Do not expect others do what you should! Supply chain complexity and mitigation of the ripple effect of disruptions

Abstract

PurposeRecent studies have argued that companies may actively implement practices to mitigate disruptions in their supply chain and reduce the extent of damage on performance. Other studies have shown that disruptions may propagate in supply chains, leading to consequences that are more negative and raising doubts on the effectiveness of mitigation strategies implemented downstream. This study investigates the influence of supply chain complexity on the two phenomena and their interplay, taking a focal company's perspective.Design/methodology/approachA systematic procedure for data collection, encoding and aggregation based on incident data mainly from secondary sources was used. Multiple regression models were run to analyse direct and moderation effects involving resilience, distance of impact location from trigger point, and supply chain complexity on weighted performance change.FindingsSupply chain complexity is found to have positive moderation on the ripple effect of disruption. Resilience capability remains to have dominating direct positive effect in mitigating disruptions when supply chain complexity is taken into account.Research limitations/implicationsThis study extends the research discourse on supply chain resilience and disruption management with focus on the supply side. It demonstrates that, along with the severity of the disruption scenario, the ripple effect must also be considered when analyzing the benefits of resilience practices implemented by the focal company.Practical implicationsComplexity in the supply chain can only help to smooth-out the rippling effects of a disruption, which go largely beyond supply-demand unbalances and lead time fluctuations. To mitigate it better, the focal company has to act proactively with adequate resilience practices, which also connects to the importance of better visibility across multiple supply chain tiers.Originality/valueTo the best of the authors' knowledge, this is the first study that empirically tests the benefits of resilience practices and the ripple effect of disruptions under the moderation role of supply chain complexity.

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

“…Moreover, disruptions cause structural dynamics leading to a ripple effect in the supply chain ( Bier et al, 2020 , Duong and Chong, 2020 , Ivanov et al, 2017 , Xu et al, 2020b ). This ripple effect intensified with the complexity of supply chains ( Birkie and Trucco, 2020 ). Given that majority of the studies in this area investigated disruptions in each area/function of a supply chain in isolation, it is still not clear how disruptions in one area are propagated to another in a supply chain ( Ho et al, 2015 , Snyder et al, 2016 ).…”

“…Strategies are also developed for reducing impacts and quick recovery when supply chains experience a disruption ( Birkie and Trucco, 2020 ). Four strategies such as collaboration, redundancy, flexibility and agility are the main suggestions for managing disruptions ( Shekarian and Parast, 2020 ).…”

Embracing supply base complexity: the contingency role of strategic purchasing

“…For instance, the purpose of a strategic purchasing function is to establish long-term relationships between a firm and its suppliers, thus allowing the firm to utilise its market-sensing capabilities to understand and learn from its complex supply base (Aslam et al , 2020; Brandon-Jones and Knoppen, 2018). In such firms, a large and varied supply base is not purely seen as an administrative burden (Bode and Wagner, 2015; Choi and Krause, 2006), but rather as a strategic asset that reduces dependency and gives more flexibility in case of supply disruptions (Birkie and Trucco, 2020). Furthermore, such a long-term focus requires the adoption of a more proactive approach and having purchasing strategies that integrate risk and uncertainty into supply base management practices (Paulraj et al , 2006; Wiengarten and Ambrose, 2017).…”

“…The proponents of this view argue that large supply bases consisting of various suppliers with high volatility and uncertainty increase coordination costs and reduce visibility (Bode and Wagner, 2015; Brandon-Jones et al , 2014; Choi and Krause, 2006). However, other scholars perceive SBC as a strategic asset that can be utilised to increase the likelihood of generating innovations (Choi and Krause, 2006; Lu and Shang, 2017), provide firms with the ability to recover from disruptions (Birkie and Trucco, 2020) and consequently improve organisational performance (e.g. Aitken et al , 2016; Lu and Shang, 2017; Sharma et al , 2020).…”

A supply chain-oriented perspective to prevent future COVID-19: Mathematical model and experience of guaranteeing quality and safety of fresh agricultural products

“…Emergency is the personnel or equipment and other key resources, in a specific state of serious deviation from the original normal situation and plan, so it must be responded to and adjusted. And the impact that can make such a state appear is called emergency events [33]. Emergencies directly lead to supply chain coordination or the original plan is no longer feasible, and then affect the production decision of the supply chain and affect the supply chain revenue.…”