Supply Chain Risk Assessment Using Fuzzy Logic

Abstract

Business's strength arises from the strength of its supply chain. Therefore, a proper supply chain management is vital for business continuity. One of the most challenging parts of SCM is the contract negotiation, and one main aspect of the negotiation is to know the risk associated with each range of quantity agreed on. Currently Managers assess the quantity to be supplied based on a binary way of either full or 0 supply, This paper aims to assess the corresponding quantities risks of the suppliers on a multilayer basis. The proposed approach uses fuzzy logic as an artificial intelligence tool that would develop the verbal terms of managers into numbers to be dealt with. A company that produces fresh frozen vegetables and fruits in Egypt who faces the problem of getting the required quantities from the suppliers with a fulfilment rate of 33% was chosen to apply the proposed model. The model allowed the managers to have full view of risk in their supply chain effectively and decide their needed capacity as well as the negotiation terms with both suppliers and customers. Future work should be the use of more data in the fuzzy database and implement the proposed methodology in an another industry.