This article sheds light on the question of how much flexibility is necessary to secure the supply chain against disruption risks.
The paper reviewed today takes a closer look at three supply chain risks: supply, process and demand risks (figure 1).
Uncertainty can be categorized in continuous risk, more slowly changing patterns, and disruptions, which describe abrupt changes in a system.
Tomlin (2006) investigates the question which supply chain strategies perform best when dealing with the later.
h5. Mitigation vs. Contingency Planning
From case studies analyzed in literature the author first deducts disruption management strategies used in practices. The summary can be seen in figure 1.
Submitted by Daniel Dumke on Wed, 2010-11-24 17:49
Supply Chain Design: Capacity, Flexibility and Wholesale Price Strategies
Massachusetts Institute of Technology, Dissertation
This is the forth contribution to my series on doctoral dissertations on Supply Chain Risk Management. An immense effort and dedication is spent on these works only to find the results hidden in the libraries. So the goal is raise interest in the research of my peers.
In his 2009 paper Brian Tomlin analyzes strategies to mitigate disruption risks in a three echelon supply chain.
Focus in his research is a single company, with its suppliers and customers. The objective is to maximize expected utility, while demand and supply are uncertain. There are two products available which can be used as substitutes. The time horizon for the decision maker is one season where the products can be sold.