier risks such as financial
issues, production problems or subcontractor problems; distribution risks such as warehouse
inadequacies, supply pipeline constrictions or cargo damage; and internal risks such as
facility unavailability or personnel availability. Such a process will again entail prioritizing
risks by the threat as measured by the likelihood and consequence they pose to a firm‟s
operations. In identifying risks, firms may also want to consider:
1) Number and location of suppliers.
2) Number and origin of shipments.
3) Contractual terms defining responsibility for shipping.
4) Modes of transport and routes for shipments.
5) Other logistics providers or partners involved in the supply chain who handle
shipments.
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Risk Analysis
The process of risk analysis should estimate the probability and consequence of risks a firm
faces and accordingly prioritize them for the ultimate treatment. Organizations may choose to
rank events of risk based on the qualitative overall risk level. Such a basic approach should
only be used for the preliminary risk register, but offers an easy way to quickly prioritize
supposed risks and select those which should receive priority attention (British Standards
Institution, 2008).
Once a firm, say a mining company has identified its top risks, it can use more sophisticated
methods such as the bow-tie method in fully understanding the nature of the risk and in rating
the likelihood and outcome of inherent risk and residual risk.
Risk Evaluation
Firms may use their ratings of the probability and result of risks before and after treatment in
evaluating residual risk levels averse to acceptable risk levels, that is their risk tolerance. If
found that their risk tolerance is lesser than the probability and result of residual risks, then
firms need to devise further risk treatments in reducing the level of residual risk. Acceptable
risk levels are unique to each organization and its supply chain. They may vary by product,
commodity or service as well as over time. For different levels of the organization, different
risk-tolerance levels may be set.
3. Risk Treatment
Once a firm has recognized and prioritized the risks faced by it, it can then devise risk
treatment plans.
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Protecting and Securing the Supply Chain
An effective SCRM program must safeguard that an organization and its partner‟s device
appropriate measures which will fully secure goods and components from the origin point to
the final destination. Supply chain security is necessary from two perspectives; first,
businesses need to prevent loss from damage or theft; and second, firms need to prevent
unauthorized interruption with shipments that could enable addition of contraband loss of
intellectual assets or technology contained in the shipments and tampering.
Responding to Events
Enterprises may still confront crises even with the best laid plans, in their supply chains.
Crises are characterized as events which threaten the organization, with high stress, intense
time pressures and the need for a rapid but careful decision making. A crisis can be defined as
an unstable condition involving a significant change that requires urgent attention and
response to protect life, property, assets, the environment, operations or income and
reputation.
Crisis management according to ISO (2007) comprises of the overall tactical and strategic
responses of an organization in recognizing and responding efficiently, effectively and
comprehensively to actualize threats. It encompasses proactive measures in detecting,
responding to and recovering from a crisis event. The phases of crisis management are:
Preparation; Response: Recovery and Business Resumption; and Testing, Training and Plan
Maintenance.
Continuity of Operations and Recovery
Business continuity planning encompasses those activities, programs, and systems developed
and implemented prior to an incident that are used to diminish, respond to, and cover from
28. 18
supply-chain disruptions, disasters, or emergencies. It is not a one-time project but an
ongoing process. A thorough and tested plan will give an organization the framework to
effectively respond in an emergency, focusing on protecting property and employees,
communicating to significant stakeholders and to recover and restore the most critical
business undertakings within an acceptable time. To be effective, planning of business-
continuity must be an integrated management process in support by the top levels and the
managed at both organizational and operational levels.
4. Continual Monitoring of Risks and Their Treatment
Once an organization has set-up an SCRM program, comprising the processes for identifying
and treating risks, it should also undertake a program of monitoring, processes of evaluation,
plans and capabilities via periodic review, post-incident reports, testing and other exercises.
Testing and Adjusting the Plan
The goals and expectations of testing and exercises include:
Determining if a process of crisis-response works and how it can be improved.
Reducing time to accomplish a process.
Testing capacity.
Incorporating lessons learnt from previous tests and actual incidents.
Accumulating knowledge and awareness among employees about the SCRM plan.
Testing should occur at regularly scheduled intervals.
Areas of Continual Adjustment
Some risks may not change much over time especially those posed by hurricanes and
earthquakes. Other risks that organizations face can change, such as those associated with
29. 19
their processes, suppliers or their regulatory environment. Due to this, firms need to observe
risks and how to address them over time.
2.2.3 Conceptual framework of Supply Chain Risk Management
Figure 2.2 Supply chain risk management (Adapted from: ISO 31000, 2009)
2.2.4 Supply Chain Risk Management Strategies
In reference to Norrman and Jansson (2004) at the strategic level, risk management is focused
on identifying and assessing the possibilities and consequences of risks, and choosing
appropriate risk strategies to reduce the probability of, or losses associated with adverse
events. To Manuj and Mentzer (2008) there are only three motives or any business to manage
risk and these are: the agency motive which argues relatively low risk firms have low firm-
IDENTIFYING INTERNAL AND
EXTERNAL ENVIRONMENTS
RISK ASSESSMENT
RISK EVALUATION
RISK ANALYSIS
RISK IDENTIFICATION
RISK TREATMENT
MONITORING
AND
REVIEW
COMMUNICATION
AND
CONSULTATION
30. 20
value; second, the cash flow motive which suggest higher cash flows are associated with
lower business risk; and the rate of return motive which asserts a positive relationship exists
between rate of return and business risk. Juttner et al. (2003) classified risk management
strategies in the following categories:
Avoidance
This approach is used when risks associated with functioning in a given product or
geographical market, or working with a certain customer or supplier is considered
unacceptable. With this, there is awareness of the demand-supply and/or operating trade-offs
related. In references to Miller (1992), avoidance may take the form of exiting via delayed
entry, divestment of specialized assets or participating only in low uncertainty markets.
Postponement
Postponement comprises of a delay in actual resource commitment in maintaining flexibility
and delaying the incurring costs. The extent of postponement depends on demand
customization, product life cycle, component costs and product modularity (Chiou et al.
2002).
Speculation
With speculation, decisions are made on anticipated demand of customers thereby making
this strategy opposite the postponement strategy. This strategy is also known as assumption
or selective risk taking.
31. 21
Hedging
There are two ways to hedge risks: the statistical approach which deals with the law of large
numbers; and the economic approach which only works when that same event would occur
for many people at the same time. The ideal hedge strategy however is the combination of the
two approaches in achieving a position such that no financial catastrophe exposes the insurer
to risks higher than can be afforded.
Control
With this strategy, some of the risks provide incentive(s) for vertical integration such as
opportunism and asset specificity by supplier, supplier-buyer power balance and capacity
constraints. Vertical integration can increase control by decreasing risks of demand or supply
failures in the supply chain. This control strategy however can change variable cost(s) into
fixed cost(s).
Transferring/Sharing Risk
This strategy can be achieved through outsourcing, contracting and off-shoring. A portfolio
of contracts can be used in inducing retailers with different risk aversion levels to selecting
unique contracts. This influences retailers in ordering quantities that maximize the expected
value. Contracting can may be used in countering inefficiencies created by the retailer risk
aversion (Cachon, 2004).
Security
According to Downey (2004), contemporary technological research in areas of sensors which
are able to detect nuclear, chemical and/or biological elements could help in identification of
at-risk shipments. The capability to arranging what is moving, identifying unusual elements,
32. 22
concentrating on them and dealing with the remainder of the movements through a sampling-
based process could be a viable strategy.
2.3 SUPPLY CHAIN RISK MANAGEMENT IN THE GLOBAL ECONOMY
In recent years, the widespread disturbances caused by fuel protests, and by foot and mouth
disease in the UK, by the SARS outbreak in China, or by terrorist attacks and threat of
weapons of mass destruction in USA, Canada and Hong Kong have transformed the
perceptions of security across supply chains and have emphasized their vulnerability. In our
global marketplace which is technology-entwined, an earthquake in Asia may seriously upset
business in Europe or North America. Such is the case of Daimler Chrysler, where Hurricane
“Floyd” flooded a plant manufacturing suspension parts in Greenville, North Carolina. The
result, seven (7) of the company‟s other plants, across North America had to be shut down for
seven (7) days (McGillivray, 2000).
Likewise, Toyota was required to shut down twenty (20) of its forty (40) assembly lines for
six (6) weeks after a fire at the company‟s brake-fluid proportioning valve supplier. Costs
caused by this disruption were a projected $40 million per day (Nelson et al., 1998). The
bankruptcy of chassis manufacturer „UPF Thompson‟ in the United Kingdom at the end of
2001 had abrupt and grave effects upon its major customer, Land Rover, which encountered
the likelihood of having to suspend production of the discovery (Carter et al., 2002). Even
lately, the ten-day (10) shutdown of 29 ports in the US is supposed to have cost the US
economy $1 billion a day.
Moreover, according to Simpson et al. (2002), due to vulnerable Japanese car manufacturers
like Nissan and Toyota had to halt production, the East Asia as predicted would have slipped
33. 23
into a recession if the dispute had gone on for any length of time. These instances
demonstrate vividly that a disturbance affecting a unit anywhere in the supply chain can have
a direct consequence on a corporation‟s ability to continue operations, provide critical
services to customers or get finished goods to market.
Modern supply chains are very complex, with many similar physical and information flows
occurring in order to ensure that produce are provided in the right quantities, to the right
place in a cost-effective manner. Accordingly, some authors have proposed that supply
networks may be a more accurate term than supply chains (Christopher et al., 1998). It has
also been recommended that the drive towards more efficient supply chains during recent
years has resulted in the supply chains becoming more susceptible to disruption (Christopher
and Lee, 2004; McGillivray, 2000; Engardio, 2001).
Given the rising interdependence among worldwide economies, it‟s no surprise globalization
ranks as a top supply chain challenge. The mining industry has especially embraced these
changes more quickly than some industries, more widely sourcing in lower-cost countries
than our overall industry sample. However, global sourcing has led to many issues that
companies encounter, including unreliable delivery (65 percent), longer lead times (65
percent) and issues with new sources (60 percent), with an additional 22 percent of
respondents, on average, anticipating increased problems within the next three years. These
challenges in delivery and quality are reflected in sourcing priorities (IBM, 2008).
Mining companies are mainly focused on total cost when working with suppliers, fewer on
the suppliers‟ delivery or overall capabilities. A more complete supplier relationship strategy
may form an opportunity for improvement. Top supply chains report less pain and more
exciting gains from globalization over the past three years, indicating that the financial
34. 24
advantages of globalizing markets and operations clearly outweigh the negatives. Leaders
tend to excel in the critical areas of cost containment and overall supply chain performance.
Mining companies track closely with top supply chains in implementing most of the globally
oriented practices covered by the survey, only trailing by a few points or achieving parity on
the others. Leaders and M&M companies had similar scores for direct global sourcing, low-
cost country sourcing, global sourcing of indirect materials and using shared services for
procurement. The largest divergence between top supply chains and M&M companies was in
the use of supplier relationship management programs, with 93 percent of leaders versus 70
percent of M&M companies using them. When compared to other industries with more
complex sourcing, such as electronics, M&M performs well in its ability to locate
experienced and skilled inter-country suppliers.
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CHAPTER THREE
METHODOLOGY
3.0 INTRODUCTION
In evaluating supply chain risk management, data to be collected must be reliable so as to
enable effective analysis, which has a direct influence on findings, conclusions and
recommendations on the study. This chapter concisely discusses research tools employed and
methods that will be used in the process of data collection. The discussion covers the research
design and strategy, the types of data to be collected, the sources, population and sample size,
data processing and analysis as well as reliability and validity.
3.1 RESEARCH DESIGN
This study uses case study as its research approach. The approach employed is used to
emphasize the thorough examination of the setting. Because the study seeks to offer an
accurate profile of the current state of supply chain risk management in GFGL, Tarkwa, the
research can be described as descriptive. The single case study design is used due to the need
to investigating the precise occurrence in the organization.
3.2 RESEARCH STRATEGY
This study adopted the use of both quantitative and qualitative approach. The quantitative
approach yielded an unbiased result which was generalized to some larger population due to
the numbers it provided. The qualitative approach on the other hand provided answers to
36. 26
research questions which were not asked originally and as such provided insight especially in
this case of assessing supply chain risk management in GFGL, Tarkwa.
3.3 POPULATION OF STUDY
For the purpose of this research, the population consists of people in the procurement,
production, logistics and distribution departments of Gold Fields Ghana Limited, Tarkwa due
to these entire departments playing crucial roles in the supply chain of the organization. The
company has engaged about 5,612 people in direct employment but the population pf interest
to this study is thirty (30) people.
3.4 SAMPLING PROCEDURE
3.4.1 Sampling Technique
In the selection of respondents, the study adopted the purposive sampling technique since the
departments of procurement, production, logistics and distribution are very important to the
study. This made certain that, the sample drawn is a correct representation of the population
of interest because this sampling technique enables the researchers in using their judgments
in selecting cases that will best enable research question(s) being answer and objectives met.
3.4.2 Sampling Size
The GFGL, Tarkwa has a workforce of more than 5,612 but the various managers in charge
of procurement, production, logistics and distribution departments were used since they are
37. 27
considered knowledgeable in providing the required information about supply chain risk
management of the firm. A total number of eighty (80) respondents were sampled.
3.5 DATA COLLECTION
3.5.1 Types of Data Used
This study makes use of both primary and secondary data sources. The primary source of data
was ascertained from the information given by the respondents. The secondary source of data
was added to complement the information collected from the field. And this comprised of the
use of journals, books, newspapers, media reports, published documents, and also the
internet.
3.5.2 Method of Data Collection
The primary data was gathered through questionnaires and semi-structured interviews with
the managers in the procurement, production, logistics and distribution departments of
GFGL, Tarkwa. In addition, the secondary data was ascertained from various sources
including the internet, relevant reports from other researchers, journals published documents
of the company and newspapers.
3.5.1 Interview Guide
Comprehensive interviews were conducted with the several managers within the
procurement, production, logistics and distribution departments GFGL, Tarkwa.
The interviews were semi-structured though the respondents were allowed to talk on issues
relating to them but the researchers had themes on which questions were asked. It comprised
38. 28
of questions relating to the upstream (suppliers), internal (production) and downstream
(wholesalers and retailers) of the supply chain and also the risk(s) they face and how these are
managed.
3.6 DATA ANALYSIS
The data collected from primary sources were organized, synthesized and examined using
both quantitative and qualitative techniques. In eliminating errors and taking care of
inconsistencies, a cross-check was made on the administered questionnaires to ascertain their
completeness and the accuracy of information provided. The Statistical Package for Social
Sciences (SPSS) was used to analyze the data. Descriptions were used for analysing the
qualitative data. Charts were used in ranking the various risks affecting the supply chain to
ascertain the severity of the particular risk on the supply chain objective.
3.7 VALIDITY AND RELIABILITY
Reliability refers to the extent to which your data collection techniques or analysis procedures
will yield consistent findings. Validity is concerned with whether the findings are really about
what they appear to be about. Saunders et al (2009). This terms validity and reliability are
often not viewed separately in qualitative studies but move together. The study will ensure
credibility by assuring participants of anonymity in the analysis of sensitive issues and
recording the data accurately through the use of the company‟s document and tape recorder.
39. 29
CHAPTER FOUR
PRESENTATION OF FINDINGS, ANALYSIS AND DISCUSSIONS
4.0 Introduction
This chapter consists of presentation and analysis of data collected from the various
departments of Gold Fields Ghana Limited. Data collected comprise of information from all
respondents of the study and analysis based on the findings of relevant reviewed of literature.
The findings of the study are discussed based on the various objectives that define the study.
4.1 Supply Chain Map of Gold Fields Ghana Limited and Associated Risks
4.1.1 Upstream Supply Chain
We found out that the procurement department is responsible for procuring all the necessary
raw materials manufacturing of their products. The department also oversees all the vendors
that supply the company with all materials needed to effectively operate in the mining
industry.
The procurement officer indicated that the company deals with a lot of suppliers both local
and international due to its voluminous work and a diverse number of needs, some of these
suppliers include Process and Plan Sales (Gh) Ltd, Africa Explosive Ltd, NDEDE Company
Ltd, Mospacka Company Ltd and Naachiaa Group of Companies all located in Ghana. Gullin
Machiner Compay and Ciros Mining Equipmets are some of the companys international
suppliers. All of these companies supply Gold Fields Ghana Limited with starting raw
materials, mining equipment‟s, safety gears and explosives which are all needed in the
production process.
40. 30
Mospacka Company Ltd, for instance, supplies the company with steel product like cutting
and welding products, steel plates, and safety gears. NDEDE Company Ltd supplies mining
consumable like degreaser and other products like flagging tape, flagging poles, measuring
tapes, spray paint and safety gears like boot, dust mask, ear plugs. ear muff, filter mask, first
aid kits, gloves, reflective vest, raincoats. Africa Explosive Ltd supplies mining explosive
products and other explosive services
Supply risk as defined by Zsidisin et al., 2004) is the possibility of an event occurrence
associated with inbound supply that may cause failures from suppliers such that it outcome
will result in the inability of the focal firm to meet customer demand.
Hence, the procurement officer who has a direct relationship with these suppliers identified
the following as the possible risks that affect the upstream supply chain. Supply failure, Late
supply deliveries, Single Sourcing Information failure, Defective Suppliers. It was further
identified that GFGL usually experience defective supplies which do not meet their standard,
renduring the product not safe to use. Some of the companys suppliers tend to not show up as
per the agreement. This failure in the supply of materials by the suppliers was mostly
attributed to the fact that some supplier,s supplyer also faild them. Some defects in the
materials supplied was some times due to information barriers, the company mostly
experience these faults when dealing with new suppliers.
4.1.2 Internal Supply Chain
The researchers found out that the company uses trough diverse production processes. The
department responsible for the smooth running of these different production process indicated
that thy are responsible for making sure that raw materials in the form of water, energy,
41. 31
starting raw materials, mining raw materials, laboratory reagents and human resources feed
into their production activities.
The production manager also indicated that since they find themselves in the mining industry,
and human resource is mostly employed, safety is of major importance. Also taking a critical
look at these production flows of Gold Fields Ghana Limited means that. At any point in time
risk can occur to disrupt its activities. Being responsible for operations within the company,
he identified the following as the possible risk that could affect company‟s inability to
produce to satisfy customers demand and the profitability of the company. Sources of these
risks include the following: Strikes and labour disputes, Machines breakdown, Demand
variability, Capacity inflexibility, Absenteeism, Utility services, Workplace accident. GFGL
in many occasion experience woork place accidents despite all the safety measure the
company has put inplace. Some these accidents occur when employees used the wrong tools
in working, do not wear of safety material, do not follow safety instructions. Absenteeism as
identified by management have been reduced over the years but it continue to be a siginifact
risk for GFGL as the absence of some key staff nrmally slows down the production process.
4.1.3 Downstream Supply Chain
The downstream supply chain involves the distribution of products to final consumers. The
researchers found out that, after the final product are produced, quality control checks are
performed after which they are finally moved into a storage room.
The managers in charge of stores and distribution made mention of the objective of these two
functions which is to make sure there is enough inventory to meet market demand.
42. 32
In the supply chain, there is also a possibility of risks event to occur in the distribution of
final products to the downstream supply chain which includes wholesalers, retailers and
customers. The following are the various risked identified by the company to be associated
with the downstream supply chain. Infrastructure unavailability, Product unavailability,
Warehouse inadequacies, Cargo damage or theft. Transportation breakdown, Late delivery of
goods, Funds flow. Cargo theft is a major risk GFGL experience in it downstream supply
chain as most its delivery vehicles are not well protected which the products vonurable to the
wrong people. Warehouse inadequacy was identified as a minor risk as the company,s
wharehouses could not house all it products forcing them to overstore products and somtimes
outsource to private warehouses which are sometimes prone to damage and theft.
4.1.4 Gold Fields Ghana Limited Supply Chain Mapping and Associated Risk
Considering the information provided by the company, the nature of Gold Fields Ghana
Limited supply chain are its first tier suppliers, focal firm which is Gold Fields Ghana
Limited and customers. The manager identified the objective of this network to be the
fulfilment of customer‟s orders with quality products.
Below is a diagrammatic representation of Gold Fields Ghana Limited supply chain map and
its associated risks.
43. 33
RISK OF GOLD FIELDS GHANA LIMITED
Figure 4.1 Supply Chain Map and Associated(GOLDFIELDS GHANA LTD)
Supply risks
Supply failure
Late supply deliveries
Single Sourcing
Information failure
Supply bankruptcy
Defective Suppliers
Operational risk
Strikes
labour disputes
Machines breakdown
Demand variability
Capacity inflexibility
Absenteeism
Utility services
Demand risks
Infrastructure unavailability
Product unavailability
Warehouse inadequacies
Cargo damage or theft
Transportation breakdown
Late delivery of goods
Funds flow
Suppliers
Focal firm (Gold Fields
Ghana Limited)
NDEDE
Company Ltd
CIROS MINING
EQUIPMETS
MOSPAKA.
LTD
Africa
Explosive Ltd
FYNE GOLD
INC.
MICROMESH
MINERALS AND
METALS
TEBEREBIE
GOLD FIELS
Customer
44. 34
4.2 Risk Analysis and Evaluation
4.2.1 Risk Analysis
After risks have been identified, its probability of occurrence and the extent of impact need to
be determined in order to know the level of severity of the risk in the supply chain. This
aspect relates to the probability of the risk occurrence and the extent of impact these
identified risks have on Gold Fields Ghana Limited supply chain. Estimates were assigned to
the identified risks to know it the probability of occurrence and the extent of an impact as
described below using four-point estimation.
Probability of Occurrence, Often (Once per week) 4 - Infrequent (Once per month) 3 –
Rare (Once per year) 2 - Extremely rare (Once per decade) 1
Impact Severity, Catastrophic (Plant shut down) 4 - Critical (Slowdown of process) 3 -
Marginal (Decreased service levels) 2 - Negligible (Service levels not impacted) 1
(This is a scale we developed depending on the probability and impact of the risk.)
Therefore, an interview with the employees came out with the following as the probability of
occurrence and extent of the impact of the identified risk using four-point estimation as
depicted in the figure below.
45. 35
Figure 4.2 Upstream Supply
From the figure it can be deduced that the various risk the company encounters are of
different rate of occurrence. As some of them could occur often thus once a week or
extremely rare. With supplier failure, 4 of the respondents said it happens very often, 3 said it
is infrequent whiles 3 respondent said it rarely occurs. Single sourcing experienced a different
outcome as 6 of the respondents said there risk is extremely rare to occur, 3 of the
respondents said it is rare whiles 1 respondent said it occurs infrequently thus once per
month. This can be attributed to the fact that Gold Fields Ghana has a lot of suppliers in their
supply chain there the company is not burdens with shortage of suppliers. Information failure
was said to occur often as stated by 4 of the respondents, 5 of them also said it occurs
infrequently whiles 2 said it rarely occurs. It was further notice that information failure was
slightly responsible for the late supplier delivery and some other time defect in good
delivered.
4 5 4 5
3
3
1
5 4
2 1
3
2 1
1
6
Often Infrequent Rare Extremely rare
46. 36
Figure 4.3 Internal
This figure above analysis the inter supply chain risk and their probability of occurrence. It
can be deduced that the various risk the company encounters are of different rate of
occurrence. Strikes and disputes is a risk that is rare or extremely rare to occur in the
company stated by all the respondent. Machine breakdown on the other hand happens often
as stated by 4 respondents, 4 respondents also said it happens infrequently. Look at the data
collected it can be clear that the company have a higher rate of experiencing machine
breakdowns which mostly have a greater impact on the supply chain as the works process
either slows down or comes to a standstill. Mining companies are prone to accidents as
complex machines are used in the production process 4 respondents stated that accidents
occurs often, 3 said infrequent and 2 said it rarely occurs.
0
4
7
3
4
0
4
3
4
3
1
1
0
3 2
9
1
0 0
1
S T RIK E S A ND
DIS P UT E S
MA C H INE
BRE A K DOW N
A BS E NT E E IS M UT ILIT Y S E RVIC E
F A ILURE
A C C IDE NT S
Often Infrequent Rare Extremely rare
47. 37
Figure 4.4 Downstream Supply Chain
Gold Fields downstream supply chain also encounter a lot of different risk which have been
identified earlier in this chapter. The figure above analyses risk according to the answers
received from respondents. These parts of the question were mainly for staff of the
companies various warehouse and stores. Transportation damage is a major risk in the
mining industry that Gold Fields is not exempted. It can be deduced from the table that 4
respondents stated that transportation damage often occurs, 4 respondents also said it occurs
infrequently whiles 2 said it rarely occurs.. 4 of the respondents stated that cargo and damage
and theft are extremely rare to occur, 4respondents stated that its rare while 3 of them said it
occur often and infrequent. The company experience very little cargo damage and theft due to
tight security and safety measure put in place.
0 0 0
1
4
0
0
1
2
2
2
2
4
4
5 4
4
6
5
5
3 3
2
Often Infrequent Rare Extremely rare
48. 38
4.2.2 Risk Evaluation
Having determined the probability of occurrence and the extent of impact on the supply
chain, risks are evaluated by finding the risk exposure values of the identified risks on the
supply chain. The risk exposure values will enable Gold Fields Ghana to rank these risks to
know those that are in the most critical class, less critical and negligible class. The risk
exposure values were determined by multiplying the probability and the impact estimates.
These are presented in the table below.
Table 4.1 Risk Evaluation
Supply risks Probability of
occurrence
Extent of Impact Risk exposure value
Supplier failure 2 4 8
Late supply deliveries 3 3 9
Single sourcing 3 3 9
Information failures 2 3 6
Supplier bankruptcy 1 4 4
Defective supplies 2 4 8
Operational risks
Strikes and labour
disputes
1 4 4
Machine breakdown 3 3 9
Demand variability 3 3 9
Capacity inflexibility 3 3 9
49. 39
Absenteeism 3 2 6
Utility service failure 4 4 16
Workplace accident 2 2 4
Demand risks
Infrastructure
unavailability
2 3 6
Product unavailability 3 3 9
Warehouse
inadequacies
4 3 12
Cargo damage and
Theft
3 2 6
Late delivery of goods 3 3 9
Transportation
breakdown
4 3 12
Funds flow 3 4 12
4.3 Risk mitigation
After risks are identified, its probability of occurrence and extent of impact determined,
strategies must be put in place to treat and mitigate these risks by targeting those risks with
high-risk exposure values. Therefore as to how these risks can be mitigated, the managers
came out with possible solutions to some of these risks. These are presented in the table
below.
50. 40
Table 4.2 Risk Mitigation
Risk Treatment
Utility service failure Generator plant has been installed to cater
for power cuts.
Warehouse inadequacies Additional warehouse construction is in
place to settle these challenges.
Transportation damage Regular maintenance is carried out to
prevent breakdown.
Funds flow Discounts are given to customers to ensure
prompt payment.
Supplier failure
Late supply deliveries
Communicate with suppliers regularly to
know their challenges so that it does not
affect their processes.
Single sourcing Measures are being put in place to involve
some local suppliers
Defective supplies Quality control checks are carried out to
prevent these materials to be processed.
Capacity inflexibility Capacity is quickly adjusted to meet high
demand.
Product unavailability Keep excess inventory to meet demand.
Machine breakdown Maintenance is carried out regularly to
reduce machine breakdown.
Strikes and labour disputes Clear segregation of duties to avoid disputes
and workers are also motivated to avoid
strikes.
51. 41
Absenteeism Fall back positions are in place to cater for
absent workers.
Workplace accident Health and safety rules are in place to reduce
workplace accidents.
Supplier bankruptcy Suppliers are paid on time to avoid
However, the managers could not provide strategies to mitigate information failure,
infrastructure unavailability and cargo damage and theft.
4.4 Examine Gold Fields Ghana Limited’s Supply Chain Risk Management Procedure
The study then reveals that although the managers consider Gold Fields Ghana Limited ‟s
supply chain to be vulnerable to risk due to increasing product variety, globalization,
increased competition in the mining industry, they do not have a standardize plan risk
management plan to assess and manage risk in their supply chain. This is to say that, the
company in identifying their risk does not focus on their overall supply chain risk which can
reveal to the organization all the risk likely to affect the organization, but from Gold Fields
Ghana Limited‟s indication their focus is only on the hazards which are just part of the
internal risk and this prevents them from controlling their entire risk. Gold Fields Ghana does
not check how often a number of losses may occur at a given time period and the probability
that a particular size of loss will occur. This prevents the company from going through risk
measurement process which determines the effects of all possible risk along the
organization‟s supply chain, as well as the degree of its consequences.
The company does not rank the likelihood and impacts of risks before and after treatment to
assess remaining risk levels against acceptable risk levels, that is, their risk tolerance. This
hinders the company from knowing the likelihood and impacts of risks left whether greater or
52. 42
less than their risk tolerance is, therefore, difficult for Gold Fields Ghana to identify the need
to come up with more advanced risk treatments to reduce the level of residual risk.
53. 43
CHAPTER FIVE
SUMMARY, CONCLUSION, AND RECOMMENDATION
5.1 Introduction
After careful analysis of data, this chapter presents the summary of findings, conclusions, and
recommendations pertaining to the solicited findings and objectives of the study.
5.2 Summary of Findings
This study revealed the following
5.2.1 Supply chain map of Gold Fields Ghana Limited and associated risks
The supply chain of Gold Fields Ghana consist of a lot of suppliers (upstream) who were
identified to include Process and Plan Sales (Gh) Ltd, Mospacka Company Ltd, NDEDE
Company Ltd and Africa Explosive Ltd being the major supplier of explosives. Gold Fields
Ghana as the focal firm does its own production (internal) and finished goods are sent to final
customers both local and international. The study also revealed some risks identified to be
associated with Gold Fields Ghana‟s downstream, internal and upstream supply chain. Some
risks identified to be associated with the upstream supply chain include supplier failure, late
supply deliveries, defective supplies, and supplier bankruptcy. Risks associated with the
internal supply chain were also identified to include strikes, labour disputes, machine
breakdown, demand variability, capacity inflexibility, utility service failure and absenteeism.
In the downstream supply chain, risks identified to be associated include warehouse
unavailability, product unavailability, cargo theft, transportation breakdown, late delivery of
goods and funds flow (bad debt).
54. 44
5.2.2 Risk analysis and evaluation
After identifying these risks, its probability of occurrence and the extent of impact were
determined to know the level of severity on Gold Fields Ghana‟s supply chain. Risk exposure
value of each risk factor was also determined to know risk factors that are in very critical, less
critical and negligible class. The study revealed that utility service failure, warehouse
inadequacies, and funds flow (bad debt) are in the very critical class and therefore
unacceptable to Gold Fields Ghana Limited‟s supply.
Late supplier delivery, single sourcing, machine breakdown, demand variability, capacity
inflexibility, product unavailability, late delivery of goods, supplier failure, and defective
supplies are less critical to the supply chain and therefore tolerable.
The risk factors in the negligible class consist of information failure, absenteeism,
infrastructure unavailability, cargo damage, supplier bankruptcy, strikes, labour disputes and
workplace accidents. This class of risk is acceptable to the supply chain.
5.2.3 Risk treatment and mitigation
The identified risks are treated after analysis and evaluation to reduce its occurrence and
impact levels. Gold Fields Ghana managers identified some strategies to mitigate the
identified risks.
5.2.4 Examine the risk management procedure of Gold Fields Ghana Limited’s supply
chain.
The study reveals that though Gold Fields Ghana consider its supply chain to be vulnerable to
risk due to increasing product variety, globalization, and increased competition in the mining
industry, it does not have any standardized risk management procedure but their focus is
rather on managing hazards since they find themselves in the daily use of chemicals in
production.
55. 45
5.3 Conclusion
The main purpose of the study is to assess supply chain risk management in the mining
industry with Ghana Gold Fields Ghana Limited‟s as a case study. To provide an extensive
assessment, the study adopted a framework which helped the researchers to study the nature
of their supply chain (upstream, internal and downstream) and its associated risk. The view of
managers with respect to the probability of occurrence and the extent of the impact of the
identified risks. Evaluation of the risk was also determined to know which risks factors are
very critical to Gold Fields Ghana‟s supply chain as well as the managers‟ view as to how the
identified risk can be treated.
Throughout the study, issues have been discussed with respect to the research objectives.
Based on these findings we can conclude that, though the company considers its SC to be
vulnerable to risk, management have not fully taken off to critically assess and manage its
supply chain risks.
5.4 Recommendations
Concentrate On Managing Supply Chain Risk to Increase Supply Chain Performance
We realized from our analysis that, Gold Fields Ghana Limited‟s focus is on managing
hazards and therefore they concentrate on minimizing its occurrence. Hazards form part of
the risk. Managing hazards means dealing with just a tip of the iceberg. Therefore, we
recommend that Gold Fields Ghana Limited should concentrate on managing risk in the
entire supply chain. This means that Gold Fields Ghana Limited should take into
consideration the upstream, internal and downstream of its supply chain. Reduction of the
entire supply chain risk comes with an overall increase in supply chain performance such as
cost service, quality, and speed.
56. 46
Collaboration with Partners
In relation to Gold Fields Ghana Limited‟s supply chain map, we recommend that they
should effectively collaborate with their partners throughout the entire chain by improving
upon information sharing, through the adaptation of ERP systems that will integrate the entire
supply chains information into a common platform in other to reduce the level of risk.
Developing a Risk Response Action Plan
From our findings, we realized that risk such as utilities service failures, warehouse
inadequacies, funds flow, and transportation breakdown are very critical to Gold Fields
Ghana Limited‟s operations and can result in the shutdown of the company‟s plant. We,
therefore, recommend that the companies develop a risk response action plan to contain and
control the risk.
Adopt Multiple Sourcing
Apart from the above, we also identified that thou the company has a lot of suppliers, they
should still do multiple sourcing. Limited suppliers mean less competition, the high cost of
raw materials as well as the inferior quality of these inputs. We will recommend that the
company should increase its suppliers, especially its local suppliers by practicing multiple
sourcing.
Continuous Monitoring and Control
Identifying risk and managing it, in general, does not end there. Risk occurrence is
unpredictable, and will require continued monitoring so as to be able to identify any new risk,
and to be able to deal with these risk appropriately. We recommend that Gold Fields Ghana
Limited should continuously monitor its external and internal environment so that new source
of risk that is likely to arise in the supply chain can be immediately identified and dealt with.
57. 47
This will also enable the company to be able to monitor already identified risk, to prevent
their reoccurrence.
Improve On Inventory Counts
Finally, Gold Fields Ghana Limited uses last in first out (LIFO) method in their warehouse,
which means that raw materials near expiry date, will be difficult to identify if they are the
last to come out of the warehouse for usage, which is a source of risk. We, therefore,
recommend the company to use first in first out (FIFO) method for issuing out inventory and
also carry out a continuous inventory check so as to avoid defects and theft as well.
58. 48
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APPENDIX
INTERVIEW GUIDE AND QUESTIONNAIRE
KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY
SCHOOL OF BUSINESS
TOPIC: ASSESSING THE SUPPLY CHAIN RISK MANAGEMENT IN
THE MINING INDUSTRY IN GHANA
AS A CASE STUDY OF TARKWA GOLDFIELDS
QUESTIONS FOR THE EVECUTIVE VICE PRESIDENT (EVP) AND
THE HEADS OF DEPARTMENT
This research is mainly for academic purpose. Therefore, any answer given will be treated as
confidential and the identity of the source of information would not be disclosed. We are
counting on your corporation.
Thank you.
Please tick the box of the response given only/state briefly for any answer which is not
provided.
BACKGROUND INFORMATION
1. Age:
18-25 [ ] 26-35 [ ] 36-45 [ ] 46 and above [ ]
2. Gender:
Male [ ] Female [ ]
3. Position …...……………………………………………………………...……
66. 56
To analyse and evaluate the impact of these risks on Goldfields overall supply chain
objective.
Consequences
Supplier Risks 1 2 3 4
Supplier failure [ ] [ ] [ ] [ ]
Late supply deliveries [ ] [ ] [ ] [ ]
Single sourcing [ ] [ ] [ ] [ ]
Information failure [ ] [ ] [ ] [ ]
Supplier bankruptcy [ ] [ ] [ ] [ ]
Others (specify)
Operational risks
Strikes and labour disputes [ ] [ ] [ ] [ ]
Machine breakdown [ ] [ ] [ ] [ ]
Absenteeism [ ] [ ] [ ] [ ]
Demand risks
Products unavailability [ ] [ ] [ ] [ ]
Warehouse inadequacies [ ] [ ] [ ] [ ]
Cargo damage or theft [ ] [ ] [ ] [ ]
Transportation breakdown [ ] [ ] [ ] [ ]
Late delivery of goods [ ] [ ] [ ] [ ]
Funds flow [ ] [ ] [ ] [ ]
Others (specify)
To find out how Goldfields mitigate these risks.
Have you developed supply chain risk mitigation strategy?
Yes [ ] No [ ]
Are your critical suppliers willing to partner or are partnered with you to mitigate the
risk?
Yes [ ] No [ ]
67. 57
To examine the risk management procedure of Goldfields.
Are you periodically collecting risk information from your supply chain management?
Yes [ ] No [ ]
If yes how often is it collected?
Yearly [ ] Quarterly [ ] Half a year [ ]
Do you have at least preliminary discussions with supply chain management about
supply chain risk management?
Yes [ ] No [ ]
Are supplier integrated in the decisions on supply chain risk management?
Yes [ ] No [ ]
68. 58
INTERVIEW GUIDE
To map out the supply chain of Goldfields and identify the various risks affecting the
supply chain.
PROCUREMENT DEPARTMENT
What is the functions of this department?
Who are your suppliers as well as your suppliers‟ suppliers?
What raw materials are purchased from these suppliers?
Which of these suppliers of raw materials are critical to your supply chain?
PRODUCTION DEPARTMENT
What are the functions of this department in the organization?
What processes are used in the manufacturing activities?
Which of these operational risks provided below are likely to affect manufacturing
activities in the supply chain?
[ ] strikes and labour disputes [ ] machine breakdown [ ] demand variability
[ ] capacity flexibility [ ] absenteeism [ ] utility services
Others (specify) ……………………………………………..
What strategies has the department put in place to mitigate these risks?
69. 59
SALES AND DISTRIBUTION DEPARTMENT
What are the functions of this department in the organization?
How does the organization‟s product get to the final customer?
Who are some of your major distributors of your products? That is, if you have
distributors
Which of these risks provided below are likely to affect the activities of this
department in the supply chain?
[ ] demand risks [ ] infrastructure unavailability [ ] products unavailability [
] warehouse inadequacies [ ] cargo damage or theft [ ] transportation breakdown
[ ] late delivery of goods [ ] funds flow