Considering region risks and mitigation strategies in the supplier selection process for improving supply chain resilience

Abstract

This study applies combinations of mitigation strategies (including multi-region supplier, multi-sourcing, reserved inventory, and alternative shipment) in supplier selection, taking into account two types of disruptions: a decline in supplier capacity and transportation failure. This study adopts a two-phase decision-making model to formulate a resilient supplier selection process, supported by suitable mitigation strategies. The first phase selects the main supplier process using the augmented ε-constrained and analytic hierarchy process method to find the maximum supplier performance on resilient-sustainable criteria and minimum supplier location risk. The second phase implements mitigation strategies when allocating orders to the main suppliers using linear programming to find how many units to order at the lowest procurement costs. Eight strategy combinations are utilized in the numerical study with several regional disruption scenarios. This study shows that by combining strategies, the company may minimize its reliance on backup suppliers while improving the supply chain resilience, collaboration with main suppliers, and service level. The findings demonstrate the strategy combination's effectiveness in terms of economic benefits, reduced lost sales, and decreased variability of orders to main suppliers.