Managing product quality risk in a multi-tier global supply chain

A series of product harm scandals, ranging from toxic toys to peanut butter indicates that firms and consumers alike are vulnerable to quality risks in a global supply chain. The matter is exacerbated with a low ‘visibility’ of quality risks hidden in the multi-tier global supply networks. The threat of quality risks could be from raw materials, manufacturing processes, or logistics operations in any tier of the supply network. This research argues that better visibility of risk in supply tiers could minimise the quality threat. A product quality risk and visibility assessment framework, integrating both the incremental calculus and marginal analysis, is proposed. Case study results indicate that the proposed approach has the following benefits: (a) enables firms to have a better ‘visibility’ of quality risks in a multi-tier supply network; (b) allows firms to establish risk indices for product components; and (c) a traceable justification path for supplier selection.