Proceedigs of the 15th IFAC Symposium on

Information Control Problems in Manufacturing

Proceedigs
of the
theOttawa,
15th IFAC
IFAC
Symposium on
on
Proceedigs
of
15th
Symposium
May 11-13, 2015.
Canada
Available online at www.sciencedirect.com
Information
Information Control
Control Problems
Problems in
in Manufacturing
Manufacturing
May
May 11-13,
11-13, 2015.
2015. Ottawa,
Ottawa, Canada
Canada

ScienceDirect

IFAC-PapersOnLine 48-3 (2015) 17001707

Supply Chain
Design With Disruption Considerations:
Chain
Design
With
Considerations:
Review Supply
of Research
theDisruption
Ripple Effect
in the Supply Chain
Supply
ChainStreams
Design on
With
Disruption
Considerations:
Review
Streams
Review of
of Research
Research
Streams on
on the
the Ripple
Ripple Effect
Effect in
in the
the Supply
Supply Chain
Chain
Dmitry Ivanov1, Alexandre Dolgui2, Boris Sokolov3,4
1
2
3,4
3,4
Alexandre
Dolgui
Sokolov
Dmitry
Ivanov
Alexandre
Dolgui2,, Boris
Boris
Sokolov
Dmitry
Ivanov1,, and
Berlin School
of Economics
Law, Department
of Business
Administration
11 Chair of International Supply Chain Management, 10825 Berlin, Germany
Berlin School
School of
of Economics
Economics and
and Law,
Law, Department
Department of
of Business
Business Administration
Administration
Berlin
Phone:
+49 3085789155;
E-Mail:
divanov@hwr-berlin.de
Chair
International
Supply
Chain
Management,
10825
Berlin,
Germany
2 of
Chair
of
International
Supply
Chain
Management,
10825
Berlin,
Germany
Ecole
Nationale
Suprieure des
Mines,divanov@hwr-berlin.de
UMR CNRS 6158, LIMOS,
Phone:
+49
3085789155;
E-Mail:
Phone:
+49
3085789155;
E-Mail:
divanov@hwr-berlin.de
22
158, Cours
Fauriel, 42023
Saint-Etienne
cedex 2,
France E-Mail:
dolgui@emse.fr
Ecole
Suprieure
des
UMR
LIMOS,
Ecole Nationale
Nationale
Suprieure
des Mines,
Mines,
UMR CNRS
CNRSof6158,
6158,
LIMOS,
3
St.
Petersburg
Institute
for
Informatics
and
Automation
the
RAS
(SPIIRAS)
158,
Cours
Fauriel,
42023
Saint-Etienne
cedex
2,
France
E-Mail:
dolgui@emse.fr
158,
Cours
Fauriel,
42023
Saint-Etienne
cedex
2,
France
E-Mail:
dolgui@emse.fr
33 V.O. 14 line, 39 199178 St. Petersburg, Russia; E-Mail: sokol@iias.spb.su
St.
Institute
for
Informatics
and
of
4
St. Petersburg
Petersburg
Institute
forPetersburg,
InformaticsRussia;
and Automation
Automation
of the
the RAS
RAS (SPIIRAS)
(SPIIRAS)
University
ITMO,
St.
E-Mail:
sokol@iias.spb.su
V.O.
14
line,
39
199178
St.
Petersburg,
Russia;
E-Mail:
sokol@iias.spb.su
V.O.
14
line,
39
199178
St.
Petersburg,
Russia;
E-Mail:
sokol@iias.spb.su
44University ITMO, St. Petersburg, Russia; E-Mail: sokol@iias.spb.su
University ITMO, St. Petersburg, Russia; E-Mail: sokol@iias.spb.su
1

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
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2405-8963
IFAC (International Federation of Automatic Control)
Peer review under responsibility of International Federation of Automatic Control.
Copyright

1770
Copyright
2015
2015 IFAC
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INCOM 2015
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-

1701

tion budget remained incapacitated. Li et al. (2013) extended

this model by introducing the limits on the fortification budget in a single-product case with eight distributors and up to
150 customers.
In addition, inventory considerations have also been included.
Chen et al. (2011) presented a joint inventory-location model
under the risk of probabilistic facility disruptions. Benyoucef
et al. (2013) considers SCD with unreliable suppliers. The
objective is to minimise fixed location costs, inventory and
safety stock costs at the distribution centres and ordering
costs and transportation costs across the network. The nonlinear MIP model is solved with the help of Lagrangian relaxation. Inventory management under SC disruption involves nonlinear cost components. Therefore heuristic solution methods are typically used. In addition, lead-time uncertainty constraints may be included into consideration (Mohebbi et al. 2003, Aar et al., 2010).
Rafiei et al. (2013) developed a comprehensive model for a
problem statement with multiple products and many periods.
They consider the levels of inventory, back-ordering, the
available machine capacity and labor levels for each source,
transportation capacity at each transshipment node and available warehouse space at each destination. The problem also
considers the facility fortification by taking into account
backup supplier with reserved capacity and backup transshipment node that satisfies demands at higher price without
disruption facility. The solution to the model is based on a
priority-based genetic algorithm.
2.1.2 Stochastic programming
It is to distinguish between classical stochastic programming
models (Tsiakis et al. 2001, Santoso 2005, Goh et al. 2007)
where demand is uncertain parameter and robust stochastic
programming models (Azaron et al. 2008) where also facility
disruptions and capacity expansion costs are considered to be
uncertain. Recently, Schtz et al. (2009), Iakovou et al.
(2010), Li and Wang (2011), and Baghalian et al. (2013) extended the existing models by considering demand-side and
supply-side uncertainties simultaneously.
Benyoucef et al. (2013) considers two-period SCD model in
which selected suppliers are reliable in the first period and
can fail in the second period. The corresponding facility location/supplier reliability problem is formulated as a non-linear
stochastic programming problem. The authors use Monte
Carlo optimisation approach in combination with the Lagrangian relaxation. Sawik (2013) developed a stochastic programming model to integrated supplier selection, order quantity allocation and customer order scheduling in the presence
of SC disruption risks.
2.1.3 Fuzzy, robust, and goal optimization
The study by Petrovic et al. (1998) was among first papers on
fuzzy optimization application to SCD with the uncertainty of
demands and external supply. The objective was to determine
the stock levels and order quantities to obtain an acceptable
delivery performance at a reasonable total cost for the SC.
Aliev et al. (2007) applied fuzzy mathematical programming
with a fuzzy objective function solved by genetic algorithm.

1771

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1702

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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from an alternate location in the network; procuring material

or transportation from an alternative source or route; and
holding strategic inventory reserves throughout the network.
The very extensive area of research on SC adaptation is model predictive control (MPC) (Wang et al., 2007). In MPC, a
system model and current and historical measurements of the
process are used to predict system behaviour at future predetermined times. A control-relevant objective function is
then optimized to calculate a control sequence that must satisfy the system constraints.
Applications of MPC to multi-echelon productioninventory
problems and SCs have been examined previously in the literature. Perea et al. (2000) modelled multi-plant, multiproduct polymer processes through difference equations, and
schedule optimization in an MPC framework. Braun et al.
(2003) developed a decentralized MPC implementation for a
six-node, two-product, and three-echelon demand network
problem. In the study by Puigjaner and Lainez (2008), a multi-stage stochastic model has been employed. Mastragostino
et al. (2014) analysed SC performance in the presence of uncertainty in the model parameter and demand considering
service level in the SC.
Apart from control approaches, other techniques have also
been applied in this domain. Unnikrishnan and Figliozzi
(2011) developed a scenario-based model with an adaptive
routing policy. Vahdani et al. (2011) applied fuzzy program
evaluation and review technique to calculate the completion
time of SC operations in the case of a severe disruption. Shao
and Dong (2012) considered supply disruption and reactive
strategies in an assemble-to-order SC with time-sensitive
demand. Ivanov et al. (2013) included transportation reconfiguration in the case of SC disruptions into the SCD in a multi-period model based on a combination of LP and optimal
control. Xu et al. (2014) developed an approach to predict SC
resilience by including recovery measures that uses the analogy to biological cells with the abilities to self-adaptation and
self-recovery. Paul et al. (2014) analysed series of disruptions
over time and presented an inventory control-based model to
develop optimal recovery policies real time disruption management for a two-stage batch productioninventory system
with reliability considerations. They consider multiple disruptions and cases where new disruption may or may not
affect the recovery plan of earlier disruptions.
3. ANALYIS AND OBSERVATIONS
3.1. Types of risks
The analysed literature suggests four basic types of disruptive
risks that should be considered by SC managers:

Production and transportation disruptions, especially

in global SCs
Product-related disruption risks due to high degree
of supplier specialization
Information flow disruptions
Disruptions in financial flows

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First, globalization and outsourcing trends make SC more

complex and less observable and controllable. According to
complexity theory, such systems become more sensitive to
disruptions. Special focus in this area is directed to disruptions in transportation channels. Second, the efficiency paradigms of lean processes, single sourcing, etc. have failed in
disruption situations. As a consequence, SC became more
vulnerable even to minor perturbations. Any disruption in a
global SC, especially in its supply base, does immediately
affect the entire SC. Third, with the increased specialization
and geographical concentration of manufacturing, disruptions
in one or several nodes affect almost all the nodes and links
in the SC. Fourth, IT became the crucial element of global
SCs, since disruptions in IT may have significant impacts on
disruptions in material flows (Soroor et al. 2009, Tang and
Musa 2011). Fifth, contracting, costs, and profit coordination
issues are important for analyzing disruptive risks in the SCs.
3.2 Pro-active SC protection
Next, recent literature discussed different risk mitigation
strategies. Six elements of pro-active SC protection can be
classified:

Back-up suppliers, depots and transportation channels

Inventory and capacity buffers
SC localization and segmentation
Product and process flexibility
Coordination and contracting
Back-up IT

3.3 Re-active SC recovery policies

Reaction to disruptive events can be performed in five basic
ways depending on the severity of disruptions:

Parametrical adaptation
Process and product adaptation
Structure adaptation
System adaptation

Parametrical adaptation represents the simplest case where

stabilization and recovery are possible through tuning of
some critical parameters like lead-time or inventory. Process
and product adaptation refer to flexibility reserves. Structure
adaptation considers back-up supplier on contingency transportation plans. System adaption is the highest level of adaptation where strategy and organization have to be recovered.
Re-active approaches can be based either on purely recovery
policies without any SC pro-active protection or integrated in
or with the pro-active approaches. We focus on the second
case. Many pro-active techniques actually include the reactive elements. MIP formulations with facility fortification
consider product shift to back-up suppliers if primary suppliers are disrupted. MPC models implement rolling planning
policy and include the re-planning elements explicitly. Inventory control models also suggest policies for recovery. Simulation techniques consider what-if scenarios which can be
used by SC managers in the case of disruption occurrence to
quickly estimate the recovery policies and impacts on operational and financial performance.

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3.4. Method overview

MIP models provide interesting managerial insights and can
be successfully used in the cases where disruption probabilities can be fairly estimated. Second, most of the MIP solutions suggest opening new facilities. That increases total costs
even if transportation costs are not increased.
However, as pointed out in recent articles by Chopra and
Sodhi (2014) and Simchi-Levi et al. (2014) it is almost impossible to determine probability of factory fires, natural disasters, or piracy in a certain region. That is why one has to
concentrate mostly on mitigation strategies and identification
of the impact of disruption on financial and operational performance regardless of what caused the disruption.
In addition, a general shortcoming of the existing studies, as
pointed out by Cui et al. (2010) and Li et al. (2013) is that the
dynamics of the SC execution is not considered. The disruptions are mostly considered as static events, without taking
into account their duration, stabilization/ recovery policies.
Similar to MIP, the assumptions on known reliability of the
suppliers and parametric probabilities make the stochastic
programming models generally difficult to handle and implement. In addition, scenario-based approach exponentially
increases the number of variables and constraints in stochastic formulations. For some practical challenges and solutions
in this direction, we refer to van Delft and Vial (2004).
Generally the application of fuzzy and robust optimization is
related mostly to operational risks (e.g., demand fluctuations)
and tactical planning level with some episodical interfaces to
SCD. The same can be stated for MPC models. In addition,
as general shortcoming of robust optimization, the tendency
to quite pessimistic solution has to be named. In practice, it is
hardly to assume that managers will accept SCDs with low
efficiency and high fixed-costs just in the anticipation of the
worst-case.
Summarizing, management science and operations research
along with system dynamics and control theory contain a
number of useful methods that can be used for analysis and
for mitigating the ripple effect. Different methods are suited
to different problems. No single technique is likely to prove a
panacea in this field. While mathematical and stochastic optimization have their place at the strategic and tactical level at
SC design and planning stages, they fail to throw much light
on the dynamic behaviour of the SC as a whole. The implications of strategic SC design and tactical plans on SC performance at the execution and recovery stage can be enhanced
by using models based on the dynamics of the execution
processes.

The research described in this paper is partially supported by

the Russian Foundation for Basic Research (grants 13-0700279, 13-08-00702, 13-08-01250, 13-06-00877, 13-0712120--, 15-29-01294-ofi-m, 15-07-08391, 15-0808459), grant 074-U01 supported by Government of Russian

Federation), Program 5-100-2020 supported by Government of Russian Federation, Department of nanotechnologies

and information technologies of the RAS (project 2.11), by
ESTLATRUS projects 1.2./ELRI-121/2011/13 Baltic ICT
Platform and 2.1/ELRI-184/2011/14 Integrated Intelligent
Platform for Monitoring the Cross-Border NaturalTechnological Systems
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