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      Ripple Effect in the Supply Chain Network: Forward and Backward Disruption Propagation, Network Health and Firm Vulnerability

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          Highlights

          • We examine the disruption propagation in supply chains

          • We use agent-based modeling to delineate disruption propagation behavior

          • We explore the effects of forward and backward disruption propagation

          • We propose management strategies based on modeling results

          • We analyze investment strategies in a dual-focal supply network

          Abstract

          A local disruption can propagate to forward and downward through the material flow and eventually influence the entire supply chain network (SCN). This phenomenon of ripple effect, immensely existing in practice, has received great interest in recent years. Moreover, forward and backward disruption propagations became major stressors for SCNs during the COVID-19 pandemic triggered by simultaneous and sequential supply and demand disruptions. However, current literature has paid less attention to the different impacts of the directions of disruption propagation. This study examines the disruption propagation through simulating simple interaction rules of firms inside the SCN. Specifically, an agent-based computational model is developed to delineate the supply chain disruption propagation behavior. Then, we conduct multi-level quantitative analysis to explore the effects of forward and backward disruption propagation, moderated by network structure, network-level health and node-level vulnerability. Our results demonstrate that it is practically important to differentiate between forward and backward disruption propagation, as they are distinctive in the associated mitigation strategies and in the effects on network and individual firm performance. Forward disruption propagation generally can be mitigated by substitute and backup supply and has greater impact on firms serving the assembly role and on the supply/assembly networks, whereas backward disruption propagation is normally mitigated by flexible operation and distribution and has bigger impact on firms serving the distribution role and on distribution networks. We further analyze the investment strategies in a dual-focal supply network under disruption propagation. We provide propositions to facilitate decision-making and summarize important managerial implications.

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          Most cited references41

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          Predicting the impacts of epidemic outbreaks on global supply chains: A simulation-based analysis on the coronavirus outbreak (COVID-19/SARS-CoV-2) case

          Highlights • Epidemic outbreaks are a special case of supply chain (SC) risks. • We articulate the specific features of epidemic outbreaks in SCs. • We demonstrate a simulation model for epidemic outbreak analysis. • We use an example of coronavirus COVID-19 outbreak.
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            The impact of digital technology and Industry 4.0 on the ripple effect and supply chain risk analytics

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              Information Distortion in a Supply Chain: The Bullwhip Effect

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                Author and article information

                Journal
                Eur J Oper Res
                Eur J Oper Res
                European Journal of Operational Research
                Published by Elsevier B.V.
                0377-2217
                0377-2217
                10 October 2020
                10 October 2020
                Affiliations
                [a ]Dept. of Information Technology & Decision Sciences, Old Dominion University, Norfolk, VA 23529, United States
                [b ]Dept. of Management Information Systems, West Virginia University, Morgantown, WV 26506, United States
                [c ]Berlin School of Economics and Law, Department of Business Administration, Professor for Supply Chain and Operations Management, Badensche Str. 50-51, 10825 Berlin, Germany
                Author notes
                [* ]Corresponding author: Tel: +49 30 308771155
                [1]

                Tel: +1 757 683 3110

                [2]

                Tel +1 757 683 5816

                [3]

                Tel: +1 304 293 8911

                Article
                S0377-2217(20)30857-2
                10.1016/j.ejor.2020.09.053
                7546950
                33071441
                fe75f0b8-215c-4114-8d30-69b915fcbe1d
                © 2020 Published by Elsevier B.V.

                Since January 2020 Elsevier has created a COVID-19 resource centre with free information in English and Mandarin on the novel coronavirus COVID-19. The COVID-19 resource centre is hosted on Elsevier Connect, the company's public news and information website. Elsevier hereby grants permission to make all its COVID-19-related research that is available on the COVID-19 resource centre - including this research content - immediately available in PubMed Central and other publicly funded repositories, such as the WHO COVID database with rights for unrestricted research re-use and analyses in any form or by any means with acknowledgement of the original source. These permissions are granted for free by Elsevier for as long as the COVID-19 resource centre remains active.

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                Sociology
                ripple effect,forward disruption propagation,backward disruption propagation,supply chain network,firm vulnerability,resilience investment

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