Modelling the supply chain risk variables using ISM: a case study on Indian manufacturing SMEs

Abstract

Purpose In the Indian manufacturing SMEs context, supply chains have a complex structure having multiple echelons, multiple partners and multiple locations. Due to these complexities, most of the Indian manufacturing SMEs face several types of supply chain risks. This paper aims to identify the dominant risk variables and to develop the interrelationship among these risk variables. Design/methodology/approach Based on the literature review and experts’ opinion, nine dominant risk variables faced by an Indian manufacturing SMEs have been identified. An interpretive structural modelling (ISM) approach has been adopted to establish the interrelationship among the risk variables. These risk variables have been classified by using MICMAC analysis. Based on ISM-MICMAC approach, a case study on three Indian manufacturing SMEs has been carried out. Findings This study would help the supply chain managers to understand and prioritize the significant risk variables. Nine significant risks variables of Indian manufacturing small and medium enterprises (SMEs) have been studied. External risk, information technology risk and financial risk have identified as most influencing risk variables, while delay risk and market risk have emerged as the most dependent risk variables. These results will provide a guideline to supply chain managers for implementation of supply chain risk management (SCRM). Research limitations/implications In this study, an ISM-based model is developed based on the opinion of experts from a group of Indian manufacturing SMEs; as such, this model may be biased and limited to a selected company. This framework can be extended further by adding more risk variables and sub-risk variables from the other sectors/organizations. Originality/value Many SCRM models are available in past literature, but no model has been proposed for the Indian Manufacturing SMEs. This research finding can be useful for managers to understand the characteristics and interrelationships among the risk variables for building a robust supply chain. These results will also help the supply chain managers in making proactive plans for SCRM, especially in the Indian SMEs context.