Applying a Safety System Versus the Risky Suppliers

The changing factors of supply chain management include the evolution of technology in market conditions, the transformation of business practices, new expectations of partners in the supply chain, and demand for more value-added from the end-user consumer. Manufacturing organizations require more flexibility to maintain a competitive advantage as well as to operate in a dynamic environment. As the complexity increases, uncertainty and levels also increase in the supply chain. Hence, risk management has become a major issue in the supply chain and plays a significant role in the supply chain performance and the continuity of the organization's dynamics. In the paper, the process of supply chain risk management has been gone through and a risk mitigation model has been presented. The goal of the paper is to expand the proposed model of Kirilmaz & Erol in which the number of commodities increases. In the first step of the suggested method, a procurement plan is provided by a linear planning model, taking into account cost constraints. In the second step, the plan is revised by considering risk criteria for planning. The transition of orders is made to reduce the risk from high risky suppliers to less risky suppliers. The process of supply chain risk management has been performed by an electromotor company in the Middle East. We use the Kirilmaz & Erol model to validate the proposed model.