The relationship between nested patterns and the ripple effect in complex supply networks

Abstract

Supply networks (SNs) play a vital role in fuelling trade and economic growth. Due to their interconnectedness, firm-level disruptions can cause perturbations to ripple through SNs, magnifying initial impact. Contemporary research on ripple effects focussed on understanding various structural features of SNs to predict and control disruption propagation. Our work adds to this body of knowledge by analysing an intriguing topological property that emerges in SNs: 'nestedness', which is defined as a pattern of organisation where products that are supplied by specialist suppliers are a subset of products that are supplied by generalist suppliers. In other words, generalists are also specialists. While previous research examined the emergence of nestedness and its possible reasons, its relationship to SN resilience remained unknown. Here, we develop a cascade model by bringing together the product-supplier-buyer structure; which provides us with fine-grained information on SN dependencies. We simulate disruptions in nested and non-nested organisations of the global automotive SN, and find that nested organisations are significantly more robust to random disruptions but vulnerable to hub disruptions under cascade conditions. However, nested structures are not as resilient; as they do not benefit from a response strategy where buyers seek alternative suppliers; because alternative suppliers do not exist. On the other hand, randomly connected SNs are vulnerable to cascades but can allow network reconfiguration.

Global shipping network dynamics during the COVID-19 pandemic's initial phases

“… Sokolov et al (2016) used a multi-stage process that included graph-theoretical performance indicators, such as connectivity coefficient, complexity and centralization index. Chauhan et al (2021) studied the relationship between network topologies (i.e., interlinkages with structural features) and cascading failures. Based on a simulated disruption, their study uncovered high robustness and lower resilience under nested networks, while hub disruptions critically challenge these structures.…”

Supply chain risk assessment in disruptive times: opportunities and challenges

“…In a way to develop a consolidated conceptualization of the term, there are even disagreements between two different perspectives on what risk means to organizations (Settembre-Blundo et al ., 2021). On the one hand, many scholars in the SCM field agreed upon a “pessimistic” viewpoint of seeing risks as destructive events with primarily undesirable consequences due to the typical human perception (Truong et al ., 2017), which corresponds best to supply chain business reality (Ho et al ., 2015; Wagner and Bode, 2008; Akbari and Do, 2021), although their effects seem to be magnified (Chauhan et al ., 2021). For example, Ellis et al .…”

An analysis of the ripple effect for disruptions occurring in circular flows of a supply chain network*

“…Nestedness is a pattern that emerges when generalist suppliers also supply products supplied by specialist suppliers. Supply chain resilience in nested supply chains is studied using a tri-partite (product-supplier-buyer) network (Chauhan et al, 2021). The performance of a supply chain network can depend on the structure of the network.…”