Supply chain risk assessment: A fuzzy AHP approach

Abstract

Managing supply chain risk is a big challenge for any organization. The purpose of the paper is to provide a methodology for assessing supply chain risk using the Fuzzy based Analytic Hierarchy Process (Fuzzy AHP). This study presents a comprehensive study to identify the Risk Factors (RFs) in supply chain and evaluate them. In this paper, sixteen risk factors were identified based on extensive literature survey. To limit the scope of the work, focus was on transaction and infrastructural risk and avoiding the demand risk. The RFs are formulated as hierarchy structure and Fuzzy AHP as a Multi Attribute Decision Making (MADM) tool applied to judge the viable candidates. A revised risk matrix with a continuous scale was proposed to assess the RFs classes. The result classifies the RFs in different categories (Extreme, High, Medium and Low). Based on this result, some management implications and suggestions are proposed. The revised risk matrix with continuous scale for risk assessment in supply chain is a novel approach.