A grey based approach for assessment of risk associated with facility location in global supply chain

Facility location decisions are critical and should be taken after strategic evaluations. Globalization and integration of economies make such decisions further complex and risk prone. The purpose of this paper is to identify and assess the risk factors to be considered while taking new facility location decision associated with global supply chain and device the methodology. A grey-based multi-criteria decision-making (MCDM) approach is used for this purpose, which also takes in to account the uncertainty in decision making. Such approach enables final decision to be more real and practical. The paper also highlighted and discussed the criteria on the basis of which the management can select the best suitable site.

The risk factors related to facility location for a global firm are identified. To select the location of a global facility with least risk, grey-based MCDM approach is formulated. This grey-based MCDM is demonstrated using the hypothetical case of an industrial valve manufacturing global firm. The grey approach is used to analyse location alternatives based on various decision criteria for extracting comparative ranking.

The paper presents a tool for strategic and planning level. It helps supply chain managers to identify the risks related to a candidate location. Then it guides the supply chain manager at strategic level to find the least risky location for a manufacturing facility.

This paper demonstrates the grey-based MCDM approach for determining less risky location to locate a new manufacturing unit so that practitioners can use this approach for taking other strategic decisions. The supply chain configuration can be decided subsequently which will yield more practical results and the decision taken will be more fruitful for firm.

The extensive literature review reveals that there are many models in the literature that addressed the issue of risk minimization in supply chain, but it was also noticed that there are limited number of models that minimize risk in locating a global facility considering the uncertainty of data in decision making. This is the first time that grey-based MCDM approach is formulated and used to find most suitable facility location under risk.