Optimising Risk Mitigation Strategies in the Nigerian Petroleum Supply Chain Using Data Envelopment




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De Montfort University


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Peer reviewed


Purpose: The complexity and vulnerability of the petroleum supply chain have pushed supply chain managers to source a more practical approach to supply chain risk management. Therefore, this thesis develops a comprehensive risk management framework to analyse 28 selected risk factors from Nigeria's petroleum supply chain. I divide the supply chain into three stages (supply, production, and distribution) to assess the risk in the internal structure. The proposed risk management framework for the Nigerian petroleum supply could support risk managers to understand the process, key indicators, and parameters for effectively measuring risk performance. Design/methodology/approach: A mixed method research is considered in this thesis. The quantitative approach considered a survey questionnaire with a sample size of 172 and a response rate of 32%. Data envelopment analysis (DEA)-based approach is used to evaluate the importance of each risk factor and determine the best response strategy. Specific risk priority number (RPN) indicators of the Failure Mode and Effect Analysis (FMEA) are considered the 3 inputs (Severity, occurrence, and detectability). In addition, the three outputs are significant indicators in the oil industry (people, environment, and business continuity). The qualitative approach considered 8 interviews with top supply chain management personnel. Findings: The findings show that the most critical risk factors in the Nigerian oil industry supply chain, in order of performance score (priority), include terrorist attacks (0.27), the explosion of road tankers (0.28), logistics (0.57), environmental (0.64). In terms of mitigation strategies, transfer, safety planning, alternative energy carriers, improved energy efficiency, emergency rescue plans, expected shortage, and diplomatic relations are among the best mitigation strategies. Research contributions: This study provides a comprehensive risk management framework of the significant risks in the Nigerian petroleum supply chain. It shows how RPN indicators are applied in a DEA model to simultaneously analyse the relationship between risks and their related impact measures. Originality/value: This thesis illustrates how RPN and DEA can be combined to analyse data for better decision-making and management. DEA integrated with RPN data to simultaneously prioritise supply chain risks, and their corresponding mitigation strategies is a novel idea. Although the findings relate to the Nigerian context, these can be readily adopted in other processing supply chains operating in different countries/regions for optimising risk mitigation strategies.





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