Crude oil supply chain risk management with DEMATEL–ANP

Abstract Crude oil supply chain is extremely complex and vulnerable to various risks. Clear understanding of these risks can help supply chain managers to make effective decisions. This paper identifies main risks related to crude oil supply chain and implements decision making trial and evaluation laboratory (DEMATEL) method to determine the interdependency between risks and then applies analytic network process (ANP) method to evaluate the importance of each risk and to determine the best response strategy. The results show that the most important risk area is the regulatory and environmental risks and that the transference and cooperation policy is rated as the best response strategy. Contributions of this paper are fourfold: (1) it provides a comprehensive framework of risks that need to be considered in crude oil supply chain risk management (SCRM) context; (2) it shows how DEMATEL can be applied to analyze the interdependency between risks; (3) it illustrates how various risks and risk management strategies can been assessed through the ANP approach to aid managers in their decision making processes; and (4) most important contribution is customization of crude oil SCRM in Iran.

[1]  Ragnar E. Löfstedt,et al.  The tolerability of risk : a new framework for risk management , 2007 .

[2]  O. Tang,et al.  Identifying risk issues and research advancements in supply chain risk management , 2011 .

[3]  Yuan Li,et al.  Decision support for risk analysis on dynamic alliance , 2007, Decis. Support Syst..

[4]  Carl L. Pritchard,et al.  Risk Management: Concepts and Guidance , 2001 .

[5]  Iwan Vanany,et al.  Supply Chain Risk Management: Literature Review and Future Research , 2007, Int. J. Inf. Syst. Supply Chain Manag..

[6]  WeyWann-Ming,et al.  Using ANP priorities with goal programming for revitalization strategies in historic transport , 2009 .

[7]  Olivier Lavastre,et al.  Supply chain risk management in French companies , 2012, Decis. Support Syst..

[8]  Rajagopalan Srinivasan,et al.  Heuristic rescheduling of crude oil operations to manage abnormal supply chain events , 2007 .

[9]  S. Chopra,et al.  Managing Risk To Avoid Supply-Chain Breakdown , 2004 .

[10]  Gwo-Hshiung Tzeng,et al.  Combined DEMATEL technique with a novel MCDM model for exploring portfolio selection based on CAPM , 2011, Expert Syst. Appl..

[11]  E. Banks.  Catastrophic Risk: Analysis and Management , 2005 .

[12]  Lawrence W. Lan,et al.  Selection of optimal supplier in supply chain management strategy with analytic network process and choquet integral , 2009, Comput. Ind. Eng..

[13]  Wann-Ming Wey,et al.  Using ANP priorities with goal programming for revitalization strategies in historic transport: A case study of the Alishan Forest Railway , 2009, Expert Syst. Appl..

[14]  Tommaso Rossi,et al.  Managing operational risks along the oil supply chain , 2010 .

[15]  Umut Rifat Tuzkaya,et al.  Multiple criteria evaluation of current energy resources for Turkish manufacturing industry , 2008 .

[16]  S. Mohanty,et al.  Oil Risk Exposure: The Case of the U.S. Oil and Gas Sector , 2011 .

[17]  Bassam Fattouh,et al.  How Secure Are Middle East Oil Supplies , 2007 .

[18]  Eshita Gupta.  Oil vulnerability index of oil-importing countries , 2008 .

[19]  Luis G. Vargas,et al.  Decision Making with the Analytic Network Process: Economic, Political, Social and Technological Applications with Benefits, Opportunities, Costs and Risks , 2013 .

[20]  Jennifer Blackhurst,et al.  Managing supply chain risk and vulnerability: Tools and methods for supply chain decision makers , 2009 .

[21]  John Psarras,et al.  Risks on the Security of Oil and Gas Supply , 2011 .

[22]  Kevin Fong-Rey Liu,et al.  Hierarchical analytic network process and its application in environmental impact evaluation , 2011 .

[23]  Goker Aydin,et al.  Decentralized Supply Risk Management , 2010 .

[24]  O. Bayazit.  Use of analytic network process in vendor selection decisions , 2006 .

[25]  Tony Merna,et al.  Corporate Risk Management: An Organisational Perspective , 2005 .

[26]  Yu. N. Shebeko,et al.  Fire and explosion risk assessment for large-scale oil export terminal , 2007 .

[27]  Kevin McCormack.  Measuring and Managing Risk , 2007 .

[28]  Shih-Jieh Hung,et al.  Activity-based divergent supply chain planning for competitive advantage in the risky global environment: A DEMATEL-ANP fuzzy goal programming approach , 2011, Expert Syst. Appl..

[29]  Marianthi G. Ierapetritou,et al.  Petroleum Refining Operations: Key Issues, Advances, and Opportunities , 2011 .

[30]  M. Ghalambaz,et al.  Forecasting future oil demand in Iran using GSA (Gravitational Search Algorithm) , 2011 .

[31]  J. Mentzer,et al.  Global supply chain risk management strategies , 2008 .

[32]  Thomas L. Saaty,et al.  Decision making with dependence and feedback : the analytic network process : the organization and prioritization of complexity , 1996 .

[33]  J. March,et al.  Managerial perspectives on risk and risk taking , 1987 .

[34]  M. Punniyamoorthy,et al.  Assessment of supply chain risk: scale development and validation , 2013 .

[35]  G. Svensson.  A conceptual framework of vulnerability in firms’ inbound and outbound logistics flows , 2002 .

[36]  Yuri Bobylev,et al.  The Oil and Gas Sector , 2012 .

[37]  Jun-ling Zhang,et al.  A Model for the Optimization of the Petroleum Supply Chain in China and its Empirical Analysis , 2010, 2010 International Conference on E-Business and E-Government.

[38]  Maria C. Carneiro,et al.  Risk Management in the Oil Supply Chain: A CVaR Approach , 2010 .

[39]  Khalid Bachkar,et al.  MANAGING RISK IN PHARMACEUTICAL GLOBAL SUPPLY CHAIN OUTSOURCING: APPLYING ANALYTIC HIERARCHY PROCESS MODEL , 2009 .

[40]  Kevin McCormack,et al.  Supply chain risk management : minimizing disruptions in global sourcing , 2007 .

[41]  Christopher S. Tang.  Perspectives in supply chain risk management , 2006 .

[42]  Kin Keung Lai,et al.  GBOM-oriented management of production disruption risk and optimization of supply chain construction , 2014, Expert Syst. Appl..

[43]  Christopher S. Tang.  Robust strategies for mitigating supply chain disruptions , 2006 .

[44]  Rob Jessen.  Top 10 Risks for the Oil and Gas Industry , 2008 .

[45]  Stefan Seuring,et al.  From a literature review to a conceptual framework for sustainable supply chain management , 2008 .

[46]  Stephan M. Wagner,et al.  AN EMPIRICAL EXAMINATION OF SUPPLY CHAIN PERFORMANCE ALONG SEVERAL DIMENSIONS OF RISK , 2008 .

[47]  C. Blome,et al.  Supply Chain Risk Management in Financial Crises – A Multiple Case-Study Approach , 2011 .

[48]  Paolo Trucco,et al.  Modelling and assessment of dependent performance shaping factors through Analytic Network Process , 2011, Reliab. Eng. Syst. Saf..

[49]  Kevin Roy B. Serrona,et al.  Municipal Solid Waste Management in Metro Manila , 2006 .

[50]  Hau L. Lee,et al.  Mitigating supply chain risk through improved confidence , 2004 .

[51]  R. K. Mavi,et al.  Identification and Assessment of Logistical Factors to Evaluate a Green Supplier Using the Fuzzy Logic DEMATEL Method , 2013 .

[52]  Birsen Karpak,et al.  Small medium manufacturing enterprises in Turkey: An analytic network process framework for prioritizing factors affecting success , 2010 .

[53]  Uta Jüttner.  Supply chain risk management: Understanding the business requirements from a practitioner perspective , 2005 .

[54]  Tsuen-Ho Hsu,et al.  Designing a model of FANP in brand image decision-making , 2011, Appl. Soft Comput..

[55]  V. Tummala,et al.  Assessing supply chain risks with the analytic hierarchy process: Providing decision support for the offshoring decision by a US manufacturing company , 2008 .

[56]  Thomas Yew Sing Lee.  Supply Chain Risk Management , 2008, Int. J. Inf. Decis. Sci..

[57]  Ming-Lang Tseng,et al.  Using a hybrid MCDM model to evaluate firm environmental knowledge management in uncertainty , 2011, Appl. Soft Comput..

[58]  José M. Pinto,et al.  A general modeling framework for the operational planning of petroleum supply chains , 2004, Comput. Chem. Eng..

[59]  D. Waters.  Supply Chain Risk Management: Vulnerability and Resilience in Logistics , 2007 .

[60]  J. Hallikas,et al.  Risk assessment in multimodal supply chains , 2012 .

[61]  Suryadi Hadi,et al.  Supply Chain Risk Management in Shrimp Industry before and during Mud Volcano Disaster: An Initial Concept☆ , 2012 .

[62]  Johnathan Mun,et al.  Modeling Risk: Applying Monte Carlo Simulation, Real Options Analysis, Forecasting, and Optimization Techniques , 2006 .

[63]  Stephan M. Wagner,et al.  An empirical investigation into supply chain vulnerability , 2006 .

[64]  Ashwani Srivastava,et al.  New methodologies for security risk assessment of oil and gas industry , 2010 .

[65]  G. Zsidisin.  A grounded definition of supply risk , 2003 .

[66]  M. Christopher,et al.  Supply chain risk management: outlining an agenda for future research , 2003 .

[67]  Germaine H. Saad,et al.  Managing Disruption Risks in Supply Chains , 2005 .

[68]  Hellmuth Weisser,et al.  The security of gas supply—a critical issue for Europe? , 2007 .

[69]  Jörn-Henrik Thun,et al.  An empirical analysis of supply chain risk management in the German automotive industry , 2011 .

[70]  Rajagopalan Srinivasan,et al.  Agent-based supply chain management—2: a refinery application , 2002 .

[71]  Gwo-Hshiung Tzeng,et al.  An integrated MCDM technique combined with DEMATEL for a novel cluster-weighted with ANP method , 2011, Expert Syst. Appl..

[72]  Ming-Lang Tseng,et al.  Application of fuzzy DEMATEL to develop a cause and effect model of municipal solid waste management in Metro Manila , 2009, Environmental monitoring and assessment.

[73]  Johan Lundin,et al.  Redesigning a closed-loop supply chain exposed to risks , 2012 .

[74]  M. Faisal.  Prioritization of Risks in Supply Chains , 2009, Managing Supply Chain Risk and Vulnerability.

[75]  Christopher S. Tang,et al.  The power of flexibility for mitigating supply chain risks , 2008 .

[76]  Ignacio E. Grossmann,et al.  Petroleum allocation at PETROBRAS: Mathematical model and a solution algorithm , 2009, Comput. Chem. Eng..

[77]  C. Karakosta,et al.  Web tool for the quantification of oil and gas corridors' socio‐economic risks , 2013 .

[78]  Mark Goh,et al.  A multi-objective approach to supply chain visibility and risk , 2014, Eur. J. Oper. Res..

[79]  J. Hallikas,et al.  Risk management processes in supplier networks , 2004 .

[80]  Jack Barry,et al.  Supply chain risk in an uncertain global supply chain environment , 2004 .

[81]  Mehrdad Hadipour,et al.  Analytic network process for criteria selection in sustainable coastal land use planning , 2010 .

[82]  Bo Chen,et al.  A comprehensive decision-making model for risk management of supply chain , 2011, Expert Syst. Appl..

[83]  James J. H. Liou,et al.  Developing a hybrid multi-criteria model for selection of outsourcing providers , 2010, Expert Syst. Appl..

[84]  Michael J. Shaw,et al.  A MCDM approach for sourcing strategy mix decision in IT projects , 2010, Expert Syst. Appl..

[85]  Ana Paula Barbosa-Póvoa,et al.  Risk Management Framework for the Petroleum Supply Chain , 2010 .

[86]  Aníbal M. Blanco,et al.  Operational planning of crude oil processing terminals , 2005 .

[87]  Irem Dikmen,et al.  Risk assessment of international construction projects using the analytic network process , 2009 .

[88]  D. K. Lorenzo,et al.  Evaluating process safety in the chemical industry , 2000 .

[89]  Jennifer Blackhurst,et al.  A model for inbound supply risk analysis , 2006, Comput. Ind..