Assessing and managing sustainability risk in supply chain a case study

Abstract

In recent years, sustainability has gained paramount importance in supply chain management (SCM) due to its strategic business advantages. Concurrently, industries are facing supply chain sustainability risks emanated from diversified sources. So far, however, there is a paucity of literature regarding sustainability risk assessment. To fill this research gap, this study presents a real-life case study of the textile industry to identify and assess supply chain sustainability risks. In this study,the fuzzy synthetic evaluation (FSE) method is applied to compute the likelihood of occurrence, the magnitude of impact, risk criticality (RC) of each risk factor, group, and the overall risk. This study finds five risk groups along with twenty sustainability risk factors. The risk groups are listed as ‘supplier’, ‘financial’, ‘social’, ‘transportation’, and ‘environmental’ respectively based on their RC values. On the other hand, the top three sustainability risk factors are ‘poor product transportation system’, ‘air, water, and soil pollution’, and ‘factory fire’ respectively. The overall RC value (3.937) of sustainability risks of the case industry is found as approximately high. Furthermore, this study applies the cause and effect diagram to find the root causes of the three influential risk factors. It is worth mentioning that this study will guide practitioners to take the required strategic steps to assess and manage sustainability risks in their supply chain.