Identification of institutional risks of SMEs supply chain using the fuzzy failure mode and effect analysis

Abstract

Institutional problems experienced by SMEs pose institutional risks that may affect their supply chain. The variables include involved actor, relationship and institution. The actor as a variable poses the risks of technical and intellectual knowledge, and negotiation skills, not to mention the issues of commitment, communication and responsibility. The relationship as a variable revolves around the issues of trust, honesty and motivation to improve, frequent conflicts, and limited information. Other institutional variables pose the risks of under-developed business networks and insufficient government involvement and training, and fundings. These risks must be handled properly and correctly. This study was aimed to identify and to assess institutional risks in supply chains. The risk identification and assessment in this research employed the Fuzzy Failure Mode and Effect Analysis (Fuzzy FMEA). The result from analysing five randomly selected SMEs revealed that the prioritised risks for actor as a variable included the lack of intellectual knowledge and poor commitment level. The prioritised risk for relationship as a variable was the lack of motivation to improve together. The prioritised risk for other institutional variables was the limited funding from other institution.