Supply Chain Risks Assessment of Shipbuiding Industry in Bangladesh

A dissertation submitted in partial fulfilment of the requirements for the degree of

MASTER OF BUSINESS ADMINISTRATION (MBA)
MAJOR: SUPPLY CHAIN MANAGEMENT
by

Md. Morshed Jahan

ID: 2023033038
Under the guidance of
Mr. Ratan Ghos
Assistant Professor,
Department of Business Administration
Bangladesh University of Professionals
February 3rd, 2023
Overview of Shipbuilding Industry in Bangladesh
Overview of Shipbuilding Industry in
Bangladesh
• Bangladeshi shipbuilding industry is a new player in global market, with
competitiveness in smaller vessels.
• 100+ shipbuilders, 120 registered shipyards mostly on riverbanks, with size
limitations to 15000-20000 dwt. Vessel.
• Annual production capacity of 205k GT, with 185k for domestic orders and
20K for export.
• 80% of materials and components imported for “export” and “class” vessels,
50-60% local supply for inland water vessels.
• Shipbuilding relies heavily on imported materials such as steel pipe, engine
components, etc., with local supplies for steel plate, cable, paint..
 Abstract
• Overview of supply chain risks in Bangladesh's shipbuilding industry

• Two-phase methodology used: literature review and expert opinions for

identification of risks, fuzzy-topsis approach for evaluation and ranking

• Results will be valuable for shipbuilders and policymakers in

Bangladesh to develop efficient supply chain management practices.
 Research Questions
Broad Question:

What are risks hindering in supply chain of shipbuilding industry in Bangladesh and
how may those risk to be reduced?

Specific Questions:

RQ1: What are the main risks posed by the supply chain for the shipbuilding
industry in Bangladesh?

RQ2: What is the most significant risk to the supply chain that is likely to impact
the growth of the shipbuilding industry in Bangladesh?

RQ3: What steps should be taken to establish a sustainable supply chain in the
shipbuilding sector in Bangladesh?
 Research
General Objective: Objectives

• Identify and prioritize supply chain risks in the shipbuilding sector of Bangladesh to
minimize disruptions and ensure a smooth supply chain.

Specific Objectives:

1. Understand and analyze the risks associated with the supply chain in the shipbuilding
industry in Bangladesh.

2. Identify key risks impacting the supply chain in the shipbuilding sector.

3. Evaluate and analyze significant risks using fuzzy-TOPSIS and develop strategies for
sustainable supply chain management system..
 Methodology
Introduction

Identified the most important supply chain risks in the shipbuilding industry by
Literature review

A questionnaire was used to interviewed 5 Industry Expert from Shipbuilding

who have more than 10 years of professional experience.

The risks were ranked using Fuzzy topsis method .

List of Risks(Alternatives)
Criteria selection
1. Probability( Criteria 1)
2. Severity( Criteria 2)
3. Quality( Criteria 3)
 Introduction
Fuzzy TOPSIS Method

The Steps of the Fuzzy TOPSIS Method:

Step 1: Creating a decision matrix

Step 2: Creating the normalized decision matrix
Step 3: Creating the weighted normalized decision matrix
Step 4: Determining the fuzzy positive ideal solution (FPIS, A*) and the fuzzy negative ideal solution
()
Step 5: Calculating the distance between each alternative and the fuzzy positive ideal solution and the
distance between each alternative and the fuzzy negative ideal solution
Step 6: Calculate the closeness coefficient and rank the alternatives
 Introduction
Results
Alternative Ci Rank
Price of operating material(A10) 1.000 1
Purchasing price of raw materials(A9) 0.964 2 The closeness coefficient of
Capacity risks Lack of capacity flexibility (A3) 0.904 3 each alternative can be
Lead time for sourcing(A6) 0.894 4
Demand fluctuations (A8) 0.892 5
calculated as follows:
Lead time for product delivery(A5) 0.866 6
Working Environment (A20) 0.847 7
Manufacturing lead time (A4) 0.821 8
Changes in design (A16) 0.799 9
Payment delay to Supplier (A18) 0.771 10
Inventory level (A1) 0.754 11
High Transportation cost (A15) 0.725 12
Lack of operational quality (A17) 0.694 13
Sales withdrawal (A7) 0.677 14
Inbound supply delay (A12) 0.662 15
Natural disaster (A19) 0.604 16
Damage of goods during transportation (A13) 0.476 17
Transport delay (A14) 0.386 18
Lack of material quality (A11) 0.370 19
Damage in inventory (A2) 0.000 20
DataIntroduction
Analysis using Fuzzy TOPSIS Method
The Steps of the Fuzzy TOPSIS Method:
Step 1: Creating a decision matrix
In this study there are 3 criteria and 5 alternatives that are ranked based on FUZZY TOPSIS
method. For this analysis triangular fuzzy number is used. The values of l, m, and u represent the
lower bound, middle, and upper bound of the membership function for a given fuzzy set. The
table below shows the type of criterion and weight assigned to each criterion.

SN Linguistic terms L M U
1 Very Low Risk 0 0 1
2 Low Risk 0 1 3
3 Moderately Low Risk 1 3 5
4 Moderate Risk 3 5 7
5 Moderately High Risk 5 7 9
6
High Risk 7 9 10
7
Very High Risk 9 10 10
DataIntroduction
Analysis using Fuzzy TOPSIS Method
Step 1: Creating a decision matrix
Aggregated Decision Matrix: Shows the arithmetic mean based on the Fuzzy Scale
Risk Criterion 1 Criterion 2 Criterion 3
A1 Sales Withdrawal 1.00 2.60 4.60 1.60 3.40 5.40 2.80 4.60 6.60
A2 Demand Fluctuations 4.20 6.20 8.00 4.00 5.80 7.40 2.20 4.20 6.20
A3 Inventory Level 3.80 5.80 7.60 5.80 7.80 9.20 1.80 3.40 5.40
A4 Damage in Inventory 1.80 3.20 4.80 4.00 5.80 7.40 1.80 3.20 5.00
A5 Lack of Capacity Flexibility 2.00 3.60 5.40 3.20 5.00 6.80 2.60 4.20 6.00
A6 Manufacturing Lead time 6.00 7.40 8.40 7.00 8.60 9.40 4.40 6.00 7.40
A7 Product delivery Lead time 6.40 7.80 8.60 5.40 7.40 9.00 3.20 5.00 6.80
A8 Lead Time for Sourcing 3.60 5.40 7.20 5.40 7.40 9.00 4.40 6.20 7.80
A9 Purchase Price of Raw Materials 6.60 8.40 9.40 6.60 8.40 9.60 5.00 7.00 8.60
A10 Price of Operational Materials 4.20 6.20 8.20 5.40 7.20 8.60 4.20 6.20 8.00
A11 Lack of Material Quality 5.20 6.60 7.80 7.40 9.00 9.80 9.00 10.00 10.00
A12 Inbound Supply Delay 5.80 7.80 9.20 5.40 7.40 9.00 1.20 3.00 5.00
A13 Damage of Goods during Transportation 2.00 3.00 4.40 2.00 3.20 4.80 2.40 4.20 6.00
A14 Transport Delay 2.80 4.40 6.00 3.40 5.20 6.80 0.40 1.40 3.00
A15 High Transportation Cost 3.40 5.40 7.20 3.60 5.40 7.00 0.00 0.80 2.60
A16 Changes in Design 3.40 5.20 6.80 4.20 6.20 8.20 2.00 3.20 4.80
A17 Lack of Operational Quality 2.00 3.80 5.80 4.60 6.40 8.00 6.20 7.80 9.00
A18 Human Error 3.40 5.20 6.80 3.80 5.80 7.60 2.40 4.20 6.20
A19 Natural Disaster 1.60 2.60 4.00 2.00 3.40 5.40 0.20 0.80 2.20
A20 Labor Unrest 1.60 3.00 4.80 2.20 3.80 5.80 1.80 3.20 4.80
 DataIntroduction
Analysis using Fuzzy TOPSIS Method
Step 2: Creating the normalized decision matrix

Risk Criterion 1 Criterion 2 Criterion 3

Based on the positive and negative A1
A2
Sales Withdrawal
Demand Fluctuations
0.11
0.45
0.31
0.74
0.70
1.21
0.16
0.41
0.38 0.73
0.64 1.00
0.28
0.22
0.46 0.73
0.42 0.69
ideal solutions, a normalized A3
A4
Inventory Level
Damage in Inventory
0.40
0.19
0.69
0.38
1.15
0.73
0.59
0.41
0.87 1.24
0.64 1.00
0.18
0.18
0.34 0.60
0.32 0.56
decision matrix calculated by the A5
A6
Lack of Capacity Flexibility
Manufacturing Lead time
0.21
0.64
0.43
0.88
0.82
1.27
0.33
0.71
0.56 0.92
0.96 1.27
0.26
0.44
0.42 0.67
0.60 0.82
following relation: A7
A8
Product delivery Lead time
Lead Time for Sourcing
0.68
0.38
0.93
0.64
1.30
1.09
0.55
0.55
0.82 1.22
0.82 1.22
0.32
0.44
0.50 0.76
0.62 0.87
A9 Purchase Price of Raw 0.70 1.00 1.42 0.67 0.93 1.30 0.50 0.70 0.96
Materials
A10 Price of Operational 0.45 0.74 1.24 0.55 0.80 1.16 0.42 0.62 0.89
Materials
A11 Lack of Material Quality 0.55 0.79 1.18 0.76 1.00 1.32 0.90 1.00 1.11
A12 Inbound Supply Delay 0.62 0.93 1.39 0.55 0.82 1.22 0.12 0.30 0.56
A13 Damage of Goods during 0.21 0.36 0.67 0.20 0.36 0.65 0.24 0.42 0.67
Transportation
A14 Transport Delay 0.30 0.52 0.91 0.35 0.58 0.92 0.04 0.14 0.33
A15 High Transportation Cost 0.36 0.64 1.09 0.37 0.60 0.95 0.00 0.08 0.29
A16 Changes in Design 0.36 0.62 1.03 0.43 0.69 1.11 0.20 0.32 0.53
A17 Lack of Operational Quality 0.21 0.45 0.88 0.47 0.71 1.08 0.62 0.78 1.00
A18 Human Error 0.36 0.62 1.03 0.39 0.64 1.03 0.24 0.42 0.69
A19 Natural Disaster 0.17 0.31 0.61 0.20 0.38 0.73 0.02 0.08 0.24
A20 Labor Unrest 0.17 0.36 0.73 0.22 0.42 0.78 0.18 0.32 0.53
 DataIntroduction
Analysis using Fuzzy TOPSIS Method
Step 3: Creating the weighted normalized decision matrix
Risk Criterion 1 Criterion 2 Criterion 3

The weighted normalized decision A1

A2
Sales Withdrawal
Demand Fluctuations
0.10 0.29 0.70
0.42 0.69 1.21
0.13 0.35 0.73
0.31 0.60 1.00
0.22 0.43 0.73
0.17 0.39 0.69
matrix can be calculated by A3
A4
Inventory Level
Damage in Inventory
0.38 0.64 1.15
0.18 0.35 0.73
0.46 0.81 1.24
0.31 0.60 1.00
0.14 0.32 0.60
0.14 0.30 0.56
multiplying the weight of each A5
A6
Lack of Capacity Flexibility
Manufacturing Lead time
0.20 0.40 0.82
0.59 0.82 1.27
0.25 0.52 0.92
0.55 0.89 1.27
0.20 0.39 0.67
0.34 0.56 0.82
criterion in the normalized fuzzy A7 Product delivery Lead time 0.63 0.86 1.30 0.42 0.76 1.22 0.25 0.47 0.76
A8 Lead Time for Sourcing 0.36 0.60 1.09 0.42 0.76 1.22 0.34 0.58 0.87
decision matrix. Standard weight is A9 Purchase Price of Raw 0.65 0.93 1.42 0.52 0.87 1.30 0.39 0.65 0.96
Materials
taken as 0.93,0.77,0.93 A10 Price of Operational 0.42 0.69 1.24 0.42 0.74 1.16 0.32 0.58 0.89
Materials
A11 Lack of Material Quality 0.51 0.73 1.18 0.58 0.93 1.32 0.69 0.93 1.11
A12 Inbound Supply Delay 0.57 0.86 1.39 0.42 0.76 1.22 0.09 0.28 0.56
A13 Damage of Goods during 0.20 0.33 0.67 0.16 0.33 0.65 0.18 0.39 0.67
Transportation
A14 Transport Delay 0.28 0.49 0.91 0.27 0.54 0.92 0.03 0.13 0.33
A15 High Transportation Cost 0.34 0.60 1.09 0.28 0.56 0.95 0.00 0.07 0.29
A16 Changes in Design 0.34 0.58 1.03 0.33 0.64 1.11 0.15 0.30 0.53
A17 Lack of Operational Quality 0.20 0.42 0.88 0.36 0.66 1.08 0.48 0.73 1.00
A18 Human Error 0.34 0.58 1.03 0.30 0.60 1.03 0.18 0.39 0.69
A19 Natural Disaster 0.16 0.29 0.61 0.16 0.35 0.73 0.02 0.07 0.24
A20 Labor Unrest 0.16 0.33 0.73 0.17 0.39 0.78 0.14 0.30 0.53
 DataIntroduction
Analysis using Fuzzy TOPSIS Method
Step 4: Determining the fuzzy positive ideal solution (FPIS, A*) and the fuzzy negative
ideal solution ()

The FPIS and FNIS of the

Positive Ideal Negative Ideal
alternatives are defined as
follows: Criterion 1 0.6530 0.9300 1.4242 0.1583 0.2879 0.6061

Criterion 2 0.5814 0.9300 1.3243 0.1571 0.3307 0.6486

Criterion 3 0.6930 0.9300 1.1111 0.0154 0.0744 0.2444

 DataIntroduction
Analysis using Fuzzy TOPSIS Method
Step 5: Calculating the distance between each alternative and the fuzzy positive ideal solution
and the distance between each alternative and the fuzzy negative ideal solution
Alternative Distance From Positive Distance from Negative
Ideal Solution Ideal Solution
The distance between each A1 Sales Withdrawal 2.657543516 0.96255735

alternative and FPIS and the A2

A3
Demand Fluctuations
Inventory Level
1.752452318
1.702416622
1.93029527
2.013079958

distance between each

A4 Damage in Inventory 2.604730699 1.258216866
A5 Lack of Capacity Flexibility 2.364686343 1.409531755

alternative and FNIS are A6

A7
Manufacturing Lead time
Product delivery Lead time
0.950360508
1.180774336
3.069296838
2.71369886

respectively calculated as A8
A9
Lead Time for Sourcing
Purchase Price of Raw Materials
1.308452177
0.594887567
2.444242487
3.206268118
follows: A10 Price of Operational Materials 1.178361542 2.511291541
A11 Lack of Material Quality 0.273697053 3.829757254
A12 Inbound Supply Delay 1.556544248 2.179875467
A13 Damage of Goods during 2.928095558 0.939180115
Transportation
A14 Transport Delay 2.988546431 0.935666505
A15 High Transportation Cost 0.936393078 0.918060748
A16 Changes in Design 2.176576519 1.721058558
A17 Lack of Operational Quality 1.442419186 2.33796446
A18 Human Error 1.917906345 1.79182203
A19 Natural Disaster 3.976806354 0.040350992
A20 Labor Unrest 2.953652257 0.883616883
 Closeness coefficient (CCi)
Introduction
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1.000

0.800

0.600

0.400
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0.200

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Alternatives
Directions for Future Work
Introduction

 What will be the alternative plan when operating and raw materials price
are increasing?
 What should be done to minimize the supplier lead time?
 How to minimize manufacturing lead time in the factory end?
Directions for Future Work
Introduction

What will be the What should be How to

alternative plan
done to minimize
when operating
minimize the manufacturing
and raw
materials price supplier lead lead time in the
are increasing? time? factory end?
Limitation and Conclusion
Introduction
This study offers a model to assess risks in Bangladesh's plastic industry using the fuzzy-TOPSIS

method. Other MCDM approaches, such as ELECTRE, VICKOR, and MOORA, etc., can be used to

identify risks. The effect of supply chain hazards has not been demonstrated in this investigation. The

effects of the identified risks on the whole supply chain of the plastic sector may thus continue to be

studied. Additionally, the risks are treated independently in this study. In the context of Bangladesh's

plastics industry, the thesis presents an integrated fuzzy-TOPSIS framework for supply chain risk

assessment. However, this paradigm may be used to different industries to analyze and ranking risks.