A modified failure mode and effects analysis method for supplier selection problems in the supply chain risk environment: A case study

• We propose an integrated FMEA-and-AHP framework to select new suppliers.
• The MFMEA is based on the six-aspect criteria and supply chain risk.
• An IC assembly company is studied to validate the MFMEA method.
• The MFMEA can categorize new suppliers effectively and select a low-risk supplier.

In the emerging supply chain environment, supply chain risk management plays a more important role than ever. Companies must focus not only on the efficiency of supply chain, but also on its risks. If an unanticipated event occurs, all of the supply chain members will be impacted, and the result will cause significant loss. Therefore, this research proposes a modified failure mode and effects analysis (MFMEA) method to select new suppliers from the supply chain risk’s perspective and applies the analytic hierarchy process (AHP) method to determine the weight of each criterion and sub-criterion for supplier selection. An IC assembly company is then studied to validate this model. The result shows that the case company can categorize its suppliers more effectively and at the same time select a low-risk supply chain partner. Moreover, the case company can provide unsatisfactory suppliers with valuable feedback that will help them improve and become its partners in the future.