Integrating machine learning and deep learning for enhanced supplier risk prediction

Abstract

The importance of anticipating and preventing disruptions is underscored by the increased operational complexity and vulnerability caused by advancements in supply chain management (SCM). This has spurred interest in integrating machine learning (ML) and deep learning (DL) into supply chain risk management (SCRM). In this paper, we introduce a tailored method using ML and DL to improve SCRM by predicting supplier failures, thus boosting efficiency and resilience in SC operations. Our method involves five phases focused on classifying and predicting supplier failures in non-conforming deliveries. This involves forecasting failure quantities and estimating total disruption costs. Initially, data from an automotive company is selected, and appropriate potential features and algorithms are selected, performance metric aligns with case study objectives, facilitating method evaluation are used such as: Precision, recall, F1-score, and accuracy metrics assess classification models, while Mean Squared Error (MSE) is used for regression tasks. Finally, an experimental design optimizes models, assessing success rates of various algorithms and their parameters within the chosen feature space. Experimental results underscore the success of our methodology in model development. In the classification task, the Random Forest (RF) classifier achieved 86% accuracy. When combined with the Gradient Boosting classifier, the ensemble exhibited enhanced accuracy, highlighting the complementary strengths of both algorithms and their synergistic impact, surpassing the performance of RF, Support Vector Regression (SVR), k-Nearest Neighbors (KNN), and Artificial Neural Network (ANN). Noteworthy is the performance in regression tasks, where Linear Regression, ANN, and RF Regressor displayed exceptionally low MSE compared to other models.