Managing risks in the supply chain using the AHP method

Abstract

Purpose The aim of the research is to provide a method to evaluate supply chain risks that stand in the way of the supply chain objectives. Design/methodology/approach An analytical hierarchy process model is proposed to identify supply chain risk factors with a view to improving the objective of customer value. The two phases of the method are the prioritization of supply chain objectives; and the selection of risk indicators. A case study is also presented. Findings The appreciation of the most critical supply chain risks comes from careful evaluations of the impacts and a consideration of the cause‐effect relationships. The involvement of key managers is essential. In the case study the two most divergent evaluations were from the logistics manager and the sales manager. Research limitations/implications Further application in various companies and industry sectors would be helpful to compare different cases and findings. Practical implications The model allows for flexibility in using (and the frequent monitoring of) a panel of indicators by management. The dashboard is composed of only a few indicators and helps in ensuring a synthesis among different perspectives. For these reasons it gives an useful contribution to practitioners. Originality/value The model seems helpful in creating awareness of supply chain risk. The involvement of managers from different areas is essential in establishing a thorough consideration of critical issues and interdependencies in determining a complete risk analysis. The method can support managers in setting up a priority hierarchy for risk treatment.

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