The effects of supply chain complexity on resilience – a simulation-based study

Abstract

Background: The aim of the paper is to analyse the effects of disruptions on supply chain performance and overall resilience. In recent years, global supply chains have been under great pressure and faced many challenges, like demand fluctuation, lack of raw materials or supply, disruption of transportation corridors and lockdowns. As a response to this, global companies started to reorganize their supply chains, trying to save and maintain their core operations by reshoring, multiple sourcing or increasing their inventory levels, and thereby reaching a higher level of long-term supplychain sustainability. Methods: The disruptive changes in transportation resources and their overall impact on supply chains and their complexity were explored. By using the simulation tool Simul8, hypotheses on how disruptive events influence supply chain performance were tested. The model tested key performance indicators (KPIs) of 3- and 4-tier supply chains, primarily average lead time in the system, average idle time in process, and resource utilization level. Results: In this study, a standard 3-tier supply chain model was compared with a 4-tier supply chain model to determine how KPIs change when there is disruption to transport and storage capabilities. The results indicate that in case of disruption, the 3-tier supply chain performs better than the 4-tier supply chain, even if the 4th tier is a cross-docking center inserted into the system to be able to react to demand fluctuations quickly. Based on this outcome, complexity does not serve resilience. Conclusions: Based on the simulations performed, recommendations are formulated for practitioners on how to develop the structure of supply chains, taking into account their level of resilience.