Disruption in Supply Chain

Disruption in Supply Chain

Mohammad Bakhshayeshi Baygi (University of Concordia, Canada), Seyyed Mostafa Mousavi (University of Warwick, UK) and Onur Kuzgunkaya (University of Concordia, Canada)
DOI: 10.4018/978-1-61350-504-5.ch011
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Abstract

Recent trends in the global business environment such as overwhelming globalization, short product life cycle, and cost reducing strategies have exposed various types of supply chains in the face of a great deal of uncertainties and risks. One of the main risks in supply chain is risk of disruption. Disruptions, which can derive from natural and man-made sources, have attracted the attention of academia, industry, as well as supply chain advisors. The importance of the topic becomes more vital when it is observed that prior planning for the disruption can significantly reduce the adverse consequences of disruption. Therefore, in the chapter, the authors would try to introduce the phenomenon of supply chain disruption along with its importance. Recent trends that greatly necessitate careful planning of supply chain disruption are presented, and lastly, different ways through which the adverse consequences of disruption can be mitigated are given to the readers.
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2. Supply Chain Disruption

Supply chains are exposed to different types of risks among which disruption is a particular type. Wagner and Bode (2006) have a discussion about the meaning of risk. Risk can have two aspects: negative aspects and positive aspects or in other words, danger and opportunity (Mitchell, 1995). As far as this chapter is about the disruptions, which are destructive, the same approach to risk (as Wagner and Bode (2006), in which risk is considered to be negative) is considered. According to the definition of Juttner et al (2003), supply chain risk is ‘‘variation in the distribution of possible supply chain outcomes, their likelihood, and their subjective value’’. Chopra and Sodhi (2004) classifies the risks of the supply chain as disruptions, delays, systems, forecast, intellectual property, procurement, receivables, inventory, and capacity. Knowing the relation between risk and disruption, here we define disruptions as “random events that cause a supplier or other elements of the supply chain to stop functioning, either completely or partially, for a (typically random) period of time.” Snyder et al. (2010) The authors of the recent paper by addressing different supply chain uncertainties as yield, capacity, lead-time and input cost uncertainty, point out that disruption is more like the yield uncertainty of the supply chain. The misunderstanding that supply chain disruptions are rare events has been described in Snyder et al. (2010) and referring to Wal-Mart emergency operations center, they explain that some kinds of disruptions may occur frequently.

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