Table Of ContentInternational Series in
Operations Research & Management Science
Yacob Khojasteh
Henry Xu
Saeed Zolfaghari Editors
Supply
Chain Risk
Mitigation
Strategies, Methods and Applications
International Series in Operations Research &
Management Science
FoundingEditor
FrederickS.Hillier,StanfordUniversity,Stanford,CA,USA
Volume 332
SeriesEditor
Camille C. Price, Department of Computer Science, Stephen F. Austin State
University,Nacogdoches,TX,USA
EditorialBoardMembers
Emanuele Borgonovo, Department of Decision Sciences, Bocconi University,
Milan,Italy
BarryL.Nelson,DepartmentofIndustrialEngineering&ManagementSciences,
NorthwesternUniversity,Evanston,IL,USA
BruceW.Patty,VeritecSolutions,MillValley,CA,USA
MichaelPinedo,SternSchoolofBusiness,NewYorkUniversity,NewYork,NY,USA
RobertJ.Vanderbei,PrincetonUniversity,Princeton,NJ,USA
AssociateEditor
JoeZhu,FoisieBusinessSchool,WorcesterPolytechnicInstitute,Worcester,MA,USA
The book series International Series in Operations Researchand Management
Science encompasses the various areas of operations research and management
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Theseriesfeaturesthreetypesofbooks:
(cid:129)Advancedexpositorybooksthatextendandunifyourunderstandingofpartic-
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MathematicalProgramming: Including linearprogramming, integerprogram-
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Applied Probability: Including queuing theory, simulation, renewal theory,
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ProductionandOperationsManagement:Includinginventorytheory,produc-
tion scheduling, capacity planning, facility location, supply chain management,
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manufacturing systems, design of production lines, logistical planning, strategic
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Applications of Operations Research and Management Science: Including
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ing, public policy, military operations research, humanitarian relief and disaster
mitigation,serviceoperations,transportationsystems,etc.
ThisbookseriesisindexedinScopus.
(cid:129) (cid:129)
Yacob Khojasteh Henry Xu Saeed Zolfaghari
Editors
Supply Chain Risk Mitigation
Strategies, Methods and Applications
Editors
YacobKhojasteh HenryXu
SophiaUniversity UniversityofQueensland
Tokyo,Japan Brisbane,QLD,Australia
SaeedZolfaghari
TorontoMetropolitanUniversity
Toronto,ON,Canada
ISSN0884-8289 ISSN2214-7934 (electronic)
InternationalSeriesinOperationsResearch&ManagementScience
ISBN978-3-031-09182-7 ISBN978-3-031-09183-4 (eBook)
https://doi.org/10.1007/978-3-031-09183-4
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Preface
Globalization has made supply chains increasingly complex, interconnected, and
interdependent that rely heavily on superior performance and efficient operational
systems.Suchsupply chains areoften influenced byfactorsbeyondthepowerand
purview of global companies. As supply chains have become more global and
complex,supplychaindisruptionshavebecomemorefrequentandsevere.Thus,it
induces supply chain vulnerabilities and increases the supply chain network’s
disruptionriskexposure.Inrecentyears,supplychaindisruptionscausedbyunex-
pected events have occurred more frequently, and these disruptions have had both
short- and long-term negative impacts on supply chain operations as well as on
corporateprofitability.
The COVID-19 outbreak, which began in late 2019 and spread worldwide,
exposed the vulnerability of supply chains as never before. Other than its social
impacts, it caused a significant disruption in global supply chains impacting pro-
duction and logistics operations. Less than six months into the pandemic, 94% of
Fortune 1000 companies experienced disruptions due to COVID-19, while 75%
were negatively affected. In fact, the pandemic brought to the forefront the impor-
tance of supply chain risk mitigation strategies. Regardless of size and type, it is
crucialforcompaniesandenterprisestodevelopandimplementsuitablestrategiesto
prevent supply chain disruptions from occurring and recover quickly from them
when they occur. This can be done by establishing an effective supply chain risk
management (SCRM) that identifies, assesses, and proposes strategies to manage
and monitor supplychain risks. SCRM identifies thepotential sources ofrisks and
implementsappropriateactionsinordertomitigatesupplychaindisruptions.There-
fore,firmsneedtobuildresilientsupplychainstoovercomeanykindofdisruptions.
Thisbookpresentsasetofstrategies,methods,andanalysesthatareessentialfor
mitigatingsupplychainrisks.Itprovidesapracticalandcontemporaryviewonhow
companies can manage supply chain risks and disruptions in order to create a
resilient supply chain. The book provides the state-of-the-art developments in
mitigatingsupplychainrisksfromvariousperspectives.Itcanbeusedasanessential
sourceforstudentsandscholarswhoareinterestedinpursuingresearchorteaching
v
vi Preface
coursesinsupplychainmanagement.Italsoprovidesaninterestingandinformative
readformanagersandpractitionerswhoneedtodeepentheirknowledgeoneffective
supplychainriskmanagement.
Structuredinamodularfashion,eachchapterinthisbookpresentsananalysisof
a specific topic on supply chain risk mitigation, allowing readers to identify the
chaptersthatrelatetotheirinterests.Morespecifically,thebookispresentedinfour
parts: (1) Review on Supply Chain Risk Management, (2) Supply Chain Risk
Strategies and Developments, (3) Supply Chain Sustainability and Resilience, and
(4)SupplyChainAnalysisandRiskManagementApplications.
The first part of the book presents literature reviews on supply chain risk
management.Thesecondpartfocusesonriskanddisruptionmanagementinsupply
chains by providing newly developed models and strategies, while the third part
focusesonsustainabilityandresiliencyinsupplychainsandafirm’sabilitytoreturn
to its original state after a disruption occurs. The last part presents supply chain
analysis and some applications of the risk management. In the first chapter of the
book, Jestin Johny and Amulya Gurtu, by focusing on the existing literature on
supplychainriskmanagement,presentareviewondefinitionsofsupplychainrisk,
uncertainty,andvulnerability.Theyidentifythesupplychainriskcharacteristicsand
discusstheirmanagerialandtheoreticalimplications.Theycontributebypresenting
adiscussionontheexistingliteratureonhowrisksareassociatedwithsupplychain
integration and perceptions toward different types of supply chain risks. In the
chapterentitled“SupplyChainRiskManagement:AnEnterpriseViewandaSurvey
ofMethods,”MikaellaPolyviou,GeorgeRamos, andEugeneSchnellerreviewthe
literatureandtherecentresearchonbehavioralinfluencesinthecontextofSCRM.
They review the SCRM process, describe its four stages of risk identification, risk
assessment, risk management, and risk monitoring, and propose practices and
strategies that help enterprises identify, assess, manage, and monitor supply chain
risks.Theyalsodiscussfactors,suchasindustryandsupplychaincomplexity,which
can constrain an enterprise in implementing specific supply chain risk mitigation
approaches. Moreover, they provide some examples of how enterprises across
industrieshaveimplementedSCRMandidentifykeytechnologiesemployedwithin
itsprocess.
The second part of the book continues on managing supply chain risks by
focusingonstrategiesandnewlydevelopedmodels.LanLuoandCharlesMunson
beginthispartwithachapterthatdevelopsasupplychainstresstest.Theyproposea
stress test approach to determine the ability of a supply chain to deal with crises
underextreme,butplausible,scenarios.Usingpredictiveglobalsensitivityanalysis,
theydevelopasinglepredictivestructuralequationthatmanagerscanusetoestimate
thepercentagelossgivenadisruptionscenario.Itcanbeusedbymanagerstoassess
theriskimpactsoftheirrespectivesupplychains.Thisenablesmanagerstoevaluate
the risk of their current supply chain with a few simple calculations, and provide
themwithsomemanagerialinsightsformitigatingsupplychainrisk.Inthechapter
entitled “Retail Supply Chain Risk and Disruption: A Behavioral Agency
Approach,”RaulPartyka,FernandoPicasso,andElyPaivaaddresstheretailsupply
chainriskmanagementandstudytheretailconsumerbehaviorduringtheCOVID-
Preface vii
19pandemicandtheunexpected consumer demandsexperiencedby retailers from
the perspective of behavioral agency theory. They describe how disruptions in the
retail supply chain during COVID-19 can be explained by the mechanisms of
behavioralagencytheory.
Thechapterentitled“MitigationofSupplyChainVulnerabilityThroughCollab-
orativePlanning,ForecastingandReplenishment(CPFR)”focusesonvulnerability
assessmentinsupplychainsanditsmitigationbyapplyingauniquemethod.Inthis
chapter,LeonardodeCarvalhoGomesaddressesvulnerabilitymitigationinsupply
chains and shows the application of collaborative methods such as collaborative
planning,forecasting,andreplenishment(CPFR)inmitigatingvulnerabilityeffects.
The author proposes a framework that clarifies the relationship between resilience
androbustness,andsupplychainvulnerability.Thechapterentitled“TheBoomand
BustofMedicalSuppliesDuringtheCOVID-19Pandemic”investigatesthecauses
ofhoardingbehaviortowardessentialproductsduringtheCOVID-19pandemicand
exploreshowthisbehavioraffectsorganizationaldecisionsontheproductionrate.In
thischapter,TungNguyenpresentsaninsightfulanalysisofstrategiestoresolvethe
boom and the bust of medical supplies during the pandemic. The author discusses
how hoarding behavior influences the stock management model and proposes
collaborationamongallactorsinthesupplychaintoaddressthehoardingproblem.
The next five chapters presented in the third part of the book focus on sustain-
ability and resiliency in supply chains that evaluate firms’ ability to return to their
originalstates,withinanacceptableperiodoftime,afteradisruptionoccurs.Inthe
first chapter of this part (Sustainability Practices for Enhancing Supply Chain
Resilience) Alejandro Ortiz-Perez, Elena Mellado-Garcia, and Natalia Ortiz-de-
Mandojana analyze the different dimensions of resilience (pre-adversity, in-crisis
organizing,andpost-crisisresilience)andthetypologyofdisruptionsinthesupply
chain(internal,social,environmental,andglobaldisruptions),andpresentadiscus-
sion on how sustainabilitypractices can improve theresilience ofthe supply chain
againstdifferenttypesofdisruptions.Theyproposeresilientpracticesthroughwhich
sustainabilitycommitmentcanfosterrelationshipswithsuppliersandcustomers,by
creating mechanisms to deal with a disruption in the supply chain. In the chapter
entitled“ATheoreticalFrameworkforSupplyChainResiliencePlanning,”Jennifer
Helgeson and Alfredo Roa-Henriquez develop a theoretical framework for supply
chainresilienceplanningbasedonthetheoryofplannedbehavior.Theydiscussrisk
management at the firm level and review the need for research that addresses
planningforresilienceinadditiontoriskmanagementinthecontextoftheneedto
planaheadandrecoverypost-disaster.
In the chapter entitled “Towards a Resilient Supply Chain,” Sandeep
Ramachandran and Ganesh Balasubramanian explain the processes and best prac-
tices that can help firms manage their supply chain risks and move toward supply
chainresiliency.Theydiscussthreecriticalaspectsofafirm—people,process,and
technology—in designing and implementing an effective risk plan, and provide
industrialapplicationsandbestpracticesforbuildingresilientsupplychains.Inthe
next chapter (Integrated Optimization of Resilient Supply Chain Network Design
and Operations Under Disruption Risks), Zhimin Guan, Jin Tao, and Minghe Sun
viii Preface
developanintegratedoptimizationapproachforthedesignandoperationsdecisions
ofresilientsupplychainnetworkswithdisruptionriskconsiderations.Theyformu-
lateamixedbinaryintegerprogrammingmodelbasedonsomestochasticscenarios
byconsideringuncertaintiesinsupplies,demands,andprices.Theyuseanillustra-
tive example to demonstrate the validity and effectiveness of the proposed model,
and report the sensitivity analysis results to examine the effects of important
parameters on the performance of the resulting resilient supply chain networks. In
thechapterentitled“BalancingSustainabilityRisksandLow-CostinGlobalSourc-
ing,”thelastchapterofthispart,GbemilekeOgunrantiandAvijitBanerjeedevelop
anintegratedframeworkasadecisionsupportsystemforsimultaneouslyaddressing
the supplier selection and order allocation problems, considering the trade-off
between supply chain sustainability-related risks and procurement cost. They for-
mulate a bi-objective mixed-integer programming model for the specific supplier
selectionandorderallocationdecisionstomaximizethesupplychain’ssustainabil-
ity performance while minimizing the procurement cost. They also present an
illustrative example of outsourcing contract manufacturers in the apparel industry
todemonstratetheapplicabilityoftheirproposedframeworkinpractice.
Thelastpartinthebookpresentsmoresupplychainanalysesandsomeapplica-
tionsoftheriskmanagement.Thefirstchapterofthispartdiscussesapproachesto
incorporate risk aversion in supply chain network design. In this chapter
(ABi-objective,Risk-AversionOptimizationModelandItsApplicationinaBiofuel
SupplyChain),KrystelCastillo-VillarandYajairaCardona-Valdésproposeamath-
ematical formulation of a bi-objective two-stage stochastic mixed-integer linear
programming modelthat measures thetrade-off betweentheexpected cost andthe
conditionalvalueatrisk.Theproposedmodelcanbeusedtodeterminethetactical
and strategic decisions of a biofuel supply chain network considering the biomass
quality variability issues and the risk of investment. They also conduct a real-life
data-driven case study at a state level to obtain pragmatic and managerial insights
thatenabletheinvestigationofsolutionsfordifferentlevelsofriskaversion.Inthe
chapter entitled “Conceptualizing and Modeling Supply Chains in the Hazard
Context,” Douglas Thomas and Jennifer Helgeson discuss the impact of natural
andhuman-madehazardsintheUSeconomyasawholeandtheUSmanufacturing
industryinparticular.Theypresentamacro-levelanalysisandexaminehowestab-
lishments—at the total economy level and within the manufacturing industry in
particular—are affected by a disruption in supplies, to determine the magnitude of
thedownstreameffect,whichisoftenreferredtoastherippleeffect.
In the chapter entitled “Developing Predictive Risk Analytic Processes in a
Rescue Department,” Mika Immonen, Jouni Koivuniemi, Heidi Huuskonen, and
JukkaHallikaspresentadata-drivenriskmanagementcaseapplicationintheservice
supplychainsandanalyzepredictiveriskanalyticprocessesandpracticesinrescue
departments.Thesepractices includepreventing,detecting, responding, andrecov-
ering from issues by using capable information systems in the supply chain. They
present a case study of the use of data analytics in risk management, which
highlights the diverse use of different types of structured and unstructured data in
proactive risk management. In the last chapter of the book (Manufacturing-Supply
Preface ix
Chain Risk Under Tariffs Impact in a Local Market), Omar Alhawari and Gürsel
Süer address a manufacturing-supply chain network, and study the impact of
imposed tariffs on imported raw materials on manufacturer and suppliers. They
conductacasestudyanddiscusstheimpactofthetradetariffsonthemanufacturing
system design considering the number of manufacturing cells open to meet the
demand.Theydiscusshowalowmarketdemandenforcesmanufacturerstochange
theirsystemdesigntoabsorbtheimpactofhighimposedtariffs.
Iwouldliketothankalltheauthorswhohavecontributedtothisbook.Although
the COVID-19 pandemic caused a significant delay in editorial process and
reviewing chapters,I appreciate theauthors’ patience, and also theirgreat effortin
revising their chapters, in particular, those who were requested for multiple revi-
sions. My special thanks go to the co-editor, Dr. Henry Xu of the University of
Queenslandforhelpingoutwithreviewingseveralchapters.
Also, I would like to express my gratitude to Matthew Amboy of Springer
New York and Jialin Yan, Associate Editor, for their help and support on this
project, and also thanks to the project team in Springer including the project
coordinator,RamyaPrakash.
I would also like to thank my wife Miya and sons Nima, Yuma, and Toma for
allowingmetodevotethetimenecessarytocompletethisbookduringthehardtimes
ofthepandemic,especiallyduringourtemporarystayinToronto,Canada.Idedicate
thisbooktothem.
Tokyo,Japan YacobKhojasteh
September2022
