An assessment of supply chain disruption mitigation strategies

Abstract

We assess the effectiveness of incorporating three types of redundancy practices(pre-positioning inventory, backup suppliers, and protected suppliers) intoa firm's supply chainthat isexposed to two types of risk: supply risk and environmental risk. Supply risk disrupts an individual supplier, while environmental risk makes a number of suppliers in a given region unavailable.An additional factor is supplier interdependence,where a disruption in one supplier may also disrupt other active suppliers. Utilizing the concept of a decision tree to capture different disruption scenarios, we develop a two-stage mixed-integer programming (two-stage MIP) model as a General Model to address the problem of supplier selection and order allocationunder supplier dependencies and risk of disruptions.In the General Model, multi-sourcing is the only supplier strategy that the firm implements. Then we develop three separate extensions of theGeneral Model,one foreach of the three redundancy practices, and evaluate the expected supply chain costof each extended model. We quantitatively show how adding redundancy to the supply chain in different forms, along with contingency plans, can help firms mitigate the impact of supply chain disruptions.The findings suggest thatall three strategies reduce costs and risks compared to the General Model. An analysis of reliability, risks, dependence, and costs is conducted on each strategy to provide insights into supplier selection, demand allocation, and capability development in a supply chain under supply chain risks.Finally, we show that regionalizinga supply chain is an effective way to mitigate the negative impacts ofenvironmental disruptionson the supply chain.

Toyota production system - one example to shipbuilding industry

“…ijmp.jor.br v. 8, n. 3, July -September 2017ISSN: 2236AGARWAL, 2015;BALL, 2015;PAKDIL;LEONARD, 2015;MUND;PIETERSE;CAMERON, 2015;CHAY, et al, 2015;HU, et al, 2015;WICKRAMASINGHE;WICKRAMASINGHE, 2016;BIRKIE, 2016;ALI;DEIF, 2016;NARAYANAMURTHY;GURUMURTHY, 2016;CHEN;SU;RO, 2017;KAMALAHMADI;PARAST, 2017;MOHAMMADDUST, et al, 2017).…”

“…Thus, this process should also be inserted in the supply chain of a client, otherwise it would have difficulties in gaining competitive advantage over the competitor. It is also essential to integrate innovative business strategy of a company and its partners (ZU; KAYNAK, 2012;OTA;HAZAMA;SAMSON, 2013;FOX, 2013;PÉRY;AGERON;NEUBERT, 2013;OKE, 2013;DEKKERS;KÜHNLE, 2012;SÄFSTEN, et al, 2014;BRUNCH;BELLGRAN, 2014; KAFETZOPOULOS; : 10.14807/ijmp.v8i3.626 PSOMAS, 2015;THEYEL;HOFMANN, 2015;WALLIN;PARIDA;ISAKSSON, 2015;CHEN;SU;RO, 2017;KAMALAHMADI;PARAST, 2017).…”

“…There was the implementation of national policy for promotion of scientific and technological activities involving laboratories, universities, research institutes etc. (ZU; KAYNAK, 2012;CHEN;SU;RO, 2017;KAMALAHMADI;PARAST, 2017). Thus, the Japanese were able to get competitive prices globally and even below the market average in the construction of their ships, besides offering special financing conditions for international ship owners to build their ships in shipyards in Japan.…”

“…Another relevant factor is the cost of unnecessary drives that are eliminated with the inclusion of a lean production flow HU, et al, 2015;BIRKIE, 2016;ALI;DEIF, 2016;NARAYANAMURTHY;GURUMURTHY, 2016;CHEN;SU;RO, 2017;KAMALAHMADI;PARAST, 2017;MOHAMMADDUST, et al, 2017).…”

“…Receiving materials in time to be processed is important to minimize or eliminate the stocks in the production process. Receiving the products with assured quality from the supply chain will require that quality control is performed inside the supplier's plant so that the manufacturing system does not stop at the shipyard (CHAVEZ, et al, 2013;BONNEY;JABER, 2013;DIBIA;DHAKAL;ONUH, 2014;PANWAR;JAIN;RATHORE, 2015;BALL, 2015;PAKDIL;LEONARD, 2015;MUND;PIETERSE;CAMERON, 2015;CHAY, et al, 2015;HU, et al, 2015;BIRKIE, 2016;VENTO, et al, 2016;ALI;DEIF, 2016;NARAYANAMURTHY;GURUMURTHY, 2016;CHEN;SU;RO, 2017;KAMALAHMADI;PARAST, 2017;MOHAMMADDUST, et al, 2017).…”