Measurement of supply risk and determining supply strategy, case study: A refrigerator making company

One of the initial researches on supply risk criteria in a supply chain is that of Kraljic. This research gives a method to classify supplied items into four categories in terms of risk and price share and presents a set of strategies to supply the items of each category. Although the addressed research gives some criteria to measure supply risk but it is not applicable in each industry due to lack of adequate criteria and the way to measure and quantify the supply risk. In this paper, we consider a refrigerator making company whose the whole items are classified into 61 groups. Reviewing the literature shows that the supply risk of each item can be precisely measured with respect to the availability of the corresponding suppliers, number of suppliers, competitive demand, purchasing or making opportunities, storage possibilities, limitations and barriers against importing, replacement possibility and exclusiveness for a refrigerator making company. We have proposed using fuzzy numbers in order to quantify most of the qualitative criteria. Measuring the supply risk and computing the price share of each item, the whole items are classified into four categories as the method given by Kraljic and accordingly the corresponding supply strategy is determined.