Risk-aware procurement optimization in a global technology supply chain

• Main Authors: CHASE, Jonathan, YANG, Jingfeng, LAU, Hoong Chuin
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2022
• Subjects: Supply chain; Risk analysis; Procurement optimization; Artificial Intelligence and Robotics; Operations and Supply Chain Management
• Online Access: https://ink.library.smu.edu.sg/sis_research/7757; https://ink.library.smu.edu.sg/context/sis_research/article/8760/viewcontent/Computational_Logistics.pdf
• Institution: Singapore Management University

Supply chain disruption, from ‘Black Swan’ events like the COVID-19 pandemic or the Russian invasion of Ukraine, to more ordinary issues such as labour disputes and adverse weather conditions, can result in delays, missed orders, and financial loss for companies that deliver products globally. Developing a risk-tolerant procurement strategy that anticipates the logistical problems incurred by disruption involves both accurate quantification of risk and cost-effective decision-making. We develop a supplier-focused risk evaluation metric that constrains a procurement optimization model for a global technology company. Our solution offers practical risk tolerance and cost-effectiveness, accounting for a range of constraints that realistically reflect the way the company’s procurement planners operate.