Development of a supply chain risk index for manufacturing supply chains

Abstract

PurposeThe purpose of this paper is to identify, classify and prioritize supply chain risks faced by Indian micro small and medium manufacturing companies and to develop a comprehensive supply chain risk index.Design/methodology/approachPrimary data has been collected from 354 Indian micro small and medium enterprises on the different supply chain risks faced by them. An extensive literature review followed by expert's interview has been carried out in order to finalize the supply chain risks. A hybrid methodology consists of AHP and Fuzzy TOPSIS is applied for the data analysis. A sensitivity analysis has been done to check the robustness and consistency of the results.FindingsResults depict the importance of supply side and financial side risks faced by manufacturing supply chains, thus adding to the ongoing academic debate on the importance of supply chain finance solutions.Research limitations/implicationsStudy is limited to the scope of an emerging market. Generalization of results needs more systematic studies around the world in different supply chains.Practical implicationsSupply chain managers can consider the benchmark framed in this study in order to identify the health of their supply chain and to efficiently employ supply chain risk management strategies.Originality/valueThe current study is novel in developing a supply chain risk index using a hybrid AHP-Fuzzy TOPSIS methodology with a comprehensive list of 26 supply chain risks under 5 categories for an MSME supply chain. To the best of the authors’ knowledge, this is the first study incorporating financial risks in the development of a supply chain risk index.