Modeling and analysis of supply chain risk system under the influence of partners' collaboration

Abstract

Confining the focus to individual enterprise, traditional risk management literature seems to echo inadequately in the context of collaborative supply chain, partially due to its exclusion of correlation of risks across companies. In this study, we refine the notion of risk in supply chain and propose a model of supply chain risk system (SCRS) that consciously takes into account the correlation among risks resulting from partners' collaboration. Through analytical inference we found that the level of collaboration contributes to the resilience of supply chain. It implies that collaboration can positively affect the topology of SCRS, thus benefiting supply chain operations in terms of risk management. A simulation program has been developed with aim to demonstrate the practical feasibility of the proposed model. Implemented in simulation, two sets of experiments have been conducted for testing the model in actual business scenarios. The experimental results provide supporting evidence to consolidate the analytical findings. © 2011 IEEE.