Research On Budget Allocation Of Manufacturers’ Risk Mitigation In Supply Chain Environment

With the continuous development of information age,establishing good partnerships among enterprises in the same supply chain can promote information sharing,improve the operational efficiency of enterprises,achieve a win-win situation.At the same time,various risks that enterprises on the chain faced with can hinder the normal operation of the supply chain,as a result,cause the turbulence of the whole chain.So more and more enterprises begin to pay attention to supply chain risk.To effectively control the risk of supply chain has become the key to the steady operation of enterprises.And,the manufaturers on the chain are the ones who will suffer the most serious damage because of both their upstream firms and their downstream firms can bring risk for them.As a result,manufacturers need to pay more attention to the supply chain risk management.The key to the success of an enterprise managing the supply chain risk is the mitigation of supply chain risk which needs cost of one firm.Using limited budget to mitigate risks to the greatest extent is a challenge that each enterprise facing now,so the research on budget allocation strategy of manufaturars’supply chain risk mitigation came into being,has certain theory significance and practical significance.To deal with the budget allocation of manufaturers’ supply chain risk mitigation measures,the research begins with the conduction of a risk management framework that can help manufaturars’set up appropriate supply chain risk mitigation measures,then,manufaturers’ need to allocate the limited budget to the risk mitigation measures using some strategies and prevent the occurrence of risk events or reduce the impact of the risk.As a result,the manufaturers’ supply chain risk budget allocation strategy needs to be further studied.This paper has carried out the related research,the main work includes the following three aspects:(1)The manufaturars’supply chain risk management framework has been constructed.Firstly,using Bow-tie analysis approach to carry on the manufaturers’ risk identification and manufacturers’ risk assessment,then supply chain risk fault trees under four situations with the supply chain disruption as the top event have been established.And according to the different identified risk factors,different preventive measures to help prevent a disruption of supply chain have been formulated.Secondly,supply chain risk event tree with the supply chain disruption as the top event has been established.The protective measures are triggered one by one in preset order beginning with the top event,leading into different paths of consequences which have different extent of influence.Lastly,the whole process including risk identification,risk assessment,risk mitigation has been completed.The manufaturers’ supply chain risk management framework have been established.(2)The model of budget allocation of manufaturers’ supply chain risk mitigation has been constructed.First,the budget allocation of manufaturers’ supply chain risk mitigation problem description has been carried on based on the pointed manufaturers’risk management framework.Then,considering the logical relationship among the risk factors,the manufaturers’risk management framework include four situations,as a result,risk mitigation measures which are adopted on the bisis of framework include four situations too,different situations means different budget allocation strategies.And then the definition and the indication of the symbol in the budget allocation model under four logical relationships have been pointed.Then,with the optimization ideas,considering the process of modelling optimization model,the budget allocation model of manufaturers’ supply chain risk mitigation with the objective that minimize the influence of the consequences based on the risk management framework have been established.(3)A supply chain of an auto parts manufacturing enterprise named A has been selected as the background,and the effectiveness of the budget allocation method of supply chain risk mitigation provided in this paper has been verified by analyzing the example.Firstly,the Bow-tie method has been used into an auto parts manufacturing enterprise supply chain risk analysis.Secondly,the budget allocation models of an auto parts manufaturers’supply chain risk under four situations with the disruption of the supply chain as the top event have been constructed,and the models were solved by software Lingo and the sensitivity analysis of the results has been conducted.Lastly,some conclusions have been found that there exists an optimal budget which minimize the influence of the consequences caused by the disruption of the auto parts supply chain;There exists different budget allocation strategies when the total budget is tight or enough;the total budget of preventive measures and the total budget of protective measures are basically unchanged;the measures which have smaller coefficients will be allocated more budget when the total budget is enough,etc.