Management of Risks in Sustainable Supply Chain Using AHP and Monte Carlo Simulation

Abstract

Business organizations are facing increasingly pressure from stakeholders to incorporate sustainable initiatives in the supply chains. In supply chain management, risk deals with the ‘disturbance and disruption' in a variety of operations that consequences to undesired consequences. Sustainable supply chain (SSC) risk management is a supply chain strategy that aligns economic goals with a supply chain's ecological course of actions. In this chapter, an attempt is made to prioritize and manage the risks linked to SSC. The analysis has been done by combined Analytic Hierarchy Process (AHP) and Monte Carlo simulation (MCS) approach, which helps in distinguishing the priority of risks and revealing of the impacts of risk. Initially, the recognized risks are analyzed to know their priority using AHP technique. Next, the uncertainties related to the risks are explored. This is followed by a risk evaluation procedure to access the disruption impacts of these risks using MCS approach. This methodical approach helps in understanding of the probable risks and consequences to emerge in SSC.