Abstract
Risk is inherent in all parts of life and brings consequences, but when it specifically emerges in supply chains, it is susceptible. Therefore, this study aims at identifying and assessing supply chain risks and developing criteria for managing these risks. Supply chain (SC) risks consist of complex, uncertain, and vague information, but risk assessment techniques in the literature have been unable to handle complexity, uncertainty, and vagueness. Therefore, this study presents a holistic approach to supply chain risk management. In this paper, neutrosophic (N) theory is merged with the analytic hierarchy process (AHP) and technique for order of preference by similarity to ideal solution (TOPSIS) to deal with complexity, uncertainty, and vagueness. Then the proposed methodology is practically implemented through a case study on the automotive industry. SC resilience, SC agility, and SC robustness were selected as criteria for managing supply chain risks and analyzed using N-AHP. Furthermore, seventeen risks were identified and assessed by using N-TOPSIS. Results suggest supply chain resilience is the most important criterion for managing supply chain risks. Moreover, supplier delivery delays, supplier quality problems, supplier communication failures, and forecasting errors are the most vulnerable risks that occur in supply chains of the automotive industry in Pakistan.
Highlights
Risk is inherent in almost all the phases of life, but when it comes to business, they are more vulnerable due to changing trends, globalization, complexity, and competitiveness of the firms [1,2,3,4,5]
The conventional approaches for assessing and managing SCRs are unable to deal with the above questions. They cannot describe which risk has the most vulnerable effects on the firm’s supply chain and performance? Which practice/criteria can deal with which type of risk? Which strategies can be developed following the criteria for managing SCRs? to investigate the most crucial practices/criteria among SC resilience, SC agility, and SC robustness for managing SCRs, we developed a holistic approach for managing SCRs based on multi-criteria decision-making (MCDM) approach
Ponomarove presented a comprehensive definition of SC resilience: SC resilience is “adaptive capability of the supply chain to prepare for unexpected events, respond to disruptions, and recover from them by maintaining continuity of operations at the desired level of connectedness and control over structure and function”. It seems that SC resilience has a two-way effect. It works as a proactive approach in supply chain risk management (SCRM) due to its capability of avoiding Supply chain disruptions (SCDs); on the other hand, it works as a reactive approach in SCRM due to its capability of restoring the supply chain to its original state [74]
Summary
Risk is inherent in almost all the phases of life, but when it comes to business, they are more vulnerable due to changing trends, globalization, complexity, and competitiveness of the firms [1,2,3,4,5]. Uncertain supply, cost savings, and implementing agile or lean structures increase the probability of risks [6,7]. Whatever the reason it would be, the firm’s supply chain (SC) is exposed to numerous risks, which create disruptions. If these disruptions are not treated in a timely manner, they affect the firm’s performance [8]. Chain disruptions (SCDs) can occur upstream and downstream of the supply chain or can be internal and external: supplier delivery delays, supplier insolvency, fluctuations in demand or estimation errors, natural disasters like hurricanes, floods, earthquakes, fires, etc. 26 plants were shut down, and profits declined by 276.15 million USD [12]
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