Risk Management in Lean & Green Supply Chain: A Novel Fuzzy Linguistic Risk Assessment Approach

In today’s world, the pressure of competition considerably changed because of the increasing pressure of market competition, changes in customer expectations due to global warming and the globalization of the economy. Growing pressures in supply chain activities urge to companies to adopt new approaches by reducing waste and planning environmental friendly processes, such as recycling, reuse, and remanufacturing. There have been several studies proposed that lean activities can help make the case for environmental impact reduction to companies. Thus, most companies have reorganized their supply chain by the integrate the green activities through the balance of lean and green models simultaneously. According to this idea, they started to transfer some of their business process activities to external companies to be leaner & greener. Outsourcing can lead to cost reductions, meeting customer demand, reducing waste, gaining more flexibility and sharing of risks. Although outsourcing in the lean & green supply chain management brings benefits, companies can confront various risks. From this viewpoint, we propose a new fuzzy linguistic risk assessment approach to assess suppliers’ risks according to several criteria such as experience level of suppliers, criticality level of parts supplied, manufacturing technical requirements and complexity of parts supplied, effect of the deviations on the final product function, flexibility of suppliers, green activity level of suppliers, occupational health and safety risk, environmental risk and cooperation level of suppliers. For this purpose, an integrated solution approach that consists of four stages is applied. At the first stage, the relative weights of the criteria are calculated by asking the decision makers with the help of the pair-wise comparison matrix. At the second stage, suppliers’ scores are evaluated according to the selected criteria using linguistic variables. At the third stage, risk levels of suppliers are calculated. At the fourth stage, suppliers are assigned to risk groups according to their risk level action plans are determined. Finally, a numerical example is presented to demonstrate the effectiveness of the proposed approach.