Critical risks in global supply networks: A static structure and dynamic propagation perspective

Arising from widespread outsourcing and, in particular, offshoring, goods and services are increasingly provided by supply networks that rely on global logistic systems. While the risks and uncertainties involved in this strategy have been widely acknowledged in the literature on interorganizational networks and supply chain management, labor conditions and labor relations—and related human resource management issues—have thus far been neglected. Starting from a perspective that takes into consideration that global supply networks are not only confronted with calculable risks but also genuine uncertainties, we explore the conditions under which labor may constitute a source as well as a means for dealing with risk and uncertainty. The study is based on a review of the relevant interorganizational network and supply chain management literature and is informed by an investigation of International Framework Agreements (IFAs) in 10 European corporations and their supply networks.IFAs—in addition to unilateral codes of conduct—could be used to detect and cope with labor‐related risk and uncertainties. However, our findings reveal that this is not the case. This leads to some tentative theoretical conclusions and implications for dealing with risk and uncertainty in global supply networks.

Global supply networks are becoming increasingly fragmented and complex. At the same time, societal pressures surrounding the environmental accountability of firms are growing, with an increasing number of environmental scandals related to supply networks. Traditional governance frameworks of green supply chain management (GSCM) may be insufficient to deal with this new reality, because they do not consider supply network structure/complexity, and how these factors interact with different governance mechanisms. Our study takes into account the complex interplay between GSCM governance mechanisms, supply network structure/complexity, and environmental performance. We introduce a series of theoretical propositions grounded in an extensive review of the GSCM, supply networks, network complexity, and organizational design literatures. In particular, we argue that supply network structure and complexity directly affect GSCM effectiveness, but that these effects will be contingent upon the type of governance mechanism applied (formal or informal).

The COVID-19 pandemic has had a tremendous impact on global supply networks, revealing vulnerabilities that were not previously recognized and creating interruptions in the transportation of goods and services around the world. This review research makes an effort to investigate the impact that COVID-19 had on global supply chains, determine the most important things that were learned from it, and suggest ways to better prepare for such events in the future. The research paper investigates a wide range of subtopics, some of which include the vulnerabilities that have been uncovered as a result of the pandemic, the role that technology and digitalization play, the requirement of resilience and agility, the requirement for diverse sourcing and local manufacturing, as well as the importance of working together and effectively managing risk. This study explores these features and provides useful insights into the challenges faced by global supply chains during the pandemic. It also provides unique insights into the problems faced by global supply networks during the pandemic and makes suggestions to strengthen their resilience and adaptation in the event of future disruptions.

Maritime ports are critical nodes in global supply network. Marine terminals provide the interface and connection between waterside and landside transport modes for the movement of cargo and passengers. These terminals are exposed to variety of organizational and environmental risks that may disrupt its services and potentially result in large amounts of direct and indirect financial losses. Maritime security investments must consider many perspectives, but the base purpose is to maintain a normal flow of maritime freight and passengers for business continuity. Security investments are made to reduce the risk of service disruptions and to restore operations to prior levels of service following a disruption. It is impractical to provide 100% security against all kinds of disruptions. Hence, resiliency options are needed which will, in case of any disruptive event, aide the facility to bounce back to normal operational capacity with a faster recovery time. An economic resiliency assessment (ERA) framework helps evaluate alternative course of actions and its resiliency benefits for marine terminals. This paper uses a systems thinking approach to create an ERA framework for evaluating cost and benefits for the maritime security investments options. ERA framework template can be applied to many other marine terminals or supply networks to help decision-makers create investment strategies for allocation of available finance in maritime security and business continuity plan.

Beside single cases and research on very particular issues, cultural aspects are mostly neglected within the planning process as well as during the operation of global supply chains and networks. In this article a conceptual framework is developed that integrates cultural issues into the research and practice of supply chain planning and operating. The framework is based on theories of culture, psychology, decision processes and on concepts of SCM and networks. The ideas are supplemented with empirical evidence from case studies. This framework presents an extended view on supply chains and networks and contributes to the field of SCM research.

PurposeGlobalization and advanced manufacturing capabilities changed industrial dynamics. To this end, not only were new retail concepts developed to broaden the distribution toward larger consumer bases, but alternative ways were also sought to reorganize supply networks for a balance between local and global production. Yet, the choice of supply network configurations must be coherent with a fashion companies’ critical success factors. Hence, it is pivotal to understand how such large brand portfolios and global supply networks could be effectively managed in a united way. In this vein, the purpose of this paper is to explain how the triplet of product, brand, and retail channel could affect SC performance, and how the positioning of a luxury company could depend on managerial attitudes.Design/methodology/approachSubsequent to an extensive literature review, 30 most frequently quoted key performance indicators (KPIs) were derived. A Delphi study was then employed to reach a consensus and 17 key KPIs were derived considering the key SC performance areas and marketing dimensions. Survey technique was deployed to examine the impact of strategic combinations of product, brand, and retail channel on SC strategy. Survey results were analyzed through factor analysis where five principal components emerged to represent performance areas. ANOVA technique was then employed to explore the dependence between product-brand-retail channel and key performance areas.FindingsBrand, retail channel, and product directly affect operational performance. The positioning of a fashion company would depend on its management attitude toward strategy segmentation and considered stage of the SC. The respondents’ profile analysis further showed a preference to segment the SC based on products. Interestingly, this finding is not aligned with earlier research (Brun and Castelli, 2008) suggesting that the brand was to become the most relevant driver for SC segmentation.Originality/valueAcademic development and empirical testing is rather rare in the luxury fashion context. Undeniably, SC strategies represent a very relevant issue for fashion companies, and the present study could be considered a first statistical step toward SC segmentation for luxury fashion companies.

The role of equipment supplier in a successful manufacturing process of product components is very important. For this reason, the collaboration between OEM and equipment suppliers should rather go into strategic partnership, covering the whole equipment's lifecycle. This paper presents a PLM framework that aims at improving the suppliers' integration in the Product development process by enhancing the vertical collaboration between OEM and equipment suppliers, grouped in a global supplier network, relating to the equipments development project. This framework could improve the innovative capacities and the technical competencies of suppliers, by means of an efficient horizontal collaboration among a new global supplier network and by providing this network an interface to support collaboration with OEM.

In a multi-tier supply network, sourcing strategy, consisting of supplier selection (SS) and order quantity allocation (OQA) to selected supplier(s), is a critical and challenging task for practitioners. Every player, in every tier of sourcing network, attempts to select quality conscious suppliers and optimise its own inventory cost per unit time for OQA. However, this may results in sub-optimal solution(s) for overall multi-tier supply network. Considering centralised sourcing strategy for SS and OQA may provide global best solution and sustainable supply network. This paper attempts to quantitatively illustrate inventory cost saving for coordinated centralised sourcing strategy for all tiers compared to independent decentralised sourcing strategy at individual tier in the supply network. Suitable mathematical models (single and multi-tier) and corresponding solution framework is used to determine local optima and global best solution for a comparative analysis. A real life electric goods manufacturing industry case study is used to demonstrate significant cost advantage for a centralised as compared to decentralised sourcing strategy. Sensitivity analysis with varied unit material price is also illustrated in this study.

During recent decades, the fashion/clothing sector has become an extremely complex global supply network. Garment production is mainly located in Asia, while many consumers live in Europe and the United States. In addition, materials (fibres) are bought on the world market. At the same time sustainability has become an important topic in the sector. It seems that companies no longer wonder whether or not to manage social and environmental aspects in their supply network but rather how to do so. Several organisations have developed competing labels (product-related), guidelines, codes of conduct and certification schemes (organisation-related) to improve the performance of social and environmental aspects in the supply network. Approaches differ greatly, from cooperation to standardisation and coordination (Forman and Sogaard Jorgensen 2004; Sondergard et al. 2004; Allwood et al. 2007; De Brito et al. 2008; Profas 2008). However, present activities seem to be building on ad hoc decisions and it is hard to distinguish systematic patterns and rational strategies. We do not yet understand sufficiently how global supply chains develop and how sustainable development is integrated in them. The Investment Climate Department of the World Bank Group (World Bank 2003) also concluded that the existing system of implementing corporate social responsibility (CSR) in global supply chains may be reaching its limits in terms of its ability to deliver further sustainable improvements in social and environmental standards. Also the International Chamber of Commerce (2007) along with the Dutch Social and Economic Council (2008) have asked for more attention concerning the implementation of sustainability in supply networks. This chapter reports on a study that addresses this issue in the fashion/clothing industry. Empirical research, based mainly on surveys and case studies, has up till now not succeeded in developing a strong theoretical basis. The frameworks found in the literature (for instance Sarkis 2003; Seuring and Muller 2008) are mainly descriptive, focusing on the pressures and incentives or the strategies and activities found in practice. Rarely do they address the question of why companies facing similar pressures and incentives choose different ambition levels, strategies and related activities. This process of strategy formulation and implementation is, therefore, mostly unexplored.

Two thirds of today's world trade is based on global value chains and supply networks. Purely regional supply chains have become less important in recent decades. The effects of these globalised structures are manifold. On the one hand, they promote employment and generate prosperity. On the other hand, they are beset by extreme social, ecological and economic imbalances. The COVID-19 pandemic has demonstrated the fragility of existing supply chain systems. The lockdown continues to disrupt complex supply chains and many problems of existing production and consumption continue to worsen. COVID-19 is one example of the crises that can shake globally networked supply chains in the short term. Other crises, such as climate change, develop more insidiously and are less immediately recognisable. Different as they are, such crises have one thing in common: they highlight the vulnerability of global social and economic structures and illustrate the impact of global trade on the regions and people of the world. This is precisely where global sustainability strategy comes in - it aims to fundamentally reduce differences and inequalities in opportunities and quality of life. The COVID-19 pandemic has forced the entire world into upheaval, creating an opportunity to make sustainability a central political resilience strategy. In the wake of the Corona pandemic, the discussion about resilient communities has flared up. In order to guarantee supply in the face of such crises, these should be more strongly regional and circular in their economic approach and global and sustainable in their perspective. The aim should be sustainable, transparent, non-exploitative supply chains that guarantee the security of supply to cover basic needs and public services despite sudden changes and crises. This discussion paper draws a future scenario of globally cooperative, circular regional economies that fundamentally reduce global inequalities in opportunities and quality of life, while at the same time permanently preserving the natural foundations of life.

There has been an increasing interest in analyzing the structure of domestic and global supply chains/networks in the past decade. Concerns about potential (systemic) risks resulting from overdependence on global supply networks have been magnified during the lockdowns triggered by the COVID-19 pandemic in the last year. Strengthening local and/or domestic networks may be an adequate approach to overcome the severe economic implications of this overdependence, but it also rises the question of how one can measure the strength of domestic supply/production networks and design an appropriate structure. The objective of this paper is to propose a method for measurement and to provide a first-cut analysis with this method on a sample of economies. Building on ecological network analysis, we borrow the Finn cycling index from its toolbox and show a ranking of countries with respect to the strength of their domestic production networks based on this index. The results suggest that the countries are very heterogeneous both in terms of the level of cycling index and its sectoral decomposition. Using panel-econometric techniques, we point out the role of the openness and structural asymmetry in shaping this strength, also controlling for other macroeconomic characteristics of the economies. The estimates reveal that openness has a negative, while asymmetry has a positive effect on this index, but other country-specific characteristics also play a role in shaping the systemic operation of national economies as measured by the Finn cycling index.

Developed countries, led by the United States and the European Union, have stepped up security review of supply chains and adopted a series of restrictive policies and protectionist measures to reshape a more secure, sustainable, and risk-controllable supply chain. A key objective of the West’s supply chain strategy is to wean their economies off Chinese influence by resorting to discriminatory policies. Supply chain interventionism on national security grounds violates market rules on which the global supply chain is based, and also runs counter to the principles of nondiscrimination and liberalization embedded in the multilateral trade governance architecture. Global supply chain reshuffles will take time and incur huge costs, leaving ample room for Beijing to make necessary adjustments and bolster its position in global supply networks.

Up to 80 % of global commodity production comes from smallholdings of less than 0.5 ha. Yet commodity crops may be a substantial proportion of a country’s exports, and feed into global supply networks. Pest risks thus have consequences at local, national and global levels. We consider three categories of risk in global commodity networks: introduction of pests to new areas, upsurges of established pests and the risks arising from management efforts. In each category we provide case studies and examples, and consider policy options. Increased travel, trade and transport increase the risks of introduction. Commodity specific biosecurity plans are required for preventing introductions, including analysis of the specific risks (pest pathways) and preparation of emergency responses. Regional and international cooperation is essential. Upsurges can be caused by crop management, evolution of new strains, and environment change. National systems must be responsive to detect problems and address them quickly. Capacity building for surveillance and diagnostics, and the development and dissemination of integrated pest management methods are needed. Investment in research and extension for the agricultural sector is vital. Risks linked with management efforts, specifically, the risk from agrochemicals are considered. Concerns in developed countries over food safety and environmental damage can place constraints on pest management. Failure to comply leads to loss of markets and buyer confidence. Policies that favour lower-risk pest management methods are needed, but are often lacking.

Identifying agricultural disaster risk regions before the occurrence of climate-related disasters is critical for early mitigation planning. This paper aims to identify these regions based on data from the Food and Agriculture Organization of the United Nations (FAO), the bilateral and multilateral trade network data of the World Integrated Trade Solution(WITS) and the agent-based economic model Acclimate. By applying a uniform forcing across agricultural sectors of some breadbasket regions (US, EU and China), when single and simultaneous extreme weather events occur, such as the 2018 European heatwave, production and consumption value losses and gains are calculated at regional and global levels. Comparing the FAO data sets, WITS, and Acclimate's production value losses, the results show a strong dependence of agricultural production losses on a region's output and connectivity level in the global supply and trade network. While India, Brazil, Russia, Canada, Australia, and Iran are highly vulnerable, the imposition of export restrictions to compensate for demand shortfalls makes Sub-Saharan Africa the most vulnerable region, as it is heavily dependent on agricultural imports. In addition, simultaneous extreme weather events can exacerbate the loss of value of agricultural production relative to single extreme weather events. Agricultural practices to increase production such as smart farming, increased investment in plantation agriculture, and diversification of trading partners can help mitigate future food security risks in Sub-Saharan Africa and other agricultural import-dependent regions.

This paper presents a conceptual model for the creation and operation of supply networks. Existing conceptual research relating to interorganizational relationships and networks is reviewed in terms of its relevance to understanding supply networks; this research is drawn from the fields of strategic management, channel management, industrial marketing and purchasing, organizational behaviour and supply-chain management. The different perspectives each field has on networks are highlighted. Contributions made by each in assisting to understand supply networks are discussed and synthesized. Findings from an exploratory survey are used to structure the design of a conceptual model for analysing the processes involved in the creation and operation of supply networks. The authors identify nine different types of networking activities and discuss the nature of these activities in the context of supply. Four different types of contextual factors relating to supply networks are identified. The model is tested in eight in-depth case studies and a validating survey of 58 focal firm networks. It is concluded that it provides a robust structure that enabled complex, cross-case analysis of multi-variable, multi-disciplinary data from interorganization product/service supply networks, but that further testing by other researchers is required.