Propagation of risks and their impact on performance in fresh food retail

The purpose of this paper is to carry out structural analysis of potential supply chain risks and performance measures in fresh food retail by applying interpretive structural modeling (ISM).

Inputs were taken from industry experts in identifying and understanding interdependencies among food retail supply chain risks on different levels (sourcing and logistics outside the retail stores; storage and customer interface at the stores). Interdependencies among risks and their impact on performance measures are structured into a hierarchy in order to derive subsystems of interdependent elements to derive useful insights for theory and practice.

Using the ISM approach the risks and performance measures were clustered according to their driving power and dependence power. Change in/inadequate government regulations’ are at the bottom level of the hierarchy implying highest driving power and require higher attention and focussed mitigation strategies. Risks like lack of traceability, transport delays/breakdowns and temperature abuse, cross-contamination in transport and storage have medium driver and dependence powers.

The approach is focussed on food retail supply chains in the Indian context and thereby limits the ability to generalize the findings. The academics and experts were selected on convenience and availability.

It gives managers a better understanding of the risks and performance measures that have most influence on others (driving performance measures) and those measures which are most influenced by others (dependent performance measures) in fresh food retail and also a tool to prioritize them. This kind of information is strategic for managers who can use it to identify which performance measures they should concentrate on managing the trade-offs between measures. The findings and the applicability for practical use have been validated by both experts and practicing managers in food retail supply chains.

The work is perhaps the first to link supply chain risks with performance and explains the propagation of risks in food retail supply chains. It contributes to theory by addressing a few research gaps and provides relevant managerial insights for practitioners.