Supply chain sustainability risk decision support model using integrated Preference Selection Index (PSI) method and prospect theory

Abstract

PurposeThe purpose of this paper is to introduce the integrated model of the Preference Selection Index (PSI) and the prospect theory as new means to appraise the impact of supply chain sustainability risks based on five pillars of sustainability. Research has shown that sustainability risk assessment has a strong positive impact on improving the performance of enterprises.Design/methodology/approachThis study adopts a new decision support model for assessing supply chain sustainability risk based on additional failure mode and effect analysis parameters and its integration with PSI methodology and prospect theory. A case example of the supply chain small and medium enterprise (SME) producing fashion have been used in this study.FindingsThe result of this study reveals some critical supply chain sustainability risks affecting the sustainability of enterprises under study.Research limitations/implicationsThe use of a limited sample is often associated as a limitation in the research studies and this study is based on findings from SMEs in the fashion retail supply chain. This preliminary study provides academics and practitioners an exemplar of supply chain sustainability risk assessment using integration of the PSI method and prospect theory.Practical implicationsThe result of this study is beneficial for practitioners, particularly owner–managers of SMEs who can use this study as guidance on how to consider risk behavior to identify and select the critical sustainability risks and plan mitigating strategies accordingly.Originality/valueScientific studies on using the PSI and its integration with prospect theory as means to assess the criticality of supply chain sustainability risks is very rare. To the best of the authors’ knowledge, this is the first paper that presents the integrated model of the PSI and prospect theory to rank supply chain sustainability risks based on five pillars of sustainability.

Investigating the role of flexibility as a moderator between supply chain integration and firm performance: the case of manufacturing sector

“…, 2020a). Given the need for sustainability, firms must implement new strategies according to market changes to reduce uncertainty risk and improve performance (Sutrisno and Kumar, 2022).…”

“…SCF influences end consumers since it engages in all upstream and downstream activities (Singh et al, 2020a). Given the need for sustainability, firms must implement new strategies according to market changes to reduce uncertainty risk and improve performance (Sutrisno and Kumar, 2022).…”

Empirical Analysis of the Carbon Accounting Information Disclosure (CAID) Affecting R&D Investment and Sustainable Development in State-Owned and Non-State-Owned Enterprises

“…An efficient and strong sustainability capability can realize the relative fairness of the internal management system of the enterprise and guarantee the independence of the financial information processing by ensuring that the enterprise is not constrained by certain links or powerful people when making CAID. Sustainable development capability ensures the quality of CAID so that the function of investors to understand the low-carbon development of enterprises can be implemented, thus enhancing investors' confidence in enterprises [45].…”

Performance measurement framework of green supply chain implementation in the context of Indian manufacturing organizations

“…According to Global Manufacturing Competitiveness Index study in 2016, India is the top sixth country in the manufacturing industry (Lee et al, 2020). Under regulatory, competitive and community pressure, manufacturing industries develop environmental approaches like GSCM (Sutrisno and Kumar, 2022). GSCM can be obtained including green supply chain practices like green design (Ali and Shoaib, 2023), green purchasing (Uemura Reche et al, 2022), reverse logistics, internal environmental management (Afum et al, 2021), green customer cooperation (Agarwal et al, 2022), green supplier selection (Gonzalez et al, 2022), investment recovery (Mardani et al, 2020), green production (Xu et al, 2022), green marketing (Amaya Rivas et al, 2022), green information technology and systems (Kumar and Barua, 2022), green packaging (Moustafa et al, 2022), green human resource management (Nawanir et al, 2021), green innovation (Luo et al, 2021), green transportation (Chen et al, 2021), green warehousing (Agyabeng-Mensah et al, 2020), etc., in the manufacturing industries.…”

“…Under regulatory, competitive and community pressure, manufacturing industries develop environmental approaches like GSCM (Sutrisno and Kumar, 2022). GSCM can be obtained including green supply chain practices like green design (Ali and Shoaib, 2023), green purchasing (Uemura Reche et al.…”