Managing risks in the supply chain using the AHP method

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.