Ripple effect in the supply chain network: Forward and backward disruption propagation, network health and firm vulnerability

By Yuhong Li, Kedong Chen, Stéphane E. Collignon, Dmitry A. Ivanov. European Journal of Operational Research, 2020

325 citations recorded by the source corpus.

A local disruption can propagate to forward and downward through the material flow and eventually influence the entire supply chain network (SCN). This phenomenon of ripple effect, immensely existing in practice, has received great interest in recent years. Moreover, forward and backward disruption propagations became major stressors for SCNs during the COVID-19 pandemic triggered by simultaneous and sequential supply and demand disruptions. However, current literature has paid less attention to the different impacts of the directions of disruption propagation. This study examines the disruption propagation through simulating simple interaction rules of firms inside the SCN. Specifically, an agent-based computational model is developed to delineate the supply chain disruption propagation behavior. Then, we conduct multi-level quantitative analysis to explore the effects of forward and backward disruption propagation, moderated by network structure, network-level health and node-level vulnerability. Our results demonstrate that it is practically important to differentiate between forward and backward disruption propagation, as they are distinctive in the associated mitigation strategies and in the effects on network and individual firm performance. Forward disruption propagation generally can be mitigated by substitute and backup supply and has greater impact on firms serving the assembly role and on the supply/assembly networks, whereas backward disruption propagation is normally mitigated by flexible operation and distribution and has bigger impact on firms serving the distribution role and on distribution networks. We further analyze the investment strategies in a dual-focal supply network under disruption propagation. We provide propositions to facilitate decision-making and summarize important managerial implications.

Subfields: Management Information Systems, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/847d29344aad2c11e5621e25183edd692bbfe24e

Citations in the corpus

• The Industry 5.0 framework: viability-based integration of the resilience, sustainability, and human-centricity perspectives (2022, unknown): “Fourth, the network effects and associated systemic risks are characteristic for resilience, raising the challenges of managing the ripple effect (Ivanov et al. 2014, Dolgui et al. 2018, Pavlov et al. 2020, Ghadge et al. 2021, Ivanov 2020a, Ivanov and Dolgui 2021b, Li et al. 2021, Park et al. 2021).”