Evaluating the performance of supply chain risk mitigation strategies using network data envelopment analysis

Abstract

Supply chain risk mitigation involves investing in strategic activities that minimize the financial impact of disruptions to the flow of goods in a supply chain. However, methods for assessing these strategies are not well established. Given the importance of mitigating supply chain risk, having a quantitative method for evaluating risk mitigation is imperative. This paper constructs a network data envelopment analysis (NDEA) model to assess risk mitigation investments by considering the cost of the strategies, performance outcomes, and interdependencies among the different stages of the supply chain. Risk mitigation strategies in this study were measured at the supplier, manufacturing, and customer segments of a firm's supply chain. Efficiency analysis (comparing NDEA to traditional approaches) shows that NDEA provides a more holistic and useful assessment of supply chain risk mitigation performance.