A Model to Evaluate Supply Chains in Disruption Events

Overview & Synopsis

Supply chain risk management is becoming increasingly necessary due to large-scale disasters. However, there is a trade-off between the long-term benefits of a supply chain and the disruption mitigation costs. Therefore, it is difficult to justify the high cost of risk countermeasures against such rare disruptions. Previous studies have discussed reducing risk in terms of mitigation and responsiveness to disruption events; however, many companies maintain low inventories and a single source supplier represented by just-in-time or lean manufacturing. Through interviews, we found that in addition to providing long-term benefits, maintaining low inventory can increase the efficiency of recovery activities. This study clarifies the effectiveness of a buffer inventory while considering risk mitigation and responsiveness by creating an evaluation model. A simulation model is used to determine the relationship between disruption time and buffer inventory.