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A structural model for investigating the driving and dependence power of supply chain risks in the readymade garment industry

2019, Journal of Retailing and Consumer Services

In today's business world, supply chain networks are becoming increasingly prone to uncertainties and complexities. The supply chain network of the ready-made garment (RMG) industry in Bangladesh is global in nature and is therefore vulnerable to increased risks and disruptions. This paper identifies potential supply chain risks and analyzes the interactions. To achieve this, a hierarchical structural model was developed through the application of an interpretive structural modeling (ISM) approach. Moreover, MICMAC (Matriced’ Impacts Cruoses Multiplication Applique a un Classement) analysis was conducted to classify the risks based on driving and dependence power. Findings revealed that disruption risk was the most influential risk in the RMG industry. The results of this study will guide industrial managers to take remedial measures to mitigate the supply chain risks in the apparel industry.

Journal of Retailing and Consumer Services 51 (2019) 102–113 Contents lists available at ScienceDirect Journal of Retailing and Consumer Services journal homepage: www.elsevier.com/locate/jretconser A structural model for investigating the driving and dependence power of supply chain risks in the readymade garment industry T Nighat Afroz Chowdhurya, Syed Mithun Alia, Zuhayer Mahtaba, Towfique Rahmana, Golam Kabirb,∗, Sanjoy Kumar Paulc a Department of Industrial and Production Engineering, Bangladesh University of Engineering and Technology, Dhaka, 1000, Bangladesh Industrial Systems Engineering, Faculty of Engineering and Applied Science, University of Regina, Canada c UTS Business School, University of Technology Sydney, Australia b A R TICL E INFO A BSTR A CT Keywords: Supply chain Supply chain risk management ISM MICMAC Readymade garment industry In today's business world, supply chain networks are becoming increasingly prone to uncertainties and complexities. The supply chain network of the ready-made garment (RMG) industry in Bangladesh is global in nature and is therefore vulnerable to increased risks and disruptions. This paper identifies potential supply chain risks and analyzes the interactions. To achieve this, a hierarchical structural model was developed through the application of an interpretive structural modeling (ISM) approach. Moreover, MICMAC (Matriced’ Impacts Cruoses Multiplication Applique a un Classement) analysis was conducted to classify the risks based on driving and dependence power. Findings revealed that disruption risk was the most influential risk in the RMG industry. The results of this study will guide industrial managers to take remedial measures to mitigate the supply chain risks in the apparel industry. 1. Introduction In today's market, the competition among firms is increasing within an ever-changing business environment (Banerjee & Mishra, 2017). Among the tools available to executives to gain competitive advantages in global trade, supply chain management (SCM) is one of the most useful strategies (Lambert et al., 1998; Wu et al., 2017). Thus, the supply chain is now considered a powerful tool to secure market position (Banerjee & Mishra 2017; Tang, 2006a). However, the supply chain is prone to many risks and uncertainties that are hindrance to the development of SCM (Heckmann et al., 2015). One major area of SCM is solely devoted to anticipating uncertainties and mitigating risks for effective supply chain risk management (SCRM) (Vanany et al., 2009). Despite the emerging awareness among executives and academics, there are still many unanswered questions regarding the mechanism and implementation of SCM (Brandenburg et al., 2014; Flynn et al., 2010; Govindan et al., 2017). Most countries are not aware of the need for an effective supply chain structure. Some countries have begun to realize, but the overall environment must first be visualized for better context, which aids in the in-depth analysis of those risks. The field of risk analysis is gradually increasing with the increase of exigency for mitigating risks (Jüttner, 2005; Manuj and Mentzer, 2008). Many have focused on domain-specific risk analysis, such as within the food industry (Mangla et al., 2018; Rueda et al., 2017), the apparel and fashion industry (Turker and Altuntas, 2014), the chemical industry (Cohen and Kunreuther, 2007), the electronics industry (Rajesh and Ravi, 2015), and the automobile industry (Sharma and Bhat, 2014). Other studies have concentrated on domain-specific SCRM from a geographical perspective, due to the variation of risks from one location to another (Govindan et al., 2013; Venkatesh et al., 2015). This research work focuses on the ready-made garment (RMG) sector of Bangladesh. The RMG industry of Bangladesh plays a significant role in shaping the economic structure of the country. The RMG industry contributed to 12.36% of the total gross domestic product (GDP) of Bangladesh in the financial year of 2016–2017 and constituted 80.7% of the total export earnings. In the same financial year, the industry generated $28.14 billion (source: thefinancialexpress. com.bd). Industrial policy predicts that the industry's share of the GDP will be 40% by 2021 and will employ 25% of the total labor force in Bangladesh (Yunus and Yamagata, 2012). Thus, the RMG industry of Bangladesh is playing a pivotal role in the global apparel retail supply chain. Bangladesh is doing well in competing with other emerging markets such as China, Vietnam and Cambodia. In 2016, Bangladesh became the second largest apparel Corresponding author. E-mail addresses: promy.ipe11@gmail.com (N.A. Chowdhury), syed.mithun@gmail.com (S.M. Ali), mahtabzuhayer@gmail.com (Z. Mahtab), towfique.rahman.bd@gmail.com (T. Rahman), golam.kabir@uregina.ca (G. Kabir), sanjoy.paul@uts.edu.au (S.K. Paul). ∗ https://doi.org/10.1016/j.jretconser.2019.05.024 Received 20 December 2018; Received in revised form 14 April 2019; Accepted 28 May 2019 Available online 07 June 2019 0969-6989/ © 2019 Elsevier Ltd. All rights reserved.