Risks assessment of lower tier suppliers using operational reliabilities and product availabilities

The recent disturbing events across the globe such as climatologic disasters, epidemics, political instability, terrorism and financial scams have emanated the potential risks to global supply chains practices. Apart this the inclination towards the efficient strategies like lean practices, lower inventories, outsourcing and single sourcing are also making the supply chains vulnerable to dependency risks. Supply chains can be disrupted at supply side, customer side or at the focal firm locations during the processing, but the associated criticality is that the severity of the risks propagates through supply chains and deteriorates the performance of not only the one firm but the entire network. This paper examines risks to the supply side primarily focusing on lower tier suppliers which are usually the small medium enterprises. In this study elements of system reliability and product availability are estimated with the infrastructural risks of lower tier suppliers to develop a combined risk assessment index under demand and supply uncertainties. This approach can further be enhanced to rank suppliers and to assess overall supply chain performance.