THE EFFECTS OF DEMAND PLANNING ON THE NEGATIVE CONSEQUENCES OF OPERATIONAL RISK IN SUPPLY CHAINS

Background: Although extant studies have highlighted the importance of specific demand planning practices in risk mitigation, there is a scarcity of research that shows the simultaneous effects of demand planning practices on the disruptions induced by operational risks in supply chains. In order to reduce this gap, this paper aims to explore the impact of the demand planning process on operational risk, and thereby reveal if operational risk factors and their negative consequences may be mitigated through the application of specific demand planning practices in supply chains.

Methods: The study involves two stages of multivariate statistical analysis. In stage one, independent and dependent variables are reduced through factor analysis in order to highlight the main, underlying, multi-item factors. In the second stage of the study, a multiple regression analysis is conducted to compare the general contribution to variance in operational risk accounted for by demand planning practices and their combinations. The conducted analysis provided regression models for particular operational risks.  

Results: The study reveals that all activities in the demand planning process contribute more or less to lower operational risk in the examined supply chains. In particular, there are strong relationships between demand planning practices and both control and demand risks. On the other hand, the lesser effects of demand planning may be observed in process and supply risks.

Conclusions: The study shows that different managerial instruments, which are not inherently dedicated to risk management, when appropriately applied, may have an indirect impact on the mitigation of supply chain risk. In particular, the concept of demand planning might be very helpful for managers when dealing with demand and control risks.