An Empirical Study of Supply Chain Frangibility and Risk Management in Indian Automobile Industry

Abstract

The automobile sector in India is one the key segment of Indian economy as it contributes to 4% of India’s GDP and 5% of India’s Industrial production. The supply chain of any firm is generally dependent on six driving factors out of which three are functional (information, inventory, and facilities) and 3 are logistic (sourcing, pricing, and transportation). The risk causing factors in supply chains consists of various levels of sub-factors under them. Say for instance, under supply risk, the sub-factors can be poor logistics at supplier end, poor material quality etc., under demand risk, the sub-factors can be inaccurate demand forecasting, fluctuating demand, bullwhip effect, and under logistics risk, the sub-factors can be poor transportation network, shorter lead time, stock outs. Through this study, we observe to find the effect of these factors in the supply chain. We use Failure Mode and Effect Analysis (FMEA) technique to prioritize the various types of risk into zones namely high, medium and low risk factors. Also, we use the Best Worst Method (BWM), a multi-criteria decision-making technique to find out the overall weightings of different risk factors. The combination of these methods can help an organization to prioritize various risk factors and proposing a proper risk mitigation strategy leading to increase in overall supply chain efficiency and responsiveness.

Applying Integrated QFD-MCDM Approach to Strengthen Supply Chain Agility for Mitigating Sustainable Risks

“…Lack of liquidity or disruption in supply and the poor financial condition of the enterprise can lead to lower revenue and sales, which can impact labor utilization and cause long delivery delays [175]. Delivery disruptions or delays can expose a company to default risk and stock shortage risk as well as huge economic losses, affect a company's competitive positioning in the market, and even lead to the suspension of other activities in the supply chain [176,177]. Hence, companies should pay attention to the risk of cargo disruptions and delays.…”