Risk management instruments in the supply chain of the furniture industry

Abstract

PURPOSE: The aim of the article was to indicate selected risk management instruments for the identification of deviations, and threats in the flow of supply chain processes in the furniture industry. It is based on research conducted by the authors on the example of a selected company in the supply chain of a furniture industry, IKEA.

DESIGN/METHODOLOGY/APPROACH: The FMEA method was applied in this study. Relationships were determined on the basis of guesses, observations and conversations with people who worked or work at IKEA. The business areas involved in the flow of goods and services of the above industry were analysed. The potential type of defects was defined together with their consequences. The probability of defect occurrence was determined on a scale from 1 to 10. The RPN parameter was determined.

FINDINGS: For a given branch, the biggest area of potential defects could be problems in the sales department. The distribution department also needs significant improvement, as transport companies have significantly inflated their financial expectations and the frequency of deliveries by road transport has increased significantly due to changes in the trend of customer orders via the Internet. The computational experiment consisted of applying a newly developed random search algorithm to solve a number of cyclic delivery synchronisation problems. The results obtained by the algorithm were compared with the solutions calculated by the exact method.

PRACTICAL IMPLICATIONS: Based on the above data, a risk map of the analysed risk factors was created. The matrix shows the occurrence of hazardous situations and the impact of the risk on the enterprise, manifested in specific ranges of significance of the occurrence of risk factors.

ORIGINALITY/VALUE: It can be concluded that there were risk factors in the enterprise that could critically disrupt the course of processes in the sphere of procurement, production and distribution, as well as in the management of logistics processes. More critical risks occurred in the sphere of production.