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Abstract: This study aims at analysing recent research on supply chain design with disruption considerations in terms
of the ripple
effect
in the supply research
chain. It on
develops different
dimensions
of the ripple-effect
This
aims
at
chain
design
with
consideraAbstract:
This study
study
aims
at analysing
analysinginrecent
recent
research
on supply
supply
chain
designmanagement
with disruption
disruption
consideraAbstract:
and
summarizes
recent
developments
the
field
of
supply
chain
disruption
from
a multitions
in
terms
of
the
ripple
effect
in
the
supply
chain.
It
develops
different
dimensions
of
the
ripple-effect
tions
in
terms
of
the
ripple
effect
in
the
supply
chain.
It
develops
different
dimensions
of
the
ripple-effect
disciplinary
perspective.
We
observe
that
the
analysis
of
how
to
achieve
planned
economic
performance
in
and summarizes
recent
developments
in
of
disruption
management
from
aa multisummarizes
recentand
developments
in the
the field
field
of supply
supplyischain
chain
disruption
management
from
multiaand
real-time,
uncertain
perturbed
execution
environment
a
vital
and
up-to-date
issue
in
many
supply
disciplinary
perspective.
We
observe
that
the
of
to
planned
economic
in
disciplinary
perspective.
We
observe
that
the analysis
analysis
of how
how
to achieve
achieve
planned research
economicinperformance
performance
in
chains.
Te ripple
effect
can
be theexecution
phenomenon
that
is able
to consolidate
supply
chain
aa real-time,
uncertain
and
perturbed
environment
is
a
vital
and
up-to-date
issue
in
many
supply
real-time,
uncertain
and
perturbed
execution
environment
is
a
vital
and
up-to-date
issue
in
many
supply
tion
management
and
recovery
similar
to the bullwhip
effectable
regarding
demand and
lead time
fluctuations.
chains.
Te
ripple
effect
can
be
the
that
to
research
in
chain
chains.
Tebuild
ripple
effect
can
befuture
the phenomenon
phenomenon
that is
ischain
able dynamics,
to consolidate
consolidate
research
in supply
supply
chain
This
may
the
agenda
for
research
on
supply
control,
continuity,
and disruption management
management and
and recovery
recovery similar
similar to
to the
the bullwhip
bullwhip effect
effect regarding
regarding demand
demand and
and lead
lead time
time fluctuations.
fluctuations.
tion
tion
chains
more robust,
adaptable,
and profitable.
Copyright
2015
IFAC
This management,
may build
build the
themaking
agendasupply
for future
future
research
on supply
supply
chain dynamics,
dynamics,
control,
continuity,
and disrupdisrupThis
may
agenda
for
research
on
chain
control,
continuity,
and
tion
management,
making
supply
chains
more
robust,
adaptable,
and
profitable.
Copyright
2015
2015,
IFAC
(International
Federation
ofdynamics,
Automatic
Control)
Hosting
Elsevier Ltd.
All rightsmanagement,
reserved.
tion
management,
making
supply
chains
more
robust,
adaptable,
and by
profitable.
Copyright
2015 IFAC
IFAC
Keywords:
supply
chain, ripple
effect,
control,
resilience,
robustness,
disruption
event
management,
quantitative
analysis,
information
technology.
Keywords: supply
supply chain,
chain, ripple
ripple effect,
effect, dynamics,
dynamics, control,
control, resilience,
resilience, robustness,
robustness, disruption
disruption management,
management,
Keywords:
event
management,
quantitative
analysis,
information
technology.
event management, quantitative analysis, information technology.
1. INTRODUCTION
1. INTRODUCTION
INTRODUCTION
Supply chain design1.(SCD)
has been a visible and influential
topic
in
the
field
of
production,
operations,
andand
supply
chain
Supply chain
chain design
design (SCD)
(SCD) has
has been
been
visible
influential
Supply
aadecades.
visible
and
influential
management
(SCM)
over
the
past
two
A
large
numtopic in
in the
the field
field of
of production,
production, operations,
operations, and
and supply
supply chain
chain
topic
ber
of approaches
have
been
proposed
for the design
ofnumsupmanagement
(SCM)
over
the
past
two
decades.
A
large
management
(SCM)
over the
past Daskin
two decades.
AAmiri
large 2006,
numply
chains
(SC)
(Drezner
1995,
1995,
ber
of
have
been
for
design
ber
of etapproaches
approaches
have
been proposed
proposed
for the
the
design of
ofetsupsupMelo
al. (SC)
2009,(Drezner
Georgiadis
et al.
2011,
Constantino
al.
ply
chains
1995,
Daskin
1995,
Amiri
2006,
ply
chains
(SC)
(Drezner
1995,
Daskin
1995,
Amiri
2006,
2012).
Typically,
cost
or
service
level
optimization
has
been
Melo
et
2009,
Georgiadis
et
Constantino
et
Melo
et al.
al.
2009,
Georgiadis
et al.
al.In2011,
2011,
Constantino
et al.
al.
included
in the
objective
functions.
many
cases, inventory,
2012).
Typically,
cost
or
service
level
optimization
has
been
2012).
Typically,
cost
or
service
level
optimization
has
been
lead-time,
and demand
fluctuations In
have been
integrated
into
included
in
objective
cases,
inventory,
included
in the
the(Sourirajan
objective functions.
functions.
In many
many
cases,
inventory,
those
models
et
al.,
2009,
Sadjady
and
Davoudlead-time, and
and demand
demand fluctuations
fluctuations have
have been
been integrated
integrated into
into
lead-time,
pour
Kumar
and Tiwari
2013,
Askin
et al. and
2014).
those2012,
models
(Sourirajan
et al.,
al.,
2009,
Sadjady
Davoudthose
models
(Sourirajan
et
2009,
Sadjady
and Davoudpour
2012,
and
Tiwari
2013,
Askin
al.
2014).
pour
2012,ofKumar
Kumar
andand
Tiwari
2013,
Askin et
etare
al. related
2014). to the
The risks
demand
supply
uncertainty
random
uncertainty
and
business-as-usual
situation.
Such
The
risks
of
and
supply
are
to
The
risks
of demand
demand
and
supply uncertainty
uncertainty
are related
related
to the
the
risks
are
also
known
as
recurrent
or
operational
risks
(Chorandom
uncertainty
and
business-as-usual
situation.
Such
random
uncertainty
and
business-as-usual
situation.
Such
pra
etare
al. 2007,known
Wilsonas2007,
Singh et operational
al. 2012). SCrisks
managers
risks
(Chorisks
are also
also
knownimprovements
as recurrent
recurrent or
oratoperational
risks
(Choachieved
significant
managing
the
SCs
and
pra
et
al.
2007,
Wilson
2007,
Singh
et
al.
2012).
SC
managers
pra
et
al.
2007,
Wilson
2007,
Singh
et
al.
2012).
SC
managers
mitigating
recurrent
SC
in
risks
through
improved
planning
achieved
significant
improvements
at
managing
the
and
achieved
significant
improvements
at2014).
managing
the SCs
SCsrisks
and
and
execution
(Chopra
andrisks
Sodhi
Disruptive
mitigating
recurrent
SC in
in
through
improved
planning
mitigating
recurrent
SC
risks
through
improved
planning
represent
now a (Chopra
new challenge
for SC2014).
managers
who facerisks
the
and execution
execution
and Sodhi
Sodhi
Disruptive
and
(Chopra
and
2014). Disruptive
risks
ripple
effect
that
arises
from for
vulnerability,
instability,
and
represent
now
a
new
challenge
SC
managers
who
face
represent
now
a new
challenge
SC managers who face the
the
disruptions
in that
SCs
(Ivanov
et al.for
2014a).
ripple
effect
arises
from
vulnerability,
ripple effect that arises from vulnerability, instability,
instability, and
and
disruptions
in
(Ivanov
al.
2014a).
disruptions
in SCs
SCsdescribes
(Ivanov et
etthe
al.impact
2014a).of a disruption on SC
The ripple effect
performance
and
disruption-based
scopeofofa changes
in the
SC
The
ripple
effect
describes
the
on
The
rippleand
effect
describes(Ivanov
the impact
impact
of
a disruption
disruption
on SC
SC
structures
parameters
et
al.
2014a).
Following
a
performance
performance and
and disruption-based
disruption-based scope
scope of
of changes
changes in
in the
the SC
SC
structures
structures and
and parameters
parameters (Ivanov
(Ivanov et
et al.
al. 2014a).
2014a). Following
Following aa
disruption, its effect ripples through the SC. The scope of the
rippling
anditsits
impact
on through
economic
performance
depends
disruption,
ripples
the
scope
of
disruption,
its effect
effectreserves
ripples (e.g.,
through
the SC.
SC. The
Thelike
scope
of the
the
both
on
robustness
redundancies
inventory
rippling
and
its
impact
on
economic
performance
depends
rippling
and
its
impact
on
economic
performance
depends
or
capacity
buffers)reserves
and speed
andredundancies
scale of recovery
measures
both
on robustness
robustness
(e.g.,
like inventory
inventory
both
on
reserves
(e.g.,
redundancies
like
(Sheffi
and
Rice
2005,
Tomlin
2006,
Bode
et
al.
2011,
or capacity
capacity buffers)
buffers) and
and speed
speed and
and scale
scale of
of recovery
recovery measures
measures
or
Ivanov
and
Sokolov
2013,
Kim
and
Tomlin,
2013).
Since
the
(Sheffi and
and Rice
Rice 2005,
2005, Tomlin
Tomlin 2006,
2006, Bode
Bode et
et al.
al. 2011,
2011,
(Sheffi
research
community
distinguishes
between
operational
and
Ivanov
Sokolov
2013, Kim
Tomlin,
2013).
the
Ivanov and
andrisks,
Sokolov
Kim and
andcan
Tomlin,
2013). Since
Since
the
disruption
the 2013,
ripple-effect
be considered
for disresearch
community
distinguishes
between
operational
and
research
community
distinguishes
between
operational
and
ruption
risks
while forripple-effect
operational can
risksbetheconsidered
bullwhip-effect
is
disruption
risks,
for
disruption
risks, the
the
ripple-effect
canpresented
be considered
for1.disdistypically
studies.
The
differences
are
in
Table
ruption
ruption risks
risks while
while for
for operational
operational risks
risks the
the bullwhip-effect
bullwhip-effect is
is
typically
studies.
The
differences
are
presented
Table
1:
Ripple
effect
and
bullwhip
effect
typically studies. The differences are presented in
in Table
Table 1.
1.
Table
Table 1:
1: Ripple
Ripple effect
effect and
and bullwhip
bullwhip effect
effect
Feature Ripple-Effect
Risks
Disruptions (e.g., a plant
Feature
Feature Ripple-Effect
Ripple-Effect
explosion)
Risks
Disruptions (e.g.,
(e.g., aa plant
plant
Risks
Disruptions
Affected Structures
explosion) and critical
explosion)
areas
(likecritical
lead-time
Affected parameters
Structures and
and
Affected
Structures
critical
and
inventory)
areas
parameters
(like
lead-time
areas
parameters (like lead-time
RecovMiddleand long-term;
and
inventory)
and inventory)
ery
coordination
efforts and
RecovMiddle- and
and long-term;
long-term;
RecovMiddleinvestments
ery
coordination efforts
efforts and
and
ery
coordination
Affected Output
performance like
investments
investments
PerforAffected annual
Output revenues
performance like
like
Affected
Output
performance
mance
Perforannual
revenues
Perforannual revenues
mance
mance
Bullwhip-Effect
Operational
(e.g., deBullwhip-Effect
Bullwhip-Effect
mand
fluctuation)
Operational (e.g.,
(e.g., dedeOperational
Critical
parameters like
mand fluctuation)
fluctuation)
mand
lost
salesparameters like
Critical
Critical
parameters like
lost
sales
lost sales
Short-term coordination
to
balance demand
and
Short-term
coordination
Short-term
coordination
supply
to balance
balance demand
demand and
and
to
Current
performance
supply
supply
like
dailyperformance
stockCurrent
Current
performance
out/overage
costs
like daily
daily stockstocklike
out/overage costs
costs
out/overage
Copyright
2015,
2015 IFAC
1770Hosting by Elsevier Ltd. All rights reserved.
2405-8963
IFAC (International Federation of Automatic Control)
Peer review under responsibility of International Federation of Automatic Control.
Copyright
1770
Copyright
2015
2015 IFAC
IFAC
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Dmitry Ivanov et al. / IFAC-PapersOnLine 48-3 (2015) 17001707
May 11-13, 2015. Ottawa, Canada
At the design stage (the so called proactive stage), contingency plans or backup planning (e.g., alternative suppliers or
shipping routes) are developed (Knemeyer et al. 2009, Cui et
al. 2010, Benyoucef et al. 2013, Li et al. 2013). During the
execution (the so called reactive stage), the recovery must
happen quickly to expedite stabilization and adaptation in
order to ensure SC continuity and avoid long-term impact
(Sheffi and Rice 2005, Simchi-Levi et al. 2014, Chopra and
Sodhi 2014).
In this setting, it is vital to extend existing SCD models by
integrating objectives like flexibility, robustness, stability,
resilience into multi-criteria SCD selection procedures
(Snyder and Daskin 2005, Wilson 2007, Klibi et al. 2010,
Peng et al. 2011, Baghalian et al. 2013). Such research can
provide professionals with useful tools to analyse performance and resilience of SCs simultaneously.
2. STATE-OF-THE-ART
2.1 Pro-active approach
Studies by Snyder and Daskin (2005), Wilson (2007), Qi and
Chen (2010), Cui et al. (2010), Klibi et al. (2010), Schmitt
and Singh (2012), Lim et al. (2010, 2013), Peng et al. (2011),
Li et al. (2013), Ivanov and Sokolov (2013), Kim and Tomlin
(2013), and Ivanov et al. (2014a) indicated that understanding
and finding SCD with effective and efficient constellations of
economic performance, complexity, robustness, flexibility,
adaptability and resilience is a promising research area with
high practical applicability.
2.1.1 Mixed-integer programming
Mixed-integer programming (MIP) with application to reliable SCD has been a broad research avenue over the past ten
years. More precisely, incapacitated fixed charge location
model UFL and P-median problem have been mostly studied. The reliable location model was first introduced by
Snyder and Daskin (2005). UFL model aims at finding optimal SCD with assignments of the customers to the locations
with the objective to minimize the sum of fixed and transportation costs in the SC. The study by Snyder and Daskin
(2005) assumed equal estimations of probability failures for
all the SC nodes and considered a case with 49 cities in U.S.
This model has been extended by Shen et al. (2009) and Cui
et al. (2010) by relaxing the assumption on homogenous failure probability. In addition, Cui et al. (2010) paid attention to
the fact that total transportation costs in the SC should not
increase after a disruption. They model provides the solution
without an increase in transportation costs for both normal
and disruptive modes. For medium-size problems, as documented in Li et al. (2013) Lagrangian relaxation also allows
finding optimal solution in reasonable time.
Next development of MIP models in the ripple-effect context
can be considered regarding the facility fortification. Lim et
al. (2010) incorporated a totally reliable bck-up supplier that
is used if a primary supplier is destroyed. The related costs
are incorporated into the objective function but the fortifica-
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May 11-13, 2015. Ottawa, Canada
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Similar to Petrovic et al. (1998), this study considered customer demand and production capacity as uncertainties. The
objective was to provide a sound trade-off between maximization of profit and service level. Constantino et al. (2011)
presented a fuzzy programming approach for the strategic
design of distribution networks.
Gulpnar et al. (2012) formulates a stochastic model for multiple capacitated facilities that serve customers with a single
product, and a stockout probabilistic requirement as a chance
constraint. Based on robust optimization, they present numerical experiments to illustrate the performance of the different
robust formulations. Pishvaee et al. (2012) presented a robust
possibilistic programming approach to socially responsible
SCD.
2.1.5 Simulation, system science and control theory
Simulation approaches have been proved to be a suitable tool
for analysis of SCD in terms of the ripple effect. Wu et al.
(2007) presented a Petri net-based modeling approach to
model how disruptions propagate through a SC and evaluate
the impact of the disruption on the SC performance. Another
application of Petri net-based simulation to SCs is presented
by Tuncel and Alpan (2010) in order to evaluate the impact
of multiple disruption scenarios (disruptions in demand,
transportation and quality) and possible mitigation actions on
the SC performance.
Monte Carlo approach based on a generalized semi-Markov
process is taken to assess the disruptions caused by a specific
type of hazard on an SC (Deleris and Erhun, 2011). This
model estimates the probability distribution of the loss in the
SC output caused by the occurrence of hazards within the SC.
Zegordi and Davarzani (2012) present an SC disruption analysis model based on colored Petri nets for better visual representation.
Lewis et al. (2013) analyse the disruptions risks at ports-ofentry with the help of closure likelihood and duration which
are modeled using a completely observed, exogenous Markov
chain. They developed a periodic-review inventory control
model that indicates for studied scenarios that operating margins may decrease 10% for reasonable-length port-of-entry
closures or eliminated completely without contingency plans,
and that expected holding and penalty costs may increase
20% for anticipated increases in port-of-entry utilization.
Swaminathan et al. (1998) and Surana et al. (2005) applied
agent systems and adaptive principles to SC dynamics analysis. Kamath and Roy (2007) analysed capacity augmentation
decisions for products with short life-cycles and unpredictably high demand with the help of the system dynamics approach. Xu et al. (2014) used AnyLogic software and modelled SC as an agent system to study the disruption at suppliers and recovery policies on SC service level.
Schnlein et al. (2013) apply stability analysis based on multiclass queuing network. The authors study different destabilization inputs and formulate a mathematical program that
minimizes the required network capacity, while ensuring a
desired level of robustness.
To study the impact of transportation disruptions on SC performance, Ivanov et al. (2010) developed a structure dynamics control approach to SCD with the simultaneous consideration of multiple SC structures (i.e., material, information,
product, technology, and finance) and their dynamics. They
presented solution methods based on a combination of optimal control and mathematical programming.
Teimoury and Fathi (2013) along with Zhou et al. (2013)
faced the issues of SC resilience through flexibility increase
and applied queuing models to analyse the impacts of postponement on SC performance. Meisel and Bierwirth (2014)
also applied simulation and optimization method to analyse
performance of a make-to-order strategy in presence of uncertainties.
Recently Ivanov et al. (2013) and (2014b) developed a model
for multi-period and multi-commodity SCD with structure
dynamics considerations. The original idea of these studies is
SC description as a non-stationary dynamic control system
along with a linear programming (LP) model. In contrast to
MIP formulation, they distribute static and dynamic parameters between the LP and control models.
2.2. Re-active approach
Investment in SC protection can help to avoid many problems with disruptive events. However, it is impossible to
avoid disruption. Therefore, adaptation is needed to change
SC plans, schedules or inventory policies in order to achieve
the desired output performance (Ivanov and Sokolov, 2013).
Modelling SCs and operations using system dynamics and
control theory using differential equations holds great appeal
for the scientific community (Riddals et al. 2000, Sarimveis
et al. 2008, Ivanov et al. 2012, Harjunkoski et al. 2014). This
is because many of the influential characteristics of the problem can be succinctly expressed in dynamic form. Then, a
vast array of tools and methodologies can be invoked to gain
insight into the system dynamics. Dynamic methods also
have the advantage of being conduits into the adaptation/recovery domain.
Wilson (2007) presented a system dynamics model for a multi-stage SC. Different transportation disruptions are modeled
and their impact on customer orders fulfillment rate and inventory fluctuations are evaluated. The greatest impact occurs when transportation is disrupted between the Tier-1 supplier and the warehouse.
Schmitt and Singh (2012) presented a quantitative estimation
of the disruption risk in a multi-echelon SC using simulation.
The disruption risk is measured by weeks of recovery as
the amplification of the disruption. Carvalho et al. (2012)
analysed impacts of disruptions on lead-time and overall SC
costs using ARENA-based simulation model.
Bensoussan et al. (2007) considered disruptions in information structure as possible information delay and incompleteness in the ordering policies for inventory decisions with the
help of linear control theory. Hwarng and Xie (2008) analysed SC dynamics from chaos theory perspective. Schmitt
(2011) modelled strategies that include satisfying demand
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Parametrical adaptation
Process and product adaptation
Structure adaptation
System adaptation
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May 11-13, 2015. Ottawa, Canada
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