Developing a resilient supply chain through supplier flexibility and reliability assessment

Abstract

In this study, we examine the optimal allocation of demand across a set of suppliers in a supply chain that is exposed to supply risk and environmental risk. A two-stage mixed-integer programming model is used to develop a flexible sourcing strategy under disruptions. Our model integrates supplier selection and demand allocation with transportation channel selection and provides contingency plans to mitigate the negative impacts of disruptions and minimise total network costs. Finally, a numerical example is presented to illustrate the model and provide insights. The findings suggest that developing contingency plans using flexibility in suppliers' production capacity is an effective strategy for firms to mitigate the severity of disruptions. We also show that flexibility and reliability of the suppliers and regions play a significant role in determining contingency plans for during disruption. Findings generally show that highly flexible suppliers receive less allocation, and their flexible capacity is reserved for disruptions. For firms that do not incorporate risk management into supplier selection and allocation, the recommendation is to source from fewer, more reliable suppliers with less risk of disruption. Our findings also emphasise that the type of disruption has important implications for supplier selection and demand allocation. This study highlights the supply chain risk management strategy of regionalising as a means for minimising the impact of environmental disruptions.

An assessment of supply chain disruption mitigation strategies

“…Sarkar and Mohapatra (2009) added semi-super events to the supplier selection problem and used a tabular method to find the optimal size of the supply base. Sawik (2014) considered single and multiple sourcing strategiesin the presence of supplier, regional, and global disruptionsand developed an MIP modelwith conditional value at risk as a risk measure, with the objective of either minimizing expected worst-case loss ormaximizing expected worst-case service level.Finally, Kamalahmadi and Mellat-Parast (2016b) Disruption dependence is also a topic that has not received much attention. There are only two related studies that took disruption dependence into consideration.…”

Low-Certainty-Need (LCN) supply chains: a new perspective in managing disruption risks and resilience

“…Research focus Disruptions and the resulting ripple effect cause SC structural changes, also referred to as SC structural dynamics (Ivanov, Sokolov, and Kaeschel 2010;Ivanov 2018a). Structural SC properties have been recognised to have a crucial impact on the ripple effect and SC robustness and resilience (Xia et al 2004;Tomlin 2006;Nair and Vidal 2011;Hu, Gurnani, and Wang 2013;Basole and Bellamy 2014;Ivanov, Sokolov, and Dolgui 2014;Ambulkar, Blackhurst, and Grawe 2015;Bode and Wagner 2015;Kim, Chen, and Linderman 2015;Gunasekaran, Subramanian, and Rahman 2015;Kamalahmadi and Mellat-Parast 2016;Han and Shin 2016;Sokolov et al 2016;Tang et al 2016;Chen, Xi, and Jing 2017;Jain et al 2017;Scheibe and Blackhurst 2018;Pavlov et al 2018;Ojha et al 2018).…”

Proactive supply chain risk management approach: The case of Serbia

“…The possibility of mitigating disruption and interruption in the supply chain is limited by implementing 'Justin-time 1 ', reducing the supplier base, and outsourcing activities, all of which increase the likelihood of risk spreading faster and more easily: in the case of a risk event, companies have neither the necessary resources nor an action plan to deal with it. For example, dual or multiple sourcing could be used as appropriate ways to minimize supply chain exposure to risk events and the cost of supply disruption (Kamalahmadi and Mellat-Parast 2016;Tadeusz 2017;Zeng and Xia (2015); Meena, Sarmah, and Sarkar 2011). Businesses that focus on a lean approach eliminate a large number of shock absorbers, such as raw material/final product inventories, a larger number suppliers, etc.…”