A new tool for evaluating supply risk management

Leite, Maria Silene Alexandre; Arantes, Fernanda Paes; Bornia, Antonio Cezar; Silva, Liane Márcia Freitas e; Santos, Kathyana Vanessa Diniz; Rique Júnior, José Flavio

doi:10.1590/0103-6513.20240005

Brasil

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Research Article • Prod. 34 • 2024 • https://doi.org/10.1590/0103-6513.20240005 linkcopy

A new tool for evaluating supply risk management

Authorship SCIMAGO INSTITUTIONS RANKINGS

Abstract

Paper aims This research proposes a tool for assessing supply risk, taking into account supply chain performance criteria.

Originality The results show that risk management can contribute to better supply chain performance when supplier selection procedures consider the risks involved and how they are related to supply chain performance criteria.

Research method A systematic literature review (SLR) was carried out on supplier selection, performance evaluation and risk management in the supply chain. The statistical tool IRT (Item Response Theory) was used to establish the level of difficulty in eliminating the types of risks identified and associated with the supply chain performance criteria, based on the probability of each situation occurring.

Main findings With this scale, it is possible to identify which types of risk and performance criteria are most difficult for suppliers to meet and then define a plan for mitigating the risks that are harder to eliminate.

Implications for theory and practice Based on the tool developed, organizations have greater understanding of how risks affect the performance of their supply chain and with that knowledge they can act to minimize the effects of the risks that are most difficult to eliminate.

Keywords: Supply chain management; Performance measurement; Risk management; Supplier risk; Item Response Theory (IRT)

Performance criteria	Associated supply risk	References
Delivery	Risk of failure in the delivery process (Risk of transportation failure)	(Acar et al., 2016; Akcan & Güldeş, 2019; Alizadeh & Yousefi, 2019; Alkahtani et al., 2019; Pham et al., 2023; Zakeri et al., 2023)
Service	Risk of inefficient service	(Acar et al., 2016; Alizadeh & Yousefi, 2019; Hou & Xie, 2019; Lee et al., 2016; Imran et al., 2020; Karami et al., 2021; Kawa & Koczkodaj, 2015; Er Kara & Oktay Fırat, 2018; Li & Wang, 2018).
Logistics	Risk of suppliers offering inefficient logistics	(Akcan & Güldeş, 2019; Chatterjee et al., 2018; Chung, 2015; Pamucar et al., 2020; Pérez-Velázquez et al., 2020; Restrepo & Villegas, 2019; Tavana et al., 2017; Wang et al., 2017; Zarbakhshnia & Jaghdani, 2018).
Reliability	Risk in assuming that the reliability of suppliers is adequate	(Fallahpour et al., 2016; Mahmoudifard et al., 2018; Mohammed, 2020; Mohammed et al., 2021; Okwu & Tartibu, 2020; Pham et al., 2023).
Geographical position	Risk that the location or geographical position poses to the execution of transportation and delivery procedures	(Alizadeh & Yousefi, 2019; Dotoli et al., 2016; Ganguly et al., 2019; Kant & Dalvi, 2017; Karami et al., 2021; Song et al., 2024).
Financial stability	Risk that the financial condition of suppliers poses to the full execution of orders	(Alizadeh & Yousefi, 2019; Ashtarinezhad et al., 2018; Bouhnik et al., 2017; Diouf & Kwak, 2018, Duong et al., 2023).
Ethics	Risk in assuming that suppliers have ethical and moral values in line with the company's values	(Amindoust, 2018; Faisal et al., 2017; Ganguly et al., 2019; Kant & Dalvi, 2017; Khan et al., 2018; Pamucar & Ecer, 2020).
Health and safety regulations	The risk of doing business with companies that neglect occupational health and safety standards	(Cheaitou et al., 2019; Nikfarjam et al., 2018; Phochanikorn & Tan, 2019; Uçal Sarı et al., 2017).
Inefficient communication and coordination	The risk of hiring companies that do not have or do not practice transparent communication between those involved in the process	(Cheaitou et al., 2019; Kant & Dalvi, 2017; Sureeyatanapas et al., 2020)
Poorly trained staff	The risk of doing business with companies that don't have staff training practices	(Cheaitou et al., 2019; Chung, 2015)
Honesty of suppliers	Risk of assuming that the company will honor its commitments	(Kant & Dalvi, 2017; Su & Gargeya, 2016)
Political stability	Risk in assuming that the company's internal policy works properly and meets objectives	(Kant & Dalvi, 2017; Er Kara & Oktay Fırat, 2018)
Operational risk	Risk in assuming that operational activities are carried out efficiently and effectively	(Er Kara & Oktay Fırat, 2018; Sureeyatanapas et al., 2020)
Manufacturing capacity risk	Risk in assuming that the company is working within its production capacity and that the order placed will be delivered as agreed	(Er Kara & Oktay Fırat, 2018)
Risk of contractual commitment	Risk in assuming that the company will honor all the terms of the contract	(Er Kara & Oktay Fırat, 2018)
Catastrophic risks	The risk of hiring companies that don't have disaster contingency plans.	(Er Kara & Oktay Fırat, 2018)
Supplier country risk	Risk to which the company is subject when contracting foreign suppliers, including factors such as the company's financial situation, legal measures, etc.	(Segura & Maroto, 2017)

Item	F1	h2
I01	0.862	0.74310
I02	0.762	0.58096
I04	0.832	0.69178
I05	0.691	0.47690
I06	0.837	0.70000
I07	0.832	0.69252
I08	0.845	0.71457
I09	0.918	0.84326
I10	0.899	0.80829
I11	0.844	0.71183
I12	0.712	0.50738
I13	0.735	0.54005
I14		0.05115
I15		0.05453
I16		0.00106
I18		0.02705
I19	0.577	0.33322
I20	0.727	0.52874
I21	0.774	0.59945
I22		0.13604
I23	0.409	0.16720
I24	0.641	0.41109
I25	0.783	0.61248
I26	0.820	0.67310
I27		0.06520
I28	0.551	0.30357
I29	0.621	0.38553
I31	0.537	0.28796
I33	0.450	0.20223
I34	0.508	0.25842

	RMSEA	TLI	CFI
Initial	1.108	0.892	0.901
Final	0.046	0.983	0.985

Item	a	b
I01	1.637	-2.235
I02	1.275	-2.667
I04	1.413	-2.624
I05	1.237	0.104
I06	1.569	-1.614
I07	1.646	-1.545
I08	1.767	-1.547
I09	1.843	-2.324
I10	1.931	-1.845
I11	1.612	-1.541
I12	1.211	-0.468
I13	1.271	-2.152
I20	1.148	-2.555
I21	1.371	-1.962
I24	1.039	-1.392
I25	1.253	-2.563
I26	1.324	-2.952
I29	0.949	-3.578

Scale (50,10)	Item	Performance criteria	Type of risk	Item
20	29	Operational risk	Risk in assuming that operational activities are carried out efficiently and effectively.	The supplier company does not fulfill the agreement due to operational failures (e.g. machine breakdowns, lack of equipment and/or workers) in its processes (*)
25	2	Delivery	Risk of failure in the delivery process (Risk of transportation failure)	The supplier delivers the items in the agreed quantity
25	26	Honesty of suppliers	Risk of assuming that the company will honor its commitments	The supplier company does as promised
30	1	Delivery	Risk of failure in the delivery process (Risk of transportation failure)	The supplier delivers on the day, place and time agreed in advance
	4	Service level	Risk of inefficient service	The supplier provides an adequate level of service
	9	Reliability	Risk in assuming that the reliability of suppliers is adequate	The supplier complies with the agreement with the client company
	20	Health and safety regulations	The risk of doing business with companies that neglect occupational health and safety standards	The supplier company follows occupational health and safety standards
	25	Poorly trained staff	The risk of doing business with companies that don't have staff training practices	The supplier company's staff is suitably qualified to carry out the activities
35	10	Reliability	Risk in assuming that the reliability of suppliers is adequate	The supplier meets the client company's expectations
	13	Geographical position	Risk that the location or geographical position poses to the execution of transportation and delivery procedures	The location of the supplier negatively affects the execution of transportation and delivery procedures. (*)
	21	Efficient communication and coordination	The risk of hiring companies that do not have or do not practice transparent communication between those involved in the process.	The flow of information from the supplier company to the others involved in the order fulfillment process is in line with the customer company's requirements.
40	6	Logistics	Risk of suppliers offering inefficient logistics	The logistics offered by the supplier (transportation options, delivery times) are sufficient to meet the needs of the client company
	7			The transportation options and conditions (vehicle, modal, fractional or whole load, one or more delivery cycles...) are sufficient to meet the needs of the client company
	8			The delivery options and conditions (time, schedule, packaging, place of delivery, etc.) offered by the supplier are sufficient to meet the needs of the client company
	11	Reliability	Risk in assuming that the reliability of suppliers is adequate	The client company considers that it can rely on the supplier company to meet its demands adequately
	24	Poorly trained staff	The risk of doing business with companies that don't have staff training practices	The supplier company trains its staff
50	12	Reliability	Risk in assuming that the reliability of suppliers is adequate	When there are adverse situations (not foreseen), the supplier company presents alternative action plans (e.g. compensation plan, contingency plan, flexibilization plan, etc.)
55	5	Service level	Risk of inefficient service	The supplier anticipates possible problems and acts preventively to avoid them

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[1] (*) Items with an inverted scale, where the higher the answer, the lower the level of performance.