Developing Supply Chain Risk Management Strategies by Using Counterfactual Explanation

Supply Chain Risk Management (SCRM) is necessary for economic development and the well-being of society. Therefore, many researchers and practitioners focus on developing new methods to identify, assess, mitigate and monitor supply chain risks. This paper developed the Risk Management by Counterfactual Explanation (RMCE) framework to manage risks in Supply Chain Networks (SCNs). The RMCE framework focuses on monitoring SCN, and in case of any risks eventuating, it explains them to the user and recommends mitigation strategies to avoid them proactively. RMCE uses optimisation models to design the SCN and Counterfactual Explanation (CE) to generate mitigation recommendations. The developed approach is applied to an actual case study related to a global SCN to test and validate the proposed framework. The final results show that the RMCE framework can correctly predict risks and give understandable explanations and solutions to mitigate the impact of the monitored risks on the case study.