Building resilient supply chain through comprehensive analysis of risks and risk sources and application of analytic hierarchy process (AHP)

Abstract

Recent events, including the outbreak of the Covid-19 pandemic, Russia -Ukraine war, and other general geopolitical trends towards nationali sm have caused disruptions at di fferent levels and sca les to the global supply chain. The years post World War 2 were marked by global stability, which incentivised businesses to leverage supplies from across the globe for optimised costs and operations and get access to a large pool of customers. Seve ral organisations outsourced their manufacturing processes to east and south-east Asian countries to benefit from low labour costs in the region. The recent supply chain di sruptions have led to re-opening of the debate about whether returns from offshoring some parts of the supply chain surpass the ri sks and possible losses that result from localised or global disruptions. There are several organisations across the world that have started re-shoring their businesses to ensure greater visibili ty and control, while there are some who have shi fted the components of their supply chain from one of the countries with higher perceived ri sk to another where the risks are distinguishably lower (for e.g., several API manufacturers are planning to shift their manufacturing from China to India, owing to a more risky out look of China due to the outbreak of the Covid pandemic, and various geopolitical issues that surround the country today). Though each organisation's aim is to secure i ts supplies to meet the consumer demand in its market, the path taken to achieve the same may differ. It has also been firmly claimed and proved that the impact of risks that arise from localised production, or reshoring are much higher than what is present in di stributed supply chains, given it is always easi er to find a solution, or subst it ute for one leg of the supply chain as compared to cases when the possibili ty of the whole chain being disrupted by a localised disruption is evidently high. Building on this premise, our aim shall not be to find solutions to locali se all parts of the supply chain to enhance controlling capabilities or find ways to mitigate the risks involved in the current supply chain of any speci fic organisation, because th is w ill still provide only short- term solutions and will be based completely on the nature of di sruptions we have already faced in the past and the current situation of the world, and not take into account the various possible kinds of disturbances that might come our way in future. Organisations must always leverage possibilit ies to optim i se its processes and in parallel, ensure to take requisi te steps to build resilient structures. To delve deeper into the subject and suggest various methods through whi ch non-resiliency in supply cha in structures can be minimised, we shall start with the theoreti cal aspects of building flexible and agile supply chain systems. The suggestions shall be bui lt over the premise that our aim is to use techno logy and too ls to lessen damage to the chain of supplies in any case, followed by building a ri sk impact analysis model using analytic hierarchy process and looking into various factors necessary to minimise losses caused by interna l and external disruptions or risk sources.