Supply chain disruption propagation: a systemic risk and normal accident theory perspective

Abstract

When a disruption occurs in a firm, its effects are often felt throughout the supply chain. As supply chains expand globally and companies pursue velocity and efficiency, the probability of disruptions propagating throughout a chain grows. In this paper, we employ a qualitative, grounded theory case study approach to help understand what drives supply chain disruption propagation and to provide theoretical insights into this emerging area. For a more complete perspective, we study three interconnected tiers in seven unique supply chains. Each supply chain triad consists of (1) a focal firm (a manufacturer), (2) a supplier to the focal firm and (3) a customer of the focal firm allowing us to gain perspective from three levels in multiple supply chains. Three aggregate dimensions are defined which help explain the propagation of supply chain disruptions: the nature of the disruption, structure and dependence, and managerial decision-making. Within these dimensions, six themes are identified giving an increased level of granularity into disruption propagation: correlation of risk, compounding effects, cyclical linkages, counterparty risk, herding and misaligned incentives. Organisations should consider these themes and their interactions to effectively deal with supply chain disruptions. ABSTRACTWhen a disruption occurs in a firm, its effects are often felt throughout the supply chain. As supply chains expand globally and companies pursue velocity and efficiency, the probability of disruptions propagating throughout a chain grows. In this paper, we employ a qualitative, grounded theory case study approach to help understand what drives supply chain disruption propagation and to provide theoretical insights into this emerging area. For a more complete perspective, we study three interconnected tiers in seven unique supply chains. Each supply chain triad consists of (1) a focal firm (a manufacturer), (2) a supplier to the focal firm and (3) a customer of the focal firm allowing us to gain perspective from three levels in multiple supply chains. Three aggregate dimensions are defined which help explain the propagation of supply chain disruptions: the nature of the disruption, structure and dependence, and managerial decision making. Within these dimensions, six themes are identified giving an increased level of granularity into disruption propagation: correlation of risk, compounding effects, cyclical linkages, counterparty risk, herding, and misaligned incentives. Organizations should consider these themes and their interactions to effectively deal with supply chain disruptions.

The Evolution of Resilience in Supply Chain Management: A Retrospective on Ensuring Supply Chain Resilience

“…). Case studies also permeate published research methodologies, exploring the depth and breadth of resilience and providing additional empirical evaluations (e.g., Scheibe and Blackhurst ). Other recent works focus on the strategic aspects of resilience in supply chain management, with growing inclusion of sustainability considerations (e.g., Autry et al.…”

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“…In bold: elements of value chain networks [Colour figure can be viewed at wileyonlinelibrary.com] other can exert its control and influence (Benedikter et al, 2013;Pfeffer & Salanick, 1978). Accordingly, the higher an actor's dependency on the resources or activities of another actor, the higher the impact of risk propagation and disruption (Scheibe & Blackhurst, 2018). Cascading impacts through the network may be the effect, affecting the adaptive responses by others in the network.…”

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