‘A blessing in disguise’ or ‘as if it wasn’t hard enough already’: reciprocal and aggravate vulnerabilities in the supply chain

Abstract

We investigate the interrelations of structural and operational vulnerabilities in the supply chain (SC) using discrete-event simulation for a real life case study. We theorise a notion of SC overlays and explore conditions surrounding their appearance. Such overlays occur if the negative consequences of changes in a SC structure as a result of a disruption are either amplified or mitigated by changes in the operational environment. We hypothesise that these overlays can be both reciprocal (i.e. complementary or mitigating) and aggravate (i.e. concurrent or enhancing). Our approach can be used for an efficient management of SC resilience capabilities by varying their levels over time. We show different ripple and bullwhip effect profiles, which lead to either reciprocal or aggravate overlays, and then we develop recommendations on the overlay-driven dynamic variation of resilience capability levels in order to enhance both SC resilience and efficiency through dynamic redundancy allocation. The results can be of value in selecting and deploying operational policies at the right time and scale during and after the recovery periods. Restricting analysis to the disruption period only and ignoring operational dynamics after capacity recovery can result in misleading or inefficient SC resilience and recovery policies.