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Building up Resilience in a Pharmaceutical Supply Chain through Inventory, Dual Sourcing and Agility Capacity

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  • Lücker, Florian
  • Seifert, Ralf W.

Abstract

This paper is inspired by a risk management problem faced by a leading pharmaceutical company. Key operational risk mitigation measures include Risk Mitigation Inventory (RMI), Dual Sourcing and Agility Capacity. We study the relationship between these three measures by modeling the drug manufacturing firm that is exposed to supply chain disruption risk. The firm determines optimal RMI levels for assumed Dual Sourcing and Agility Capacity. We quantify the decrease in RMI levels in the presence of Dual Sourcing and Agility Capacity. Furthermore, using an example, we analyze RMI, Dual Sourcing and Agility Capacity decisions jointly. It turns out that RMI and Agility Capacity can be substitutes as long as no Dual Source is available. Once the Dual Source is available, Agility Capacity and Dual Sourcing appear to be substitutes. We further show that for long disruption times, the optimal Dual Source production rate may decrease in the disruption time. Within our modeling framework, we introduce an operational metric that quantifies Supply Chain Resilience. Supply chain disruptions can have a severe business impact and need to be managed appropriately.

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  • Lücker, Florian & Seifert, Ralf W., 2017. "Building up Resilience in a Pharmaceutical Supply Chain through Inventory, Dual Sourcing and Agility Capacity," Omega, Elsevier, vol. 73(C), pages 114-124.
    • Handle: RePEc:eee:jomega:v:73:y:2017:i:c:p:114-124
    DOI: 10.1016/j.omega.2017.01.001
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    2. Babai, M. Zied & Ivanov, Dmitry & Kwon, Oh Kang, 2023. "Optimal ordering quantity under stochastic time-dependent price and demand with a supply disruption: A solution based on the change of measure technique," Omega, Elsevier, vol. 116(C).
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    4. Jędrzej Charłampowicz, 2018. "Supply Chain Efficiency On The Maritime Container Shipping Markets – Selected Issues," Business Logistics in Modern Management, Josip Juraj Strossmayer University of Osijek, Faculty of Economics, Croatia, vol. 18, pages 357-368.
    5. Saha, Esha & Rathore, Pradeep & Parida, Ratri & Rana, Nripendra P., 2022. "The interplay of emerging technologies in pharmaceutical supply chain performance: An empirical investigation for the rise of Pharma 4.0," Technological Forecasting and Social Change, Elsevier, vol. 181(C).
    6. Wissuwa, Florian & Durach, Christian F. & Choi, Thomas Y., 2022. "Selecting resilient suppliers: Supplier complexity and buyer disruption," International Journal of Production Economics, Elsevier, vol. 253(C).
    7. Azadegan, Arash & Modi, Sachin & Lucianetti, Lorenzo, 2021. "Surprising supply chain disruptions: Mitigation effects of operational slack and supply redundancy," International Journal of Production Economics, Elsevier, vol. 240(C).
    8. Ana Carolina Silva & Catarina Moreira Marques & Jorge Pinho de Sousa, 2023. "A Simulation Approach for the Design of More Sustainable and Resilient Supply Chains in the Pharmaceutical Industry," Sustainability, MDPI, vol. 15(9), pages 1-23, April.
    9. Basu R, Jothi & Abdulrahman, Muhammad D. & Yuvaraj, M., 2023. "Improving agility and resilience of automotive spares supply chain: The additive manufacturing enabled truck model," Socio-Economic Planning Sciences, Elsevier, vol. 85(C).
    10. Dmitry Ivanov & Boris Sokolov, 2019. "Simultaneous structural–operational control of supply chain dynamics and resilience," Annals of Operations Research, Springer, vol. 283(1), pages 1191-1210, December.
    11. Dmitry Ivanov, 2022. "Viable supply chain model: integrating agility, resilience and sustainability perspectives—lessons from and thinking beyond the COVID-19 pandemic," Annals of Operations Research, Springer, vol. 319(1), pages 1411-1431, December.
    12. Alikhani, Reza & Ranjbar, Amirhossein & Jamali, Amir & Torabi, S. Ali & Zobel, Christopher W., 2023. "Towards increasing synergistic effects of resilience strategies in supply chain network design," Omega, Elsevier, vol. 116(C).
    13. Furstenau, Leonardo Bertolin & Zani, Carolina & Terra, Stela Xavier & Sott, Michele Kremer & Choo, Kim-Kwang Raymond & Saurin, Tarcisio Abreu, 2022. "Resilience capabilities of healthcare supply chain and supportive digital technologies," Technology in Society, Elsevier, vol. 71(C).
    14. Iacocca, Kathleen & Mahar, Stephen & Daniel Wright, P., 2022. "Strategic horizontal integration for drug cost reduction in the pharmaceutical supply chain," Omega, Elsevier, vol. 108(C).
    15. Shashi & Piera Centobelli & Roberto Cerchione & Myriam Ertz, 2020. "Managing supply chain resilience to pursue business and environmental strategies," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1215-1246, March.
    16. Shabnam Rekabi & Ali Ghodratnama & Amir Azaron, 2022. "Designing pharmaceutical supply chain networks with perishable items considering congestion," Operational Research, Springer, vol. 22(4), pages 4159-4219, September.
    17. Marta Negri & Enrico Cagno & Claudia Colicchia & Joseph Sarkis, 2021. "Integrating sustainability and resilience in the supply chain: A systematic literature review and a research agenda," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 2858-2886, November.
    18. Antonio Zavala-Alcívar & María-José Verdecho & Juan-José Alfaro-Saiz, 2020. "A Conceptual Framework to Manage Resilience and Increase Sustainability in the Supply Chain," Sustainability, MDPI, vol. 12(16), pages 1-38, August.
    19. Luo, Sha & Ahiska, S. Sebnem & Fang, Shu-Cherng & King, Russell E. & Warsing, Donald P. & Wu, Shuohao, 2021. "An analysis of optimal ordering policies for a two-supplier system with disruption risk," Omega, Elsevier, vol. 105(C).
    20. Rana Azghandi & Jacqueline Griffin & Mohammad S. Jalali, 2018. "Minimization of Drug Shortages in Pharmaceutical Supply Chains: A Simulation-Based Analysis of Drug Recall Patterns and Inventory Policies," Complexity, Hindawi, vol. 2018, pages 1-14, December.
    21. Hosseini, Seyedmohsen & Ivanov, Dmitry & Dolgui, Alexandre, 2019. "Review of quantitative methods for supply chain resilience analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 285-307.
    22. René Y. Glogg & Anna Timonina-Farkas & Ralf W. Seifert, 2022. "Modeling and mitigating supply chain disruptions as a bilevel network flow problem," Computational Management Science, Springer, vol. 19(3), pages 395-423, July.

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