The impact of supply base complexity on disruptions and performance: the moderating effects of slack and visibility

Abstract

In the face of increasing supply base complexity, organisations have to develop new ways to manage or mitigate risk. This paper investigates the impact of four dimensions of complexity on the frequency of disruptions and plant performance. We apply insights from organisational information processing theory to understand how organisations can mitigate against the impact of more frequent disruptions. We test the moderating effects of slack resources as a means to absorb the effects of disruptions and supply visibility as a means to improve the ability to handle disruptions. The model is tested with data from 264 supply chain management professionals. Our findings broadly support the original hypotheses and suggest that supply base complexity can increase the frequency of disruptions and reduce plant performance but that slack resources and visibility can help to mitigate the effects. The study offers valuable insights into the management of supply base complexity.

Customer and Supplier Portfolios: Can Credit Risks be Managed Through Supply Chain Relationships?

“…A smaller set of trading partners may also lead to reduced supply chain complexity and, in turn, reduce disruptions and risks (Choi and Krause ; Bode and Wagner ; Brandon‐Jones et al. ). A more concentrated base of customers and suppliers appears to lead to embeddedness, which improves performance (Lanier et al.…”

“…Related to concentration, the SCM literature also has focused extensively on supply base reduction, under the view that it may lead to improved performance (Goffin et al 1997;Lemke et al 2000;Ogden 2006;Swink and Zsidisin 2006;Ogden and Carter 2008;Skilton 2014). A smaller set of trading partners may also lead to reduced supply chain complexity and, in turn, reduce disruptions and risks (Choi and Krause 2006;Bode and Wagner 2015;Brandon-Jones et al 2015). A more concentrated base of customers and suppliers appears to lead to embeddedness, which improves performance (Lanier et al 2010;Kim and Henderson 2015).…”

The Impact of Control and Complexity on Supply Network Performance: An Empirically Informed Investigation Using NK Simulation Analysis

“…Brandon‐Jones et al. () show that the vertical, horizontal, and spatial complexity differently impact disruptions. Specifically, their results show that the number of firms and the uncertainty of lead times influence the frequency of disruptions but that geographic dispersion and the differentiation of suppliers do not have significant effects on this frequency.…”

“…In particular, complexity has negative implications on overall plant performance (Bozarth et al, 2009), frequency of disruptions (Craighead et al, 2007;Bode & Wagner, 2015), responsiveness (Choi & Krause 2006), and delivery speed (Vachon & Klassen, 2002). Brandon-Jones et al (2015) show that the vertical, horizontal, and spatial complexity differently impact disruptions. Specifically, their results show that the number of firms and the uncertainty of lead times influence the frequency of disruptions but that geographic dispersion and the differentiation of suppliers do not have significant effects on this frequency.…”

“…Complexity in SN refers to multiple dimensions (Choi & Hong, 2002;Bozarth et al, 2009;Bode & Wagner, 2015;Brandon-Jones, Squire, & Van Rossenberg, 2015), but in line with the complex adaptive nature of SN and in concert with previous studies on the topic, we focus on the level of supply interactions and the number of firms (Choi & Hong, 2002). SN complexity has been shown to adversely influence performance such as cost, quality, delivery time, and frequency of disruptions (Craighead et al, 2007;Bozarth, Warsing, Flynn, & Flynn, 2009;Larsen, Manning, & Pedersen, 2013;Bode & Wagner 2015;Brandon-Jones et al, 2015;Mizgier, Wagner, & Jüttner, 2015). The findings of these studies show that as complexity increases, buyers and suppliers find it more difficult to coordinate their SN and hence the SN performance, characterized in terms of the ability of the network to satisfy customer requirements, suffers.…”