Ordering policies based on information sharing to mitigate the severity of supply chain disruption

Supply chain resilience is an increasing area of interest for researchers and companies as its impact on efficiency and effectiveness of supply chains is mirrored on the ability of enterprises to compete in a fiercely competitive marketplace. Today’s supply chains are more exposed to vulnerability due to the increasing probability of demand and supply uncertainty in complex supply chains. Some authors have reported how the risk of supply chain disruption has grown and how great the consequences of that disruption might be. However, literature have mainly focused on characteristics of supply chain to define the level of the risk or of the resilience to external (terrorist attacks, floods, earthquakes, etc.) and internal (failure of actors inside the supply chain) disruption causes. The paper presents a tactical approach to counteract the supply chain disruption issue, leading to operative rules that mitigate the effects of this negative occurrence. The approach relies on establishing novel ordering policies based on an information sharing approach. Orders placed are divided into two streams, transmitting the real demand information to the whole supply chain echelons and the required inventory adjustments in order to keep a stable inventory. A simulation model of a four echelons supply chain is developed to investigate the effect of a disruptive situation. Four ordering policies of information sharing approach are investigated and evaluated in terms of supply chain adaptability. The simulation results showed how the suggested approach can recover supply chain normal performance by reducing effects on inventories and increasing service levels of the supply chain.