Resilience Modeling of Interdependent Supply Chain Networks with Company Collaboration Against Ripple Effects

This study investigates interdependent supply chain network resilience (ISCNR) in the presence of ripple effects, i.e., the phenomenon that the disruptions at some companies also impact the operation of other companies in the same supply chain network (SCN), and even collapse a large part of the SCN. Some researchers have studied ISCNR considering the ripple effect. However, few of them explore the phenomenon taking into account the influences of network structure and company cooperation. In practice, when a company is at risk of failure, its partner companies in the same ISCN may help it to shed the risk through proper cooperation. In this research, a new model for ISCNR against ripple effects considering company collaboration is proposed. A multi-dimension quantitative framework is also developed to measure ISCNR, which considers three resilience dimensions based on three network performance indicators. Then, with a new ISCN model, we investigate the ISCNR considering company collaboration under random and malicious attacks. The simulation results show that company collaboration can enhance ISCNR against ripple effects, while in some cases, company collaboration may adversely impact ISCNR. This research provides insights on improving supply chain network resilience considering the impact of real-world company collaboration to mitigate the intensity of ripple effects.

I. Introduction

In today's complex corporate environment, global operating companies are more vulnerable than ever to supply chain disruptions. Disruptions in supply chain networks (SCNs) have different frequencies and performance implications, which are distinguishing characteristics [1]. High probability and low impact disruptions are typically considered in light of the bullwhip effect and refer to demand and lead-time fluctuations. Compared to the bullwhip effect, low probability and high impact disruptions pose new difficulties for researchers and decision-makers in SCNs. The spread of risk in the SCNs is a phenomenon known as the “ripple effect,” which affects the SCN's output performance, including sales, delivery speed, and quality. The ripple effect may seriously threaten the security and economy of the supply chain system than the bullwhip effect. It can result in market share losses (e.g., Toyota lost its market leadership after the earthquake hit its SCNs in 2011 [2]) and/or company value decreases.