Prioritization of Risks in Supply Chains

  • Mohd. Nishat Faisal


Modern supply chains are very complex, with physical, financial, and information flows occurring simultaneously in order to ensure that products are delivered in the right quantities, to the right place in a cost-effective manner. Maintaining uninterrupted supply chain flows is a prerequisite for the success of a supply chain in the marketplace. But there are always associated risks in each of these flows which require suitable strategies to mitigate them. The issue of risks in supply chains has assumed importance in wake of the understanding that supply chain failures are fatal to the existence of all the partners’ in a supply chain. The severity of supply chain failures are more felt by small and medium enterprises (SMEs) who form the majority at tier II and tier III levels of a supply chain. This is because of the limited resources and lack of adequate planning to counter supply chain risks. Management of risk in supply chains is a multi-criteria decision making problem. The research presented in this chapter proposes a Fuzzy-AHP based framework to prioritize various risks in supply chains. An exhaustive literature review complimented with the experts’ opinion was undertaken from the perspective of SMEs to formulate a hierarchical structure of risks in supply chains. A fuzzy analytic hierarchical process (F-AHP) is then utilized to ascertain the relative weightings which are subsequently used to prioritize these risks. Understanding the priorities would help the firms to accord importance and develop suitable strategies to manage supply chain risks according to their relative importance. This provides effective management of scarce resources available to SMEs to manage risks resident in their supply chains.


Supply Chain Analytic Hierarchy Process Fuzzy Number Supply Chain Management Triangular Fuzzy Number 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. 1.
    Agrell P J, Lindroth R, Norrman A et al (2004) Risk, information and incentives in telecom supply chains. International Journal of Production Economics, 90:1–16CrossRefGoogle Scholar
  2. 2.
    Barratt M (2004) Understanding the meaning of collaboration in the supply chain. Supply Chain Management: An International Journal, 9:30–42CrossRefGoogle Scholar
  3. 3.
    Barratt M, Oliveira A (2001) Exploring the experiences of collaborative planning initiatives. International Journal of Physical Distribution & Logistics Management, 31:266–89CrossRefGoogle Scholar
  4. 4.
    Bogataj D, Bogataj M (2007) Measuring the supply chain risk and vulnerability in frequency space. International Journal of Production Economics, 108:291–301CrossRefGoogle Scholar
  5. 5.
    Bozbura F T, Beskese A (2007) Prioritization of organizational capital measurement indicators using fuzzy AHP. International Journal of Approximate Reasoning, 44:124–147CrossRefGoogle Scholar
  6. 6.
    Bozbura F T, Beskese A, Kahraman C et al (2007) Prioritization of human capital measurement indicators using fuzzy AHP. Expert Systems with Applications, 32:1100–1112CrossRefGoogle Scholar
  7. 7.
    Büyüközkan G (2008) Determining the mobile commerce user requirements using an analytic approach’, Computer Standards & Interfaces, doi:10.1016/j.csi.2007.11.006Google Scholar
  8. 8.
    Büyüközkan G, Feyzioĝlu O, Nebol E et al (2008) Selection of the strategic alliance partner in logistics value chain. International Journal of Production Economics, 113:148–158CrossRefGoogle Scholar
  9. 9.
    Cakir O, Canbolat M S (2008) A web-based decision support system for multi-criteria inventory classification using fuzzy AHP methodology. Expert Systems with Applications, 35:1367–1378CrossRefGoogle Scholar
  10. 10.
    Callioni G, Billington C (2001) Effective collaboration: Hewlett-Packard takes supply chain management to another level. OR/MS Today, 28:34–39Google Scholar
  11. 11.
    Cardinali R (1998) If the system fails, who is liable?. Logistics Information Management, 11:257–261CrossRefGoogle Scholar
  12. 12.
    Cavinato J L (2004) Supply chain logistics risks. International Journal of Physical Distribution & Logistics Management, 34:383–387CrossRefGoogle Scholar
  13. 13.
    Chan F T S, Kumar N (2007) Global supplier development considering risk factors using fuzzy extended AHP-based approach. Omega, 35:417–431CrossRefGoogle Scholar
  14. 14.
    Chang D-Y (1992) Extent Analysis and Synthetic Decision, Optimization Techniques and Applications. World Scientific, SingaporeGoogle Scholar
  15. 15.
    Chang D-Y (1996) Applications of the extent analysis method on fuzzy AHP. European Journal of Operational Research, 95:649–655zbMATHCrossRefGoogle Scholar
  16. 16.
    Chopra S, Sodhi M S (2004) Managing risk to avoid supply chain breakdown. Sloan Management Review, 46:53–61Google Scholar
  17. 17.
    Christopher M, Lee H (2004) Mitigating supply chain risk through improved confidence. International Journal of Physical Distribution & Logistics Management, 34:388–396CrossRefGoogle Scholar
  18. 18.
    Christopher M, McKinnon A, Sharp J, Wilding R, Peck H, Chapman P, Jüttner U, Bolumole Y (2002) Supply Chain Vulnerability, Cranfield University, CranfieldGoogle Scholar
  19. 19.
    Craighead C W, Blackhurst J, Rungtusanatham M J and Handfield R B (2007) The Severity of Supply Chain Disruptions: Design Characteristics and Mitigation Capabilities. Decision Sciences, 38:131–156CrossRefGoogle Scholar
  20. 20.
    Cucchiella F, Gastaldi M (2006) Risk management in supply chain: a real option approach. Journal of Manufacturing Technology Management, 17:700–720CrossRefGoogle Scholar
  21. 21.
    Durán O, Aguilo J (2008) Computer-aided machine-tool selection based on a Fuzzy-AHP approach. Expert Systems with Applications, 34:1787–1794CrossRefGoogle Scholar
  22. 22.
    Elkins D, Handfield R B, Blackhurst J, Craighead, C W et al (2005) 18 ways to guard against disruption. Supply Chain Management Review, 46–53Google Scholar
  23. 23.
    Erensal Y C, Oncan T, Demircan M L (2006) Determining key capabilities in technology management using fuzzy analytic hierarchy process: A case study of Turkey. Information Sciences. 176:2755–2770CrossRefGoogle Scholar
  24. 24.
    Faisal M N, Banwet D K, Shankar R et al (2006) Mapping supply chains on risk and customer sensitivity dimensions. Industrial Management & Data Systems,106:878–895CrossRefGoogle Scholar
  25. 25.
    Faisal M N, Banwet D K, Shankar R et al. (2007a) Supply chain risk management in SMEs: analysing the barriers. International Journal of Management and Enterprise Development, 4:588–607CrossRefGoogle Scholar
  26. 26.
    Faisal M N, Banwet D K, Shankar R et al. (2007b) Information risk management in supply chains: an assessment and mitigation framework. Journal of Enterprise Information Management, 20:677–699CrossRefGoogle Scholar
  27. 27.
    Finch P (2004) Supply chain risk management. Supply Chain Management: An International Journal, 9:183–196CrossRefGoogle Scholar
  28. 28.
    Frenkel S J, Scott D (2002) Compliance, collaboration, and codes of labor practice: the Adidas connection. California Management Review, 45:29–49Google Scholar
  29. 29.
    Fu H-P, Ho Y-C, Chen R.C.Y, Chang T-H, Chien P-H et al (2006) Factors affecting the adoption of electronic marketplaces. International Journal of Operations & Production Management, 26:1301–1324CrossRefGoogle Scholar
  30. 30.
    Giunipero L C, Pearcy D H (2000) World-class purchasing skills: an empirical investigation. Journal of Supply Chain Management, 36:4–13CrossRefGoogle Scholar
  31. 31.
    Giunipero L C, Eltantawy R A (2004) Securing the upstream supply chain: a risk management approach. International Journal of Physical Distribution & Logistics Management, 34:698–713CrossRefGoogle Scholar
  32. 32.
    Goh M, Lim J Y S, Meng F et al (2007) A stochastic model for risk management in global supply chain networks. European Journal of Operational Research,182:164–173zbMATHCrossRefMathSciNetGoogle Scholar
  33. 33.
    Gunasekaran G, Patel C, McGaughey R E (2004) A framework for supply chain performance measurement. International Journal of Production Economics, 87:333–347CrossRefGoogle Scholar
  34. 34.
    Hale T, Moberg C R (2005) Improving supply chain disaster preparedness. International Journal of Physical Distribution & Logistics Management, 35:195–207CrossRefGoogle Scholar
  35. 35.
    Hallikas J, Karvonen I, Pulkkinen U, Virolainen V M, Tuominen M et al (2004) Risk management processes in supplier networks. International Journal of Production Economics, 90:47–58CrossRefGoogle Scholar
  36. 36.
    Hallikas J, Virolainen V M, Tuominen M (2002) Risk analysis and assessment in network environments: A dyadic case study. International Journal of Production Economics, 78:45–55CrossRefGoogle Scholar
  37. 37.
    Harland C, Brenchley R, Walker H et al (2003) Risk in supply networks. Journal of Purchasing and Supply Management, 9:51–62CrossRefGoogle Scholar
  38. 38.
    Hauser L M (2003) Risk-adjusted supply chain management. Supply Chain Management Review, Nov/Dec:64–71Google Scholar
  39. 39.
    Hendricks K B, Singhal V R (2003) The effect of supply chain glitches on shareholder wealth. Journal of Operations Management, 21:501–522CrossRefGoogle Scholar
  40. 40.
    Hendricks K B, Singhal V R (2005) An Empirical Analysis of the Effect of Supply Chain Disruptions on Long-Run Stock Price Performance and Equity Risk of the Firm. Production and Operations Management, 14:35–52Google Scholar
  41. 41.
    Jiang B, Baker R C, Frazier G V et al (2007) An analysis of job dissatisfaction and turnover to reduce global supply chain risk: Evidence from China. Journal of Operations Management, doi:10.1016/j.jom.2007.09.002Google Scholar
  42. 42.
    Johnson M E (2001) Learning from toys: Lessons in managing risk from toy industry. California Management Review, 43:106–125Google Scholar
  43. 43.
    Jüttner U (2005) Supply chain risk management: Understanding the business requirements from a practitioner perspective. The International Journal of Logistics Management, 16:120–141CrossRefGoogle Scholar
  44. 44.
    Jüttner U, Peck H, Christopher M et al (2002) Supply chain risk management: outlining an agenda for future research, Griffiths, J., Hewitt, F., Ireland, P., Proceedings of the Logistics Research Network 7th Annual Conference, 443–450Google Scholar
  45. 45.
    Kang H-E, Lee A H I (2007) Priority mix planning for semiconductor fabrication by fuzzy AHP ranking Expert Systems with Applications. 32:560–570CrossRefGoogle Scholar
  46. 46.
    Kaufmann A, Gupta M M (1991) Introduction to Fuzzy Arithmetic Theory and Applications. Van Nostrand Reinhold, New YorkzbMATHGoogle Scholar
  47. 47.
    Kern T, Willcocks L (2000) Exploring information technology outsourcing relationships: theory and practice. The Journal of Strategic Information Systems, 9:321–350CrossRefGoogle Scholar
  48. 48.
    Kleindorfer P R, Saad G H (2005) Managing Disruption Risks in Supply Chains. Production and Operations Management, 14:53–68CrossRefGoogle Scholar
  49. 49.
    Laarhoeven P J M, Pedrycz W (1983) A fuzzy extension of Saaty’s priority theory. Fuzzy Sets and Systems, 11:229–241CrossRefMathSciNetGoogle Scholar
  50. 50.
    McFadden P J (1997) Guarding computer data. Journal of Accountancy, 184:77–79Google Scholar
  51. 51.
    Mentzer J T, Foggin J H, Golicic S G (2000) Supply chain collaboration: enablers, impediments, and benefits. Supply Chain Management Review, 4:52–58Google Scholar
  52. 52.
    Neiger D, Rotaru K, Churilov L. (2008) Supply chain risk identification with value-focused process engineering. Journal of Operations Management, doi:10.1016/j.jom.2007.11.003Google Scholar
  53. 53.
    Norrman A, Jansson U (2004) Ericsson’s proactive supply chain risk management approach after a serious sub-supplier accident. International Journal of Physical Distribution & Logistics Management, 34:434–456CrossRefGoogle Scholar
  54. 54.
    Ojala M, Hallikas J (2006) Investment decision-making in supplier networks: Management of risk. International Journal of Production Economics, 104:201–213CrossRefGoogle Scholar
  55. 55.
    Peck H (2005) Drivers of supply chain vulnerability: an integrated framework. International Journal of Physical Distribution & Logistics Management, 35:210–232CrossRefGoogle Scholar
  56. 56.
    Piplani R, Fu Y (2005) A coordination framework for supply chain inventory alignment. Journal of Manufacturing Technology Management, 16:598–614CrossRefGoogle Scholar
  57. 57.
    Ritchie B, Brindley C (2000) Disintermediation, disintegration and risk in the SME global supply chain. Management Decision, 38:575–583CrossRefGoogle Scholar
  58. 58.
    Saaty T L (1980) The Analytic Hierarchy Process, McGraw Hill, New YorkzbMATHGoogle Scholar
  59. 59.
    Sarkar A, Mohapatra P K J (2006) Evaluation of supplier capability and performance: A method for supply base reduction. Journal of Purchasing & Supply Management, 12:148–163CrossRefGoogle Scholar
  60. 60.
    Sasmal S, Ramanjaneyulu K (2008) Condition evaluation of existing reinforced concrete bridges using fuzzy based analytic hierarchy approach. Expert Systems with Applications, 35:1430–1443CrossRefGoogle Scholar
  61. 61.
    Shi D (2004) A review of enterprise supply chain risk management. Journal of Systems Science and Systems Engineering, 13:219–244CrossRefGoogle Scholar
  62. 62.
    Sinha P R, Whitman L E, Malzahn D et al (2004) Methodology to mitigate supplier risk in an aerospace supply chain. Supply Chain Management: An International Journal, 9:154–168CrossRefGoogle Scholar
  63. 63.
    Sounderpandian J, Prasad S, Madan M et al (2008) Supplies from developing countries: Optimal order quantities under loss risks. Omega, 36:122–130CrossRefGoogle Scholar
  64. 64.
    Souter G (2000) Risks from supply chain also demand attention. Business Insurance, 34:26–28Google Scholar
  65. 65.
    Speckman R E, Davis E W (2004) Risky Business: expanding the discussion on risk and the extended enterprise. International Journal of Physical Distribution & Logistics management, 34:414–433CrossRefGoogle Scholar
  66. 66.
    Svensson G (2004) Key areas, causes and contingency planning of corporate vulnerability in supply chains: A qualitative approach. International Journal of Physical Distribution & Logistics Management, 34:728–748CrossRefGoogle Scholar
  67. 67.
    Tang C S (2006) Robust Strategies for Mitigating Supply Chain Disruptions. International Journal of Logistics: Research and Applications, 9:33–45Google Scholar
  68. 68.
    Treleven M, Schweikhart S B (1988) A risk/benefit analysis of sourcing strategies: Single vs multiple sourcing. Journal of Operations Management, 7:93–114CrossRefGoogle Scholar
  69. 69.
    Tsai C-Y (2008) On supply chain cash flow risks. Decision Support Systems, 44:1031–1042CrossRefGoogle Scholar
  70. 70.
    Yu C S (2002) A GP-AHP method for solving group decision-making fuzzy AHP problems. Computers and Operations Research, 29:1969–2001zbMATHCrossRefGoogle Scholar
  71. 71.
    Zadek S (2004) The path to corporate responsibility. Harvard Business Review, 82:125–132Google Scholar
  72. 72.
    Zhu K-J, Jing Y, Chang D Y (1999) A discussion on extent analysis method and applications of fuzzy AHP. European Journal of Operational Research, 116:450–456zbMATHCrossRefGoogle Scholar
  73. 73.
    Zsidisin G A, Panelli A, Upton R et al (2000) Purchasing organization involvement in risk assessments, contingency plans, and risk management: an exploratory study, Supply Chain Management: An International Journal, 5:187–198CrossRefGoogle Scholar
  74. 74.
    Zsidisin G A, Ellram L M, Carter J R, Cavinato J L et al (2004) An analysis of supply risk assessment techniques. International Journal of Physical Distribution & Logistics Management, 34:397–413CrossRefGoogle Scholar

Copyright information

© Springer-Verlag London Limited 2009

Authors and Affiliations

  • Mohd. Nishat Faisal
    • 1
  1. 1.Institute of Management Technology DubaiDubaiUnited Arab Emirates

Personalised recommendations