Benchmarking supplier external risk factors in electronic equipment industry supply chains

Abstract

PurposeThe global electronic equipment industry has evolved into one of the most innovative technology-based business sectors to transpire in the last three decades. Much of its success has been attributed to effective supply chain management. The purpose of this paper is to provide an examination of external risk factors associated with the industry’s key suppliers through the creation of Bayesian networks which can be used to benchmark external risks among these suppliers.Design/methodology/approachThe study sample consists of the suppliers to seven of the leading global electronic equipment companies. Bayesian networks are used as a methodology for examining the supplier external risk profiles of the study sample.FindingsThe results of this study show that Bayesian networks can be effectively used to assist managers in making decisions regarding current and prospective suppliers with respect to their potential impact on supply chains as illustrated through their corresponding external risk profiles.Research limitations/implicationsA limitation to the use of Bayesian networks for modeling external risk profiles is the proper identification of risk events and risk categories that can impact a supply chain.Practical implicationsThe methodology used in this study can be adopted by managers to assist them in making decisions regarding current or prospective suppliers vis-à-vis their corresponding external risk profiles.Originality/valueAs part of a comprehensive supplier risk management program, companies along with their suppliers can develop specific strategies and tactics to minimize the effects of supply chain external risk events.