IMPLEMENTATION OF THE HOUSE OF RISK IN THE SUPPLY CHAIN OF MANUFACTURING SMEs

Abstract

Uncertainty in supply chain activities poses various risks that can hinder the company's competitiveness. Thus, the flow of information from the process of procuring raw materials to products received by consumers must be ensured to run well. To achieve this, companies must be more sensitive to possible risks that arise from supply chain activities so that risk management is necessary. Therefore, this study aims to manage possible risks using the House of Risk (HOR) method. The research is divided into two main stages, namely the risk assessment stage and the risk management stage. At the risk assessment stage, the Aggregate Risk Potential (ARP) value will identify the severity level of the risk event and the occurrence rate of the risk agent. Then, at the risk management stage, it will identify preventive actions that are taken to reduce the severity and occurrence of risk agents. The results of the study indicate that there are 19 risk events and 16 risk agents that have the potential to occur in manufacturing SMEs as a case study of this research. Then, 8 risk agents were selected that needed to be followed up to reduce the level of risk. The result is that the 8 risk agents have reduced risk levels after being given preventive measures, which were initially at very high, high, and medium levels, dropping one level too high, medium, and low levels.