Modelling for Disruptions in Apparel Supply Chain

By Aditya Kumar
(07MF3016)

Under the guidance of

Prof Jitesh Thakkar

DEPARTMENT INDUSTRIAL ENGINEERING AND MANAGEMENT INDIAN INSTITUTE OF TECHNOLOGY, KHARAGPUR

DEPARTMENT INDUSTRIAL ENGINEERING AND MANAGEMENT INDIAN INSTITUTE OF TECHNOLOGY, KHARAGPUR

CERTIFICATE
This is to certify that the project report entitled Modelling for Disruptions in Apparel Supply Chain is submitted in partial fulfillment of the requirements for the award of the degree of Master of Technology in Industrial Engineering and Management at the Indian Institute of Technology, Kharagpur. It is a faithful record of bonafide research work carried by Mr. Aditya Kumar (07MF3016) under my supervision and guidance. It is further certified that no part of thesis has been submitted to any other University or Institute for the award of any other Degree or Diploma.

Prof Jitesh Thakkar

Dept of Industrial Engg and Management

Acknowledgements
I am extremely grateful and thankful to Prof.Jitesh Thakkar for his constant encouragement and appreciation along with able and expert guidance. His essential and gracious support from the initial to final level enabled me to develop an understanding of the subject . It was a truly cherishable learning experience to work under their guidance.

List of tables and figures

List of tables
Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Disruption Examples Comparison of AHP, ANP, ISM References of Disruption Factors Structural Self Interaction Matrix Reachability Matrix Partition of Reachability Matrix and Level Classification

List of figures
Fig 1 Fig 2 Fig 3 Fig4 Fig 5 The Supply Chain : Physical processes involved The textile and Apparel Supply Chain Basic Logic of ISM Driving and Dependence power Diagram ISM Based model for disruptions

Abstract Purpose - The aim of this paper is the structural analysis of potential supply chain risks for apparel industry. It demonstrate how interpretive structural modeling (ISM) helps in identifying and understanding interdependencies among supply chain risks and understand driver and driven relationship between various factors of disruptions. The risks will be were structured into a hierarchy in order to understand driving power and dependency. Methodology - ISM was used to identify inter-relationships among supply chain risks and to classify the risks according to their driving and dependence power. Findings - ISM was proven as a useful methodology to structure supply chain risks in an easy way that can also be carried out in a step-by-step process on several manufacturing stages. The input to the algorithm has to be well-defined to give the user an exact understanding of all risks that have to be assessed, i.e. the better the input to ISM in terms of the relationships between the factors the better the outcome and representation will be. Practical Implication - Results will benefit industry personnel by providing insights into todays dynamic apparel manufacturing environment as well as identifying key disruptions. Keywords - Supply chain management, Risk management, Decision making, Cause-effect relations, Interpretive structural modeling

Contents 1. Introduction 2. Literature Survey 3. Modeling 4. Methodology 5. Results and Discussion 6. Scope for future work 7. References 6 7 13 16 21 24 25

1. Introduction

In todays world textile and apparel industry plays a significant role in the industrial growth of most of the countries regardless of the level of their economic prosperity. Increasing number of countries including India are using this industry for promoting the growth of their economy. This is vital for them for employment opportunity and export earnings. The textile and apparel industry is characterized by high demand uncertainty and long lead times. Obsolescence, high stock out cost, large no of product variety and high margins are some of the other features which make it different from other supply chains. Time to market and supply saturation are other problems confronted by apparel and retail industry. Innovations in material development and production technologies led to product proliferation and shorter product life cycles. The increase in average per capita with a rise in active lifestyle, informal corporate culture and casual wear created a demand for new fabrics and garments. Different manufacturing and retail business models diversified the market increasing competition and introduce more uncertainty in the market. To model the factors responsible for causing disruption in supply chain of apparel industry and give managers better insight into the complex situation a modeling technique called Interpretive Structural Modelling (ISM) has been used in this work. ISM is a qualitative and interpretive method which generates solutions for complex problems through discourses based on the structural mapping of complex interconnections of elements.

Problem Statement Application of Interpretive Structural Modeling for disruption factors for Apparel Industry

Objectives To apply Interpretive Structural Modeling to the factors affecting disruptions of supply chain for apparel industries To find out the driver and dependency relations between the disruption factors and develop a hierarchical model

The present work is summarized as follows. The section two deals with introduction to apparel supply chain and its features. Section three discuses about the various disruptions there types and causes etc. Section four deals with Interpretive structural modeling and its application to the disruption factors generating driver driven relationships and development of ISM based model. Manegerial Implications of ISM and conclusions of application of ISM is presented in the final section.
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2. Literature Review Supply chain is a network of entities formed to manage coordinated information, material and financial flow, plant operations and logistics.[11] The supply chain encompasses all activities associated with the flow and transformation of goods from the raw materials stage, through to the end user as well as the associated information flows. Supply chain management is the integration of these activities through improved supply chain relationships, to achieve a competitive advantage.[12]

[13] Fig 1 : The Supply Chain : Physical processes involved 2.1 The Apparel Supply Chain The textile and apparel industry is characterized by high demand uncertainty and long lead times. Any disruption in the textile-apparel supply chain can compound the effect downstream.[22] Apparel manufacturers sourcing from oversees count on supplier penalties to ensure quality and timeliness, but disastrous events brings invisibility in information. Obsolescence, high stock out cost, large no of product variety and high margins are some of the other features which make it different from other supply chains.

[14] The textile and apparel production distribution chain. Source: Dickerson, K. (1999). Textiles and apparel in global economy. (3rd ed.), pg. 19, Upper Saddle River, NJ; Prentice Hall.

Fig 2 : The textile and Apparel Supply Chain

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The tradition of mass production along the textile supply chain to optimize costs is no longer a profitable strategy. With falling of trade barriers and quotas, textile and apparel industry has seen new partnerships and structures that are difficult to decipher with certainty . Time to market and supply saturation are other problems confronted by apparel and retail industry [22]. Innovations in material development and production technologies led to product proliferation and shorter product life cycles. The increase in average per capita with a rise in active lifestyle, informal corporate culture and casual wear created a demand for new fabrics and garments. The market further diversified creating niche and micro segments based on ethnicity, age, income, lifestyle and location. This in turn led to difficult and inaccurate forecasting, that has further increased the environmental dynamism and uncertainty. The consumers of textile and apparel have become more sophisticated demanding differentiated customized product, a wide variety, better service and lower prices [23] Different manufacturing and retail business models diversified the market increasing competition and introduced more uncertainty in the market. These changes have encouraged the development of more flexible manufacturing and supply chain technologies. Computer based manufacturing and distribution planning, computer aided design and management systems, and the developments in information technology based communication have made the international operations more feasible. The need to react to changes in consumer preferences and deal with the volatility of the demand has led to the Quick Response strategy where the retailer places the order very near to demand to be delivered even nearer to the final point of sale and in smaller quantities. Closer supplier customer links are necessary for quick response to work effectively.[25]

2.2 Risks and Disruption in Supply Chain

An organization, apart from its internal risks, face risks from its physical market input, output and the supply chain- in which the firm may be operating. Many firms face the risks from the adverse events that may occur at any point along a physical supply chain or the chain that connects the inputs to the firms production process to its outputs. Problems may arise at any juncture in the supply chain. A disruption at any spot in the supply chain will have a direct or indirect impact on the other entities involved. The degree of integration of an organization over different aspects of the physical supply chain determines in large part the degree of exposure to the risks [9]

According to Ziegenbein, Li, Hong, Kajuter, 2007 Supply chain risks cover risks that are related to disturbances and interruptions of the flows within the goods-, information- and financial network as well as the social and institutional networks and may negatively effect the objective accomplishment of the individual company, respectively, the entire supply chain, in regards of end-user advantage, costs, time or quality.[1] As supply chains expand globally, their risk of disruption also grows. Events such as WTC attack Hurricane Katrina, have brought focus to the analysis of disruption risk and development of mitigation plans to cope with that risk.
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The extremely competitive environment, pressures of cost reduction and high standards of serviceability with the ability to achieve reasonable profits in highly competitive market have seen a drive towards supply chain integration and lean manufacturing management. Supply chain concepts like Quick Response and Just-In-Time have become tremendously popular among all sections of manufacturing and retail industry (Youngdhall & Loomba, 2000). This drive toward the more efficient supply networks during the recent years has resulted in these networks becoming more vulnerable to disruptions. The firms have been pushing towards zero or near zero inventory system. Thus, there often tends to be 17 little or no inventory in the system to buffer the interruptions in supply. Any disruption can have a severe impact across the supply chain. Owing to the close interrelationships between many supply chains, the impact of such disruption can be far reaching (Chapman et al, 2000). The risk of disruption to companies in apparel industry is significant due to the international nature of the business, large supply base, and the ever changing trade and customs regulations.

2.1.

Types of Disruptions

Exogenous Disruptions - The disruptions emanating due to the factors external to an organization are often uncontrollable. Natural disasters and acts of terrorism are some examples of exogenous risk factors. Example Natural disaster, terrorism, diseases etc Internal Disruptions- The risks of disruption emanating from the organizations internal processes are defined as internal disruptions. This includes the production planning problems, raw material shortage, quality problems, disruptions due to physical, financial or technological infrastructure of the focal firm and work force related problems. Internal disruptions can happen at any point in the supply chain and will affect the both upstream and downstream members International Disruptions- International disruptions may emanate from the international nature of the business like some problem in political or economic stability of the company supplying raw material.
Transportation and Logistics Disruption - Transportation is part of the lifeblood of companies that provide or require shipping, mailing, or trucking services. An unexpected break in the transportation process could create a ripple effect throughout the supply chain and a loss of revenue for businesses dependent on just-in-time inventory. Transportation disruptions such as traffic accidents, flight or ship delays, and lack/loss of drivers occurring at any business could cause employee stress, loss of work hours, reputation damage, and delay of receipt of merchandise, packages and/or mail, as well as present the potential for human injury or death. Social Disruptions- Riots, public demonstrations, and civil disturbances have become common in the past thirty years. A business may be affected by the demonstration or disturbances in the area of its location. People may turn to violence in response to a political turmoil, government suppression, or perceived criminal activity by some organization or group and the resulting aggression is rarely well focused.
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Economic disruptions- At macro level, financial or economic risks entails currency and related problems such as devaluation, inter-convertibility, delay in payments, rescheduling of external debt, faults and deposit blockages.

Political environment - The political risk to business emanate from a variety of political actions. Political disruptions involve the possibility of financial losses due to government actions such as expropriations, imposition of legal restrictions, a freeze of assets, politically motivated sanctions, insistence or divestment, or disruptions from various types of popular agitations and civil disorders .Other disruptions to business can come in form of trade sanctions/embargoes that can be a result of diplomatic relation between two or more countries. The political environment affects some financial risks like currency devaluatio Table 1: Disruption Examples
Disruption Exogenous Internal International Legal Social Supply base Transportation disruption Examples Natural disaster, terrorism, diseases Process/product, workforce, financial, utility, system and communications Political, trade, economic. Compliance regulations, business practices, heath and safety regulations, copyright issues Riots, public demonstrations. Lead time, quality Shipment delays

2.3 Factors Affecting the disruptions [7] i. Extent of the geographic area covered by the supply chain Specific geographic areas can have distinct transportation problems. For example, shipping of goods to far north easten India is difficult - either by train, road or air. Shipping by air is faster but more costly than shipping by sea. This involves risk due to notoriously variable weather and reconstruction of roads. Thus, logistically difficult geographic regions and the number of regions covered by the supply chain increases uncertainty and supply chain exposure. ii. Political areas and borders crossed Each political area or the border that a supply chain must cross can cause problems for the supply chain. Issues of political stability, risk of war, changing trade regulations etc can be few of the events. These are defined as events or a series of events that can affect the physical assets, personal or operations in foreign land. This contributes to the increased complexity, uncertainty and supply chain exposure. iii. Transportation mode and their speeds Intermodal transportation modes add complexity and delays to the supply chain. The off-shore sourcing may include more than one of the transportation systems like train and truck, ships or air. Speed is also inversely proportional to the cost and volume of products that can be shipped. The speed of transportation increases from sea to rail to truck to air while the cost and the volume that can be transferred decreases.
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iv. Technical infrastructure and the degree of its Use Some countries lack the technical and communication infrastructure to allow firms to operate efficiently. Or otherwise, there might be compatibility issues between the technologies used by trading firm in the supply chain. v. Random occurrences Some events are beyond the control, such as earthquake, floods, storms etc. other random events can be foreseen but unavoidable. For example, the ship might be delayed in typhoon season, as it must avoid it. Understanding and managing risk shifting around supply chains is an important issue in business and a complex problem. Identification of supply chain risks is the first step in the risk management process. The selection of appropriate (mitigation or prevention) measures builds on the structural assessment and the impact area of the various types of risks. The purpose of this work is to conduct an exploratory analysis of the disruptions in the apparel manufacturing industry. The specific research objective is to identify and determine the nature of disruptions in the apparel manufacturing industry. It aims at answering questions like - What are the disruptions that are occurring in the apparel manufacturing companies ? How are they related and what are the interalationships between them ? How can by studying their relationships we can handle the disruption situations better beforehand? 2.4 Detailed list of disruptions [10] 1. Demand related disruptions- Due to improper demand prediction there can be shortage in the final goods as the production planning done on incorrect demand will not suffice. Sales forecast inaccuracy 2. Production related disruption: - These factors have to be monitotered on regular basis and can be reduced by regular maintenance. Quality/specification problem Equipment problem Internal logistics problem Planning problem Material shortage (Cause as well as effect of disruption) Change in customer demand 3. Natural Disasters Theses factors have wide impact on supply chain in many ways. They can throw the whole supply chain out of gear. Although rare to occur but there impact is very high. Flood Storm Earthquake Tornado Cyclone Drought 4. Social Disruption Unstable law and order can affect the logistics of supplies Riots
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 Strikes/demonstrations/shut downs Acts of terrorism 5. Thefts/vandalism/Fraud Any delay in supply of raw materials or the finished goods can lead to pausing of production process or loss of customers. 6. Fire in manufacturing Plant Any accident can lead to delay in production process due to loss of material and machinery getting affected due to accident 7. Power disruption/water disruption Delay in 8. Suitability/disclosure and fiduciary Fiduciary breaches/guideline violations Suitability/disclosure issues Retail consumer disclosure violations Breach of privacy Aggressive sales Account churning Misuse of confidential information Lender liability 9. Improper business or market practices These factors lead to lack of trust within the members of supply chain which stops information flow in supply chain making things uncertain for the members Antitrust Improper trade/market practices Market manipulation Insider trading (on firms account) Unlicensed activity Money laundering 10. Systems IT infrastructure disruption Hardware Loss of information Software Network failure Telecommunications 11. Exchange rates They can affect the economic policies of the country. It will also decide wether to prefer domestic suppliers over the foreign ones. 12. Supplier lead time This can depend on various factors associated with the supplier. 13. Supplier quality Poor quality of raw materials can lead to stop of production process altogether. Proper check, quality standards and implementation of mutual confidence between supplier and manufacturer can reduce this 14. Transportation delays It will lead to delayed deliveries of supply to plant and finished goods to market. 15. Political environment If the political situation of the country is unstable all the industrial processes will suffer because of its impact. 16. Customs regulations Custom regulation will decide the amount of import or export the manufacturers want to do in order to optimize their profit. 17. Price fluctuations Because of price fluctuation the manufacturers may look for alternative suppliers which can cause increase in manufacturing time of the products
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3 Modelling 3.1 Interpretive Structural Modeling (ISM) The term interpretive structural modeling (ISM) is used here to refer to the systematic application of some elementary notions of graph theory in such a way that theoretical, conceptual, and computational leverage is exploited to efficiently construct a directed graph, or network representation, of the complex pattern of a contextual relationship among a set of elements.[2] The outcome of application of ISM are two fold: (1) it establishes the relationships among factors by delivering a digraph; and (2) it classifies factors into various categories depending upon their driver and dependence power.[23] ISM is a qualitative and interpretive method which generates solutions for complex problems through discourses based on the structural mapping of complex interconnections of elements [15][16]. A structure of the elements results within the context of the ISM depending on a certain relation type which describes the connections of the elements to each other [17]. The method supports the identification and order of the complex relations between the elements of a system so that the influence can be analysed between the elements. ISM has been applied to various problems [18][19][20][21]
The figure below shows the basic logic of the ISM. A complex problem or the dependencies between elements to be examined are interpreted as a (badly or not at all structured) complex system (object system). The modeling converts the object system into a well-defined and representative system consisting of directed graphs (digraph). An interpretation of the object system as regards content is also carried out besides the structural one, i.e. the digraphs are completed with context (information). The object system mapped as digraphs becomes the basic structural model. The expansion with content finally leads to an interpretive structural model.

Fig 3: Basic Logic of ISM Springer Science + Business Media: ISM-Logik Szyperski and Eul-Bischoff (1983)

[4]
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The ISM is described as interpretive since a group discussion is deciding, whether and how the elements are related. Thus, the methodology is appropriate for use by experts who are knowledgeable of the problems context. The method is structuring since it produces (on the basis of the relations) a comprehensive structure of all the complex elements by considering all possible pairwise interactions of the elements. The method is modeling since the complete structure and the individual relations of the elements are illustrated in digraphs [6] ISM is a qualitative and interpretive method which generates solutions for complex problems through discourses based on the structural mapping of complex interconnections of elements.[3] 3.2 Comparison with other methods

[23] Sources: a Saaty and Forman (1993); b Saaty (1996); c Warfield (1974) and Thakkar et al. (2007) AHP is a multi criteria decision making technique which is strictly hierarchical in nature. There is no any possibility of the options affecting the weights of decision making criteria. Complex problems cannot be modeled by this method. ANP is a comprehensive decision-making technique that has the capability of including all the relevant criteria tangible and intangible without bothering about their linear hierarchy in arriving at a decision. ANP is competent enough to capture the interrelationships among the decision variables for prioritizing the various alternatives.[24] ISM is a well-established methodology for identifying and summarizing relationships among specific items, which define an issue or problem. It helps to impose order and direction on the complex relationship among elements of system.[17]

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3.3 Limitation of ISM Although the results provided by ISM contain a lot of information about the dependencies between supply chain risks, the ISM model cannot be used to identify a direct (critical) link between two risks, that, when eliminated, would have no longer any effect. The resulting ISM model can show overall impact chains but with removed links, if the information is still contained, to keep track of the dependencies at the expense of detailed information about all direct links. Furthermore, the ISM model shows only that there is a connection between two risks without any information if the impact of this connection is significant or negligible. To get more detailed information about the strength of the relation between risks, fuzzy ISM can be applied which will give driver power and dependencies powers

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4. Methodology Application of ISM 4.1 Disruption Factors considered for applying ISM To keep the model simple based on their impacts a selected no of factors responsible for disruption in Apparel Supply Chain have been identified as Factors responsible for disruptions 1. Changes in custom regulations 2. Country economic crisis 3. Exchange rate fluctuations 4. IT related disruption 5. Logistics related disruptions 6. Natural Disaster 7. Process Failure 8. Product quality related disruptions 9. Standard Compliance issues 10. Supply base related 11. Terrorism 12. Trade regulations 13. Utility unavailability (power, water, oil, gas) 14. Workforce related (strikes, union) References Ritchie & Marshall, 1993 Ritchie & Marshall, 1993 Koller, 1999 Young & Tippins, 2001 Caponigro, 2000 Frenkel, Hommel & Rudolph, 2000 Culp, 2001 Frost, Allan, Porter & Bloodworth, 2001 Frost, Allan, Porter & Bloodworth, 2001 Broder, 2000 McNamee & Selim, 1998; -

Table 2 : References of Disruption Factors 4.2 Steps in ISM Although the results obtained by ISM can provide a lot of information about the dependencies between supply chain risks, the ISM model cannot be used to identify a direct (critical) link between two risks, that, when eliminated, would have no longer any effect. The resulting ISM model shows overall impact chains but removes links, if the information is still contained, to keep track of the dependencies at the expense of detailed information about all direct links. Furthermore, the ISM model shows only that there is a connection between two risks without any information if the impact of this connection is significant [5]

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1. The starting point in application of ISM is the identification of elements relevant to the problem. This can be done by secondary research. 2. Establishing contextual relation type. Next, the contextual relation must be cogently stated as a possible statement of relationship among the elements. 3. Construction of structural self-interaction matrix (SSIM) by pairwise comparison. This part of ISM is the most tedious and demanding. During this phase, the participants must decide upon the pairwise relationship between the elements. Keeping in mind the contextual relationship for each element, the existence of a relation between any two sub-elements (i and j) and the associated direction of the relation is questioned. Four symbols are used to denote the direction of the relationship between the elements i and j: V for the relation from i to j but not in both directions; A for the relation from j to i but not in both directions; X for both direction relations from i to j and j to i; and O if the relation between the elements does not appear to be valid.

Structural Self Interaction Matrix 14 O A O A A V O A O A O X V 13 O O O A A O A A O A V O 12 V V X O O O O O A O O 11 O O A A A O O O O A 10 V V V A A O O O O 9 O O O O A V O O 8 O O O A A O V 7 O O O A A O 6 O O O A A 5 V O V X 4 O O 3 X V 2 A 1 -

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Table 3: Structural Self Interaction Matrix 4. Developing a reachability matrix from the SSIM and checking for transitivity. This step is concerned with the construction of the reachability matrix M. It is a binary matrix since the entry V, A, X and O of the SSIM are converted into 1 and 0 as per the following rules: - If the (i, j) entry in the SSIM is V, then the (i, j) entry in the reachability matrixbecomes 1 and the ( j, i ) entry becomes 0.
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- If the (i, j) entry in the SSIM is A, then the (i, j) entry in the reachability matrixbecomes 0 and the ( j, i ) entry becomes 1. - If the (i, j) entry in the SSIM is X, then both the (i, j) and ( j, i ) entries of the reachability matrix become 1. - If the (i, j) entry of the SSIM is O, then both the (i, j) and ( j, i ) entries of the reachability matrix become 0.

Reachability Matrix

1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Dependence Power 1 1 1 0 0 0 0 0 0 0 0 0 0 0 3

2 0 1 0 0 0 0 0 0 0 0 1 0 0 1 3

3 1 1 1 0 0 0 0 0 0 0 1 1 0 0 5

4 0 0 0 1 1 1 1 1 0 1 1 0 1 1 9

5 1 0 1 1 1 1 1 1 1 1 1 0 1 1 12

6 0 0 0 0 0 1 0 0 0 0 0 0 0 0 1

7 0 0 0 0 0 0 1 0 0 0 0 0 1 0 2

8 0 0 0 0 0 0 1 1 0 0 0 0 0 1 3

9 0 0 0 0 0 1 0 0 1 0 0 1 0 0 3

10 1 1 1 0 0 0 0 0 0 1 1 0 1 1 7

11 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1

12 1 1 1 0 0 0 0 0 0 0 0 1 0 1 5

13 0 0 0 0 0 0 0 0 0 0 1 0 1 0 2

14 0 0 0 0 0 1 0 0 0 0 0 1 1 1 4

Driving Power 5 5 5 2 2 5 4 3 2 3 7 3 6 7

Table 4 : Reachability Matrix

5. Level partitioning of reachability matrix. The fifth phase involves extraction of a hierarchical ordering from the reachability matrix by level partitioning. The purpose of this phase is to facilitate the construction of the digraph from the reachability matrix. The level partition makes use of sets associated with each elements j in s. The reachability set R(si) consists of the element itself and other elements which are reachable from si. Similarly, there may be some elements which can reach the element si constituting the antecedent set A(si). Thereafter, an intersection of the reachability set and antecedent set (R(si) A(si)), i.e. the common elements in bothsets, is derived for each element. The element for which R(si) R(si) A(si) is the top-level element in the ISM hierarchy. The top-level element has no relation to any other elements above their own level. Once top-level elements are identified, they are separated out from the other elements. Then, the same process
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undergoes iterations till the level of all elements is achieved. These identified levels help in building the digraph and final ISM model.

Partition of Reachability Matrix and Level Classification

Factor No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Reachability Set 1,3,5,10,12 1,2,3,10,12 1,3,5,10,12 4,5 4,5 4,5,6,9,14 4,5,7,8 4,5,8 5,9 4,5,10 2,3,4,5,10,11,13 3,9,12,14 4,5,7,10,13,14 2,4,5,8,10,12,14

Antecedent Set 1,2,3 2,11,14 1,2,3,11,12 4,5,6,7,8,10,11,13,14 1,3,4,5,6,7,8,9,10,11,13,14 6 7,13 7,8,12 6,9,12 1,2,3,10,11,13,14 11 1,2,3,12,14 11,13 6,12,13,14

Intersection 1,3 2 1,3,12 4,5 4,5 6 7 8 9 10 11 3,12,14 13 12,14

Level 5 6 5 1 1 7 3 2 2 2 7 5 4 5

Table 5: Partition of Reachability Matrix and Level Classification 6. Drawing of digraph with removed transitivity links. An initial digraph including transitivity links is obtained from the conical form of the reachability matrix. The conical matrix is achieved from the partitioned reachability matrix by rearranging the elements according to their level, which means all the elements having the same level are pooled, i.e. with most zero (0) elements in the upper diagonal half of the matrix and most unitary (1) elements in the lower half. For the sake of simplicity, transitivity links are removed to obtain the final digraph. If there is a relationship between risk i and j, this is shown by an arrow which points from i to j. 7. Conversion of digraph into an ISM and checking of conceptual inconsistency. The Resultant digraph from step (6) is converted into an ISM by replacing element nodes with statements. Finally, the ISM model is reviewed to check for incompatibilities.

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5. Results and Conclusion

5.1 Results

Driving Power and Dependence Diagram

14 12

10 8

Dependence

10 12 3 14 9 8 7 6 1,2 13 11 6 7 8

4 2

0 0 1 2 3 Driving Power 5 4

Fig3 : Driving and Dependence power Diagram

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ISM Based Model

Logistics related disruption

IT related disruption

Product quality related disruptions

Standard Compliance issues

Supply base related

Process Failure

Utility Unavailability

Changes in custom regulations

Exchange Rate Fluctuation

Trade Regulation

Workforce related (Strikes etc)

Country Economic Crisis

Terrorism

Natural Disaster

Fig 4: ISM Based model for disruptions

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Explanation of ISM Results

ISM was proven as a useful methodology to structure supply chain risks in an easy and distributed approach that can also be carried out in a step-by-step process on several manufacturing stages.The input to the algorithm (risks) has to be well-defined to give the participants an exact understanding of all risks that have to be assessed, i.e. the better the input to ISM is prepared the better the outcome and representation will be. In this paper, an attempt has been made to apply ISM to uncover interdependencies of supply chain risks. The ISM creates conditions for rational decision making in that complex issues are structured. The pair wise analysis of risks in a group of experts from different functional areas encourages contributions from those who understand the issues being discussed, but may not understand all issues related to the overall risk management process. Thus, the present model will help to increase the awareness of decision makers, whilst assisting them to better understand the mutual influence among different supply chain risks and the consequences this implies for decisions about risk mitigation strategies. Substantial discussion of the identified risks among the experts lead to significant learning about the inter-relationship and total risk exposure of the company or supply chain under study. Conclusion We see that terrorism and Natural Disaster actors with highest driving power and they fall in category of external factors. It occurrence cannot be stopped by SC risk mitigation. The next level of factors are custom regulation, trade regulation, exchange rate fluctuation and workforce related factors all influenced by Economic Situation of the country. These factors in turn affect the utility availability like electricity, power etc. Quality related and supply based related disruptions are affected by process failure. The topmost factors are Logistics related disruption and IT related disruption which also mutually affects each other. The managerial implications of ISM can be discussed as follows 1. Factors like utility availability, natural disaster work force unavailability(strikes etc),terrorism etc are key driver variables. It shows that the industry will be heavy affected by these factors. 2. Factors like IT related disruptions and Logistics related variables are highly dependent variables. They carry the influence of the other variables so these are the factors on top in the hierarchy and should be dealt in the end. 3. Factors like standard compliance issues, supply base related etc are factors having low driven and driving factor. To some extent they are mostly disconnected from the system and are having low impact on the overall model.

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4. Factors having high driving and driven values are the linkage factors. Here we dont find any such factors.

Based on this internal and external parameters, owner-manager can envisage the incremental benefits of their investment in mitigating or developing strategy to reduce the impact of disruptions. The application of ISM helps in understanding the inter-relationships among supply chain risks and to classify the risks according to their driving and dependence power. In the driving dependence diagram above the factors having higher values of driving power like natural disaster etc are the major drivers and the factors having high dependence like logistics related disruption etc are major driven factors.

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6. Scope for future Work In the present work to model the disruption factor ISM was used which gave lot of information. However ISM model cannot be used to identify a direct link between two risks, that, when eliminated, would have no longer any effect. Furthermore, the ISM model shows only that there is a connection between two risks without any information if the impact of this connection is significant or negligible. To get more detailed information about the strength of the relationbetween risks, fuzzy ISM can be applied which will give driver power and dependencies powers . ISM is a qualitatitive modelling method. In further the supply chain can be modelled by discrete event simulation and understand the impact of different factors quantitatively and design the supply chain accordingly to reduce the impact of disruption factors.

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