A comprehensive decision-making model for risk management of supply chain

• Published in: Expert systems with applications 2011-05, Vol.38 (5), p.4957-4966
• Main Authors: Xia, De, Chen, Bo
• Format: Article
• Language: English
• Subjects: Analytic network process (ANP); Decision making; Dynamics; Mathematical models; Operational process cycle (OPC); Process control; Product life cycle; Product life cycle (PLC); Risk; Risk management; Supply chain (SC); Supply chains
• ISSN: 0957-4174; 1873-6793
• DOI: 10.1016/j.eswa.2010.09.156

► Four risk clusters and their dynamic relation are identified in the SC. ► Main clue based on dual cycles promotes the stability of decision-making processes. ► Bilateral, unilateral and inter-circulative relationship are built into the model. ► The model improves the pertinence of risk management measures. Risk management of a supply chain (SC) has a great influence on the stability of dynamic cooperation among SC partners and hence very important for the performance of the SC operations as a whole. A suitable decision-making model is the cornerstone for the efficiency of SC risk management. We propose in this paper a decision-making model based on the internal triggering and interactive mechanisms in an SC risk system, which takes into account dual cycles, the operational process cycle (OPC) and the product life cycle (PLC). We explore the inter-relationship among the two cycles, SC organizational performance factors (OPF) and available risk operational practice (ROP), as well as the risk managerial elements in OPC and PLC. In particular, three types of relationship, bilateral, unilateral and inter-circulative ones, are analyzed and verified. We build this dynamic relation into SC risk managerial logic and design a corresponding decision-making path. Based on the analytic network process (ANP), a methodology is designed for an optimal selection of risk management methods and tools. A numerical example is provided as an operational guideline for how to apply it to tailor operational tactics in SC risk management. The results verify that this strategic decision model is a feasible access to the suitable risk operational tactics for practitioners.