Ambiguity and its coping mechanisms in supply chains lessons from the Covid-19 pandemic and natural disasters

Abstract

PurposeThe first purpose of this paper is to situate and conceptualise ambiguity in the operations management (OM) literature, as connected to supply chain decision-making (SCDM). The second purpose is to study the role of ambiguity-coping mechanisms in that context.Design/methodology/approachThis research uses the behavioural decision theory (BDT) to better embed ambiguity in a generic SCDM framework. The framework explicates both behavioural and non-behavioural antecedents of ambiguity and enables us to also ground the “coping” mechanisms as individual and organisational level strategies. Properties of the framework are illustrated through two “ambiguous” events – the 2011 Thai flood and Covid-19 pandemic.FindingsThree key findings are documented. First, ambiguity is shown to distinctively affect supply chain decisions and having correspondence with specific coping mechanisms. Second, the conceptual framework shows how individual coping mechanisms can undermine rational-based organisational coping mechanisms, leading to “sub-optimal” (poor) supply chain decisions. Third, this study highlights the positive role of visibility but surprisingly organisational “experiential” learning is imperfect, due to the focus on “similar” past experience and what is known.Originality/valueThe paper is novel in two ways. First, it introduces ambiguity – an often neglected concept in operations management – into the supply chain lexicon, by developing a typology of ambiguity. Second, ambiguity-coping mechanisms are also introduced as both individual and organisational strategies. This enables the study to draw distinctive theoretical and practical implications.

COVID-19 pandemic related supply chain studies: A systematic review

“…In order to create value for customers, Mollenkopf et al (2020) used a service-dominant logic paradigm to prepare a supply chain response plan to the current food crisis. The behavioral decision theory is used to understand how organizations behave and make decisions during ambiguous events such as the COVID-19 pandemic ( Gunessee and Subramanian, 2020 ).…”

“…A report published by Fortune magazine on 21 February 2020, before the WHO reclassified the COVID-19 outbreak as a pandemic on 11 March 2020, revealed that due to the COVID-19 pandemic, 94% of the Fortune 1000 companies were facing disruption in their supply chains ( Fortune, 2020 ). Moreover, unlike other previous outbreaks, this pandemic has impacted all the nodes (supply chain members) and edges (ties) in a supply chain simultaneously ( Gunessee and Subramanian, 2020 , Paul and Chowdhury, 2020a ); hence, the flow of the supply chain has been disrupted substantially. For example, the demand for necessary items such as personal protective equipment (PPE), ventilators, and dried and canned foods has increased.…”

An examination of the effect of supply chain disruption risk drivers on organizational performance: evidence from Chinese supply chains

“…In addition, suppliers should have the capability to adapt to changes in market demand (such as customer preferences) and the capability to remain competitive through new product development (Zsidisin and Ellram, 2003;He et al, 2020). Moreover, a recent study suggested that the negative effects of the COVID-19 pandemic lockdown on global supply disruption came from having a complex supply network that was subject to many human errors and safety concerns (Gunessee and Subramanian, 2020). In presented here provides the most comprehensive assessment of supply chain disruption risks in terms of capturing different types of risks in a supply chain.…”

“…Demand variations such as changes in order quantity, shorter product life cycle, and the introduction of new products pose significant risks to the firm (Ho et al, 2005;Manuj and Mentzer, 2008). COVID-19 showed that customers who engage in panic buying and social distancing cause volatility in demand with a ripple effect in supply chains (Gunessee and Subramanian, 2020) A fundamental activity in a supply chain is to properly match demand and supply. Demand disruption also occurs when a firm is not able to properly match supply and demand, as a result of either forecast inaccuracy, a ripple effect, or from inefficient coordination in the supply chain (Chen et al, 2013).…”

“…Incidents such as pandemics, epidemics, natural disasters (such as earthquakes), socio-political instability, economic downturns, and terrorist attacks are examples of environmental disruption (Parast, 2020;Gunessee and Subramanian, 2020). These events are exogenous to the firm and its supply chain, they happen infrequently, and their impact on a firm's supply chain can be significant.…”