An Ontology-based Bayesian network modelling for supply chain risk propagation

Abstract

Purpose Supply chain risks (SCRs) do not work in isolation and have impact both on each member of a chain and the performance of the entire supply chain. The purpose of this paper is to quantitatively assess the impact of dynamic risk propagation within and between integrated firms in global fresh produce supply chains. Design/methodology/approach A risk propagation ontology-based Bayesian network (BN) model was developed to measure dynamic SCR propagation. The proposed model was applied to a two-tier Australia-China table grape supply chain (ACTGSC) featured with an upstream Australian integrated grower and exporter and a downstream Chinese integrated importer and online retailer. Findings An ontology-based BN can be generated to accurately represent the risk domain of interest using the knowledge and inference capabilities inherent in a risk propagation ontology. In addition, the analyses revealed that supply discontinuity, product inconsistency and/or delivery delay originating in the upstream firm can propagate to increase the downstream firm’s customer value risk and business performance risk. Research limitations/implications The work was conducted in an Australian-China table grape supply chain, so results are only product chain-specific in nature. Additionally, only two state values were considered for all nodes in the model, and finally, while the proposed methodology does provide a large-scale risk network map, it may not be appropriate for a large supply chain network as it only follows the process flow of a single supply chain. Practical implications This study supports the backward-looking traceability of risk root causes through the ACTGSC and the forward-looking prediction of risk propagation to key risk performance measures. Social implications The methodology used in this paper provides an evidence-based decision-making capability as part of a system-wide risk management approach and fosters collaborative SCR management, which can yield numerous societal benefits. Originality/value The proposed methodology addresses the challenges in using a knowledge-based approach to develop a BN model, particularly with a large-scale model and integrates risk and performance for a holistic risk propagation assessment. The combination of modelling approaches to address the issue is unique.