The Management of Disruption Supply Risks at Vestas Wind Systems

Abstract

Supply risk management is a key strategic task for Vestas Wind Systems A/S (Vestas), who designs, produces, installs, and services wind turbines for customers in the global green energy market. One type of supply risk that draws much Vestas’ attention is disruption risk, which covers a range of different disruption events, driven by different sets of risk drivers and requires different combinations of risk management strategies. In this chapter, we analyze the three Vestas purchases of gearboxes, towers, and electronics and show how different sets of strategies are required for the successful mitigation of these risks. Based on this analysis, we propose a simple supply risk management framework, which can help managers mitigate disruption risk. The literature tends to treat disruptions as events that can be dealt with by the same generic set of strategies. In this chapter, we show that effective disruption mitigation may require very different strategies depending on the type of supply and the varied drivers causing the disruption.