Structural drivers of upstream supply chain complexity and the frequency of supply chain disruptions

Abstract

A great deal of research has focused on supply chain risk management, but the question "Which supply chain characteristics increase the frequency of supply chain disruptions?" has not received much attention from empirical research. This is a relevant question, because firms seek stability in their operations, and therefore managers need to know how the structure of their supply chains affects the occurrence of disruptions. The present study addresses this issue with a specific focus on upstream supply chain (supply-side) disruptions. Drawing on the literature on supply chain complexity, we devise and test a model that predicts the frequency of supply chain disruptions based on a multi-dimensional conceptualization of upstream supply chain complexity. Not only do the empirical findings suggest that all of the three investigated complexity drivers -horizontal, vertical, and spatial complexity -increase the frequency of disruptions, but also that they interact and amplify each other's effects in a synergistic fashion.

Linking Supply Chain Network Complexity to Interdependence and Risk-Assessment: Scale Development and Empirical Investigation

“…The items described different aspects of SCNC, varying levels of which should represent varying levels of network complexity. The items that characterized SCNC: high number of first tier suppliers, strong inter-relationship relationship among the tier-one suppliers, high degree of differentiation in terms of levels of operational practices among the actors, and Low frequency and the volume of interaction among the actors (Bode, Wagner 2015;Bozarth et al 2009;Handfield, Nichols 1999;Simon 1962;Choi, Krause 2006;VanVactor 2011;Noorderhaven, Harzing 2009;Milgate 2001;Prater et al 2001;Meepetchdee, Shah 2007;Johnsson et al 2007;Burt, Doyle 1993).…”

“…Using a single item scale for disruption risk they highlighted that a positive relationship existed between magnitude of disruption and probability of disruption with overall disruption risk. Further in a recent study Bode and Wagner (2015) linked upstream supply chain complexity drivers and supply chain disruption. Blackhurst et al (2008) in their conceptual risk framework for supplier risk assessment indicated that risk as a whole is very generic and can be segregated as risk identification, assessment, decision-making and monitoring.…”

“…Studies highlight that complexity impacts performance of the chain and also that of the individual network actors (Bode, Wagner 2015;Choi, Krause 2006;Waldrop 1992). Though, different studies have defined complexity from different perspectives, a clear and easily comprehendible working definition of supply chain network complexity remains lacking.…”

“…So arises the need to propose an acceptable working definition and also develop a scale dealing with supply chain (SC) network complexity (Manuj, Sahin 2011;Milgate 2001). Extant studies took the view of SC network complexity as multi-dimensional and multi-faceted phenomenon affected by varied sources and described complexity from different perspectives: number of elements and subsystems (Bozarth et al 2009;Manuj, Sahin 2011;Choi, Krause 2006;Choi, Hong 2002;Handfield, Nichols 1999) and high number of elements affecting the complexity and the supply chain network functioning in terms of disruptions (Chopra, Sodhi 2014;Bode, Wagner 2015); quality and nature of relationship (Lian, Laing 2004;Ferlie, Pettigrew 1996); Inter-relationship between network elements (Choi, Krause 2006;Wycisk et al 2008;Johnsson et al 2007); frequency of interaction (VanVactor 2011;Noorderhaven, Harzing 2009); degree of differentiation (Choi, Krause 2006;Burt, Doyle 1993), etc.…”

“…In this study supply chain network complexity (SCNC) is defined as the extent of inter-relationship among the supply chain network partners/actors, their degree of differentiation in terms of practices, their frequency of interaction and their volume (i.e. numbers) in network (Bode, Wagner 2015;Bozarth et al 2009;Handfield, Nichols 1999;Simon 1962;Choi, Krause 2006;VanVactor 2011;Noorderhaven, Harzing 2009;Milgate 2001;Prater et al 2001;Meepetchdee, Shah 2007;Johnsson et al 2007;Burt, Doyle 1993). In this study SCNC is investigated as an antecedent to two vital relationship and behavioral aspects of the network partners: interdependence (Kumar et al 1995;Vijayasarathy 2010) and risk assessment (Tummala, Schoenherr 2011;Ha et al 2011;Wagner, Bode 2006;Ellis et al 2010).…”