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Risk analysis for the supplier selection problem using failure modes and effects analysis (FMEA)

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  • Simon Li

    (University of Calgary)

  • Wei Zeng

    (University of Calgary)

Abstract

While seeking for global suppliers is a general trend for lower cost and better quality, it is not trivial for a company to assess the corresponding risks in supplier selection. This paper proposes the supplier selection method that applies failures modes and effects analysis (FMEA) to assess the risks in the decision process. As each supplier is evaluated under the common multi-criteria framework, risks are viewed as the possible deviations from expected performance, and they are interpreted as failure modes in risk analysis. Following the concepts of FMEA, each failure mode is examined with respect to the possible causes and effects. This method generates two technical deliverables for supporting risk analysis. Firstly, the FMEA document is developed to support the team’s discussion of supplier risks and accumulate the risk knowledge within the company. Secondly, the ranking numbers based on FMEA (i.e., risk priority numbers) are utilized to evaluate a discount on a supplier’s performance according to their risk level. A real-case example about selecting methanol suppliers in the global market is used to demonstrate the proposed method for risk analysis in practice.

Suggested Citation

  • Simon Li & Wei Zeng, 2016. "Risk analysis for the supplier selection problem using failure modes and effects analysis (FMEA)," Journal of Intelligent Manufacturing, Springer, vol. 27(6), pages 1309-1321, December.
    • Handle: RePEc:spr:joinma:v:27:y:2016:i:6:d:10.1007_s10845-014-0953-0
    DOI: 10.1007/s10845-014-0953-0
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    References listed on IDEAS

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    1. Ho, William & Xu, Xiaowei & Dey, Prasanta K., 2010. "Multi-criteria decision making approaches for supplier evaluation and selection: A literature review," European Journal of Operational Research, Elsevier, vol. 202(1), pages 16-24, April.
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    Cited by:

    1. Vedpal Arya & S. G. Deshmukh & Naresh Bhatnagar, 2019. "Product quality in an inclusive manufacturing system: some considerations," Journal of Intelligent Manufacturing, Springer, vol. 30(8), pages 2871-2884, December.
    2. Linlin Liu & Dongming Fan & Zili Wang & Dezhen Yang & Jingjing Cui & Xinrui Ma & Yi Ren, 2019. "Enhanced GO methodology to support failure mode, effects and criticality analysis," Journal of Intelligent Manufacturing, Springer, vol. 30(3), pages 1451-1468, March.
    3. Yixiong Feng & Zhaoxi Hong & Jin Cheng & Likai Jia & Jianrong Tan, 2017. "Low Carbon-Oriented Optimal Reliability Design with Interval Product Failure Analysis and Grey Correlation Analysis," Sustainability, MDPI, vol. 9(3), pages 1-14, March.
    4. Gautam Dutta & Ravinder Kumar & Rahul Sindhwani & Rajesh Kr. Singh, 2021. "Digitalization priorities of quality control processes for SMEs: a conceptual study in perspective of Industry 4.0 adoption," Journal of Intelligent Manufacturing, Springer, vol. 32(6), pages 1679-1698, August.
    5. Davoud Jafari & Mehrzad Lohrasbi, 2018. "Performance Measurement and Ranking Organization’s Suppliers Based on Risk Factors Using a Hybrid Approach of FMEA and Multi-Criteria Decision Making Techniques: A Case Study," Modern Applied Science, Canadian Center of Science and Education, vol. 12(10), pages 149-149, October.
    6. Xinlong Li & Yan Ran & Genbao Zhang & Yan He, 2020. "A failure mode and risk assessment method based on cloud model," Journal of Intelligent Manufacturing, Springer, vol. 31(6), pages 1339-1352, August.
    7. Rajiv Kumar Sharma, 2022. "Examining interaction among supplier selection strategies in an outsourcing environment using ISM and fuzzy logic approach," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 13(5), pages 2175-2194, October.

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