Supply Chain Disruptions

With the significant negative effects on operations, marketing, and related financial services, it is not unexpected that many institutions around the world are devoting significant money and effort to developing the finest disruption management techniques (Bode and Macdonald, 2016).

The author studies supply chain disturbances and provides a full analysis on how institutions are addressing supply chain disruptions in this monograph. The recent move by various organizations to recall the commodities that have been already sold out because of their defective nature is a clear indicator that there are a long-term and short-term effects steaming form supply chain disruptions (Rienkhemaniyom and Ravindran, 2014). Moreover, several recent developments/ observations have led to an expanded effort on the supply chain disruption management (Bradley, 2014). First, the potential negative ramifications of the supply disruption of the consumer commodities such as food and toy products is an indicator that are some forms of the nonfinancial effect of disruption in the supply chain. (Ro, Su and Chen, 2016) Secondly, there are previous studies that have highlighted that interruptions in the supply chain might have an adverse impact on organizational and industrial growth (Golgeci and Y. Ponomarov, 2013). Thirdly, managers have started recognizing that the internal processes that focus on business continuity are not enough to prevent supply chain disruptions (Wang et al., 2016).

Supply Chain Disruption

This can be defined as any incidence that has an adverse effect on the supply chain operations and hence leading to some amount of confusion (Ruan, Pang, and Nong, 2012). The major focus of this section is to highlight the alternative classification of the unique supply chain classifications that are essential in the development of more disruption management strategies (Xiao, Luo and Jin, 2009).

One level of categorizing the supply chain disruptions is to classify them based on the cause by either the act of human beings such as (quality issues, terrorism, and political instability) and by acts of nature, for example, hurricanes, earthquakes and flooding (Reimann, Kosmol and Kaufmann, 2017). Another categorization of the supply chain disruption would be to focus on the life cycle of the supply chain (Friesz, 2011). Another form of classification can be based on the type of disruption, for instance, the lead time disruption (Schmitt, 2011).

The classification of these disturbances provides a guideline on different types of classifications and the methods that can be used to control them if they occur so that the business doesn’t incur massive losses (Schmitt and Singh, 2011). However, the classification of supply chain disruption in any particular manner does not yield the best decisions a fact that demand that any form of disruption is approached from a structured perspective (Habermann, Blackhurst and Metcalf, 2015).

Disruptive Risk Management

The current globalization pressure has produced a paradigm shift in the supply chain where organization outsources non-core activities to concentrate on the most productive business activities with the objective of having a better competitive advantage (Ivanov, Dolgui and Sokolov, 2015). An effective management of the supply chain disruptions can be carried out through a core location, process, and product focus along the entire supply chain (Finch, 2004). The particular events that can disrupt the process can be identified so that amicable decision for managing them can be determined. From the control perspective, it is important to determine any risks and come up with the best solutions (Ghadge et al., 2013).

The current marketplace is characterized by uncertainty and turbulence and tends to increase because of volatility in every sector (Qi, Bard and Yu, 2004). And more so, the Vulnerability if the supply chain to disruptions and disturbances in each sector has increased. Because of the changes in the business model, many firms have experienced drastic changes in the supply chain risk profile (Lian and Jia, 2013). To improve self-assurance in the supply chain, an appropriate control and visibility mechanism must be implemented (Thangam, 2015). The lack of disruption management strategies have been highlighted in the recent past when examining the impact of regional power outages, natural disasters and terrorist attacks. One of the acute constituents of disaster supply chain planning is the storage of emergency equipment, supplies, and important documents (Jiang and Li, 2010). Institutions must store the most important documents in a secure location (Petersen and Lemke, 2015).

Research on Particular Disruption Risks

Various scholars have recognized that development in the current technology presents vital opportunities for service improvement and cost reduction since they provide the ability to align supply chain strategies to deal with commodity supply and demand uncertainties (Papadakis, 2006). Connect supply chain segments in real time and provide the ability to reduce response times. The right strategy depends on a particular organization and the specific needs of the targeted customer. It is important to build a plant with sufficient capacity to deal with the forecast uncertainties and cover the maximum possible demand (Park, Min and Min, 2016).

Conclusion

This report concluded that the organizational leadership is required to drive business continuity and supply chain flexibility is imperative in the creation of a supply chain that is not simply affected by various natural or human-created disasters (Pagell, Krause and Klassen, 2008). Institutions must put in place an appropriate measure that ensures that a business of the supply chain is guarded against external and internal shocks to ensure firms continue operating ongoing concern basis (Reimann and Ketchen, 2017).

References

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Ghadge, A., Dani, S., Chester, M. and Kalawsky, R. (2013). A systems approach for modeling supply chain risks. Supply Chain Management: An International Journal, 18(5), pp.523-538.

Bradley, J. (2014). An improved method for managing catastrophic supply chain disruptions. Business Horizons, 57(4), pp.483-495.

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Friesz, T. (2011). Supply chain disruption and risk management. Transportation Research Part B: Methodological, 45(8), pp.1125-1127.

Golgeci, I. and Y. Ponomarov, S. (2013). Does firm innovativeness enable effective responses to supply chain disruptions? An empirical study. Supply Chain Management: An International Journal, 18(6), pp.604-617.

Habermann, M., Blackhurst, J. and Metcalf, A. (2015). Keep Your Friends Close? Supply Chain Design and Disruption Risk. Decision Sciences, 46(3), pp.491-526.

Ivanov, D., Dolgui, A. and Sokolov, B. (2015). Supply Chain Design With Disruption Considerations: Review of Research Streams on the Ripple Effect in the Supply Chain. IFAC-PapersOnLine, 48(3), pp.1700-1707.

Jiang, X. and Li, Y. (2010). Decision Models of Supply Chain Under Asymmetric Information with Demand Disruption. Advanced Materials Research, 143-144, pp.773-781.

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Petersen, H. and Lemke, F. (2015). Mitigating reputational risks in supply chains. Supply Chain Management: An International Journal, 20(5), pp.495-510.

Papadakis, I. (2006). Financial performance of supply chains after disruptions: an event study. Supply Chain Management: An International Journal, 11(1), pp.25-33.

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Reimann, F. and Ketchen, D. (2017). Power in Supply Chain Management. Journal of Supply Chain Management, 53(2), pp.3-9.

Reimann, F., Kosmol, T. and Kaufmann, L. (2017). Responses to Supplier-Induced Disruptions: A Fuzzy-Set Analysis. Journal of Supply Chain Management.

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Ruan, J., Pang, S. and Nong, G. (2012). Managing B2B-Supply Chain with Option Contract under Disruptions. Advanced Materials Research, 476-478, pp.534-537.

Schmitt, A. (2011). Strategies for Customer Service Level Protection under Multi-Echelon Supply Chain Disruption Risk. SSRN Electronic Journal.

Schmitt, A. and Singh, M. (2011). A Quantitative Analysis of Disruption Risk in a Multi-Echelon Supply Chain. SSRN Electronic Journal.

Thangam, A. (2015). Retailer’s optimal replenishment policy in a supply chain under partial trade credits and probabilistic supply disruptions. International Journal of Supply Chain and Operations Resilience, 1(4), p.388.

Wang, N., Fang, X., Gou, Q. and Liang, L. (2016). Supply chain performance under pull or push contracts in the presence of a market disruption. International Transactions in Operational Research, 24(4), pp.713-736.

Xiao, T., Luo, J. and Jin, J. (2009). Coordination of a Supply Chain with Demand Stimulation and Random Demand Disruption. International Journal of Information Systems and Supply Chain Management, 2(1), pp.1-15.