Identification and assessment of supply chain risk: development of AHP model for supply chain risk prioritisation

Abstract

In modern times, competition has shifted from companies to supply chains and risk management has become one of the greatest challenge for supply chain managers. Risks affect supply chain performance hence supply chain risk assessment needs more attention. For this reason, this paper presents a general risks taxonomy and it gathers together, specifically the risks affecting the performance of an automotive supply chain. Further, the authors use analytic hierarchy process (AHP) methodology to analyse the risk factors. It is hoped, that this analysis will help managers, vendors, consultants and auditors to manage supply chain risks better. All risks that a supply chain might face have been identified, classified and ranked based on their risk exposure on supply chain. Results suggest that the most critical risks originate from supply side of the chain. The most important risks in automotive supply chain turn out to be volatile demand, financial failure of suppliers, supplier’s quality problems and failure to generate cost reduction.