The moderating impact of supply network topology on the effectiveness of risk management

Anna Ledwoch, Hakan Yasarcan and Alexandra Brintrup

International Journal of Production Economics, 2018, vol. 197, issue C, 13-26

Abstract: While supply chain risk management offers a rich toolset for dealing with risk at the dyadic level, less attention has been given to the effectiveness of risk management in complex supply networks. We bridge this gap by building an agent based model to explore the relationship between topological characteristics of complex supply networks and their ability to recover through inventory mitigation and contingent rerouting. We simulate upstream supply networks, where each agent represents a supplier. Suppliers' connectivity patterns are generated through random and preferential attachment models. Each supplier manages its inventory using an anchor-and-adjust ordering policy. We then randomly disrupt suppliers and observe how different topologies recover when risk management strategies are applied. Our results show that topology has a moderating effect on the effectiveness of risk management strategies. Scale-free supply networks generate lower costs, have higher fill-rates, and need less inventory to recover when exposed to random disruptions than random networks. Random networks need significantly more inventory distributed across the network to achieve the same fill rates as scale-free networks. Inventory mitigation improves fill-rate more than contingent rerouting regardless of network topology. Contingent rerouting is not effective for scale-free networks due to the low number of alternative suppliers, particularly for short-lasting disruptions. We also find that applying inventory mitigation to the most disrupted suppliers is only effective when the network is exposed to frequent disruptions; and not cost effective otherwise. Our work contributes to the emerging field of research on the relationship between complex supply network topology and resilience.

Keywords: Supply chain risk management; Complex supply networks; Random networks; Scale-free networks; Inventory mitigation; Contingent rerouting; Agent-based modelling (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S092552731730419X
Full text for ScienceDirect subscribers only

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:eee:proeco:v:197:y:2018:i:c:p:13-26

DOI: 10.1016/j.ijpe.2017.12.013

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().