EconPapers    
Economics at your fingertips  
 

Demand Shocks in Supply Networks: Ripple Effects

Nikolay Osadchiy ()
Additional contact information
Nikolay Osadchiy: Emory University

A chapter in Handbook of Ripple Effects in the Supply Chain, 2025, pp 105-118 from Springer

Abstract: Abstract This chapter explores the ripple effects of demand shocks in supply networks, focusing on the mechanisms that drive propagation of these shocks and the factors that can either amplify or mitigate their impact. The analysis is based on three key research areas: idiosyncratic shocks and the bullwhip effect, correlated shocks and systematic risks, and the role of community structure in shock propagation. Since the focus is on demand shock propagation, it is important to establish a measure of upstreamness for firms in the network from the most downstream to upstream. We call this measure layer and describe its construction and variations. We then proceed with the analysis of idiosyncratic shock propagation, where small fluctuations in consumer demand lead to increasingly large variations in order upstream in the supply chain. We find that in complex supply networks, the propagation of these idiosyncratic shocks is often mitigated by statistical aggregation and strategic customer base management. We then continue with the analysis of correlated shocks, such as those caused by economic downturns or global crises, which impact multiple nodes simultaneously, leading to systematic risks, and characterize conditions for upstream amplification of systematic shocks. Finally, we investigate how community structures within supply networks influence the propagation of shocks. We argue that tightly knit communities can localize demand or supply disruptions with implications for network resilience and preparedness for ripple effects.

Keywords: Supply networks; Demand shocks; Network analysis; Empirical study (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:isochp:978-3-031-85508-5_5

Ordering information: This item can be ordered from
http://www.springer.com/9783031855085

DOI: 10.1007/978-3-031-85508-5_5

Access Statistics for this chapter

More chapters in International Series in Operations Research & Management Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2025-05-18
Handle: RePEc:spr:isochp:978-3-031-85508-5_5