Topology and Strategy for Supply Network Robustness

Journal article

Qualitative prescriptions for the robustness of supply networks provides individual firms with useful heuristics, but the focus on specific firms and their immediate supplier relationships means that systemic effects that arise in the larger, complex network cannot be taken into account. In this paper we contribute concepts from network theory to relate topological properties of supply networks to the robustness of the system as a whole. To do so, we model a network that has been validated by two companies with global supply chains, and use computer simulations to explore the extent to which firm failures disrupt the network. Our results show that outsourcing, adaptive capacity, and redundant capability have positive effects on robustness whereas alignment of manufacturing strategies does not. We also find that when supply chains are formed through preferential attachment they become more vulnerable to the failure of firms with many links, but they also become more robust financially, as forecasting becomes more accurate. Further research needs to focus on cross-validation with empirical data including observations of temporary production re-allocation, so that we can move beyond models in which we are restricted to a binary choice between failure and optimality.

Authors: Brintrup, A; Kito, T; Reed-Tsochas, F; Lopez, E

• Publication date: 2011-01-01