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When does operational risk cause supply chain enterprises to tip? A simulation of intra-organizational dynamics

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  • Guertler, Benjamin
  • Spinler, Stefan

Abstract

Interrelationships and feedback loops between different enterprises in a supply chain are widely acknowledged to create additional challenges for risk identification and monitoring. However, each individual manufacturing enterprise is also characterized by interrelationships between its internal operational risks. Our paper investigates these internal interrelationships and provides insights into the operational dynamics of single supply chain enterprises. We use system dynamic simulation and scenario analysis to answer the question: “When does operational risk cause a supply chain enterprise to tip”? We show that some operational risks are significantly more critical than the others, and that this is caused by the interrelatedness of those supply risks. In view of our findings we suggest changes in procurement and risk management activities that shift the focus towards critical operational risks. This will help to create a more stable supply network in the midterm.

Suggested Citation

  • Guertler, Benjamin & Spinler, Stefan, 2015. "When does operational risk cause supply chain enterprises to tip? A simulation of intra-organizational dynamics," Omega, Elsevier, vol. 57(PA), pages 54-69.
  • Handle: RePEc:eee:jomega:v:57:y:2015:i:pa:p:54-69
    DOI: 10.1016/j.omega.2015.03.005
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    2. Soumyatanu Mukherjee & Sidhartha S. Padhi, 2022. "Sourcing decision under interconnected risks: an application of mean–variance preferences approach," Annals of Operations Research, Springer, vol. 313(2), pages 1243-1268, June.
    3. Dominguez, Roberto & Cannella, Salvatore & Barbosa-Póvoa, Ana P. & Framinan, Jose M., 2018. "Information sharing in supply chains with heterogeneous retailers," Omega, Elsevier, vol. 79(C), pages 116-132.
    4. Chih-Hung Hsu & Ru-Yue Yu & An-Yuan Chang & Wan-Ling Liu & An-Ching Sun, 2022. "Applying Integrated QFD-MCDM Approach to Strengthen Supply Chain Agility for Mitigating Sustainable Risks," Mathematics, MDPI, vol. 10(4), pages 1-41, February.
    5. Cannella, Salvatore & Dominguez, Roberto & Framinan, Jose M., 2017. "Inventory record inaccuracy – The impact of structural complexity and lead time variability," Omega, Elsevier, vol. 68(C), pages 123-138.

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