Energy price risk and the sustainability of demand side supply chains

Energy is a critical input for production industries. As production becomes increasingly fragmented the management of inputs along the supply chain is a significant factor to stability and the competitiveness of the individual firm and the wider chain. Sustainable supply systems will require changes in how energy is managed particularly to ensure energy security. Rising and increasingly volatile industrial prices create technical price risks to individual firms and the supply chains they are within. A comparison is made between the management of metal and energy price volatility in the intermediate metal processing industry (IMP) in the West Midlands, UK. Results indicate significant variance between the management of price risks from the inputs due to the structure of the supply market, the political-economic context of energy as a carbon source and industrial conventions within the sector. Interdependence between economic actors in the demand-side supply chain can generate risk to the competitiveness of the firm and supply chain from the ability to transfer, or share, price changes in energy inputs through the supply chain. This is an important aspect of energy security in demand-side chains that threatens the sustainability of industrial activity. (C) 2014 Elsevier Ltd. All rights reserved.