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Strategic investment in supply chain resilience: A study of fast-moving consumer goods under demand uncertainty

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  • Wu, Yue
  • Lam, Jasmine Siu Lee

Abstract

The growing disruptions require Fast-Moving Consumer Goods (FMCG) supply chains to evolve beyond cost efficiency and incorporate resilience to sustain competitiveness and growth. FMCG supply chains face unique challenges, including perishability, intense competition and high demand uncertainty. Although investing in supply chain resilience(SCR) is crucial in FMCG, few studies provide applicable frameworks to evaluate the value of this strategic investment and address demand uncertainty. This paper addresses this gap by introducing a net present value (NPV)-based resilience indicator integrated with FMCG performance metrics. To estimate resilience cost savings used in this indicator, we develop stochastic optimization, robust optimization, and Wasserstein distributionally robust optimization (WDRO) models for a two-echelon, multi-product FMCG supply chain, and explore risk preferences through expected total cost, conditional value at risk (CVaR), and mean-CVaR. The model is further extended to capture demand uncertainty under disruption. Numerical experiments suggest that resilience investments can yield up to 13 % cost savings under disruptions, rising to 15 % when accounting for demand uncertainty. WDRO emerges as the most effective model for strategy selection. The results demonstrate that both the level and distribution shape of demand uncertainty influence investment, with an optimal uncertainty level that strongly encourages investment. Sensitivity analysis further shows market share loss, lost sales, customer service requirement, perishability and profitability as positive drivers of investment, whereas transportation, production and scrap costs are negatively correlated. This study offers valuable decision-making guidance for FMCG supply chain managers on resilience investments.

Suggested Citation

  • Wu, Yue & Lam, Jasmine Siu Lee, 2026. "Strategic investment in supply chain resilience: A study of fast-moving consumer goods under demand uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 205(C).
    • Handle: RePEc:eee:transe:v:205:y:2026:i:c:s1366554525005174
    DOI: 10.1016/j.tre.2025.104495
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