Rethinking the role of partnerships in global supply chains: A risk-based perspective

Abstract

Growing global operations on one hand drive cost down substantially but on the other hand make the supply chain more vulnerable to numerous risks. Confronted with increased risks, companies are more inclined to form partnerships and engage in supply chain collaboration consciously. Such inclination for partnerships simulates thinking of its incentives behind in association with risk management. However, traditional literature, confining its focus to individual enterprise, echoes inadequately on the role of partnerships in supply chain risk management. To bridge this gap, this paper refines the notion of risk in supply chains and proposes a model of supply chain risk system which is able to convey a risk-based view of partnerships in global supply chains. Through analytical inference it is shown that the level of collaboration among partners contributes to the resilience of supply chains. This implies that partnerships can positively affect the integration of supply chain risk system, thus benefiting operations in supply chains. 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 manifest high consistence with the analytical prediction.