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ABSTRACT
The unprecedented nature of the COVID-19 pandemic-the global scope, long-lasting impacts, and the simultaneous supply and demand disruptions-calls for a rethink of supply chain network design beyond what was studied in the literature. This study provides managerial insights on the design and operations of supply chain networks for the new normal. Building on the latest theoretical development in supply chain disruption and using an extensive simulation study based on the data of confirmed COVID-19 cases and lockdown measures, we analyze the dynamics of alternative supply chain network strategies under various pandemic-induced disruption scenarios. Our study highlights the principle of robustness, that a supply chain network should be designed to withstand alternative disruption scenarios that could emerge, which can be achieved through strategic design elements. We find that flexibility offers strategic redundancies to effectively combat the sources of uncertainty that trigger the forward and reverse bullwhip effects. In addition, we find that flexibility complemented with the strategies of preparedness and agility can be especially valuable in robust network. In particular, preparedness (securing emergency backup suppliers) is most effective when flexibility is deployed downstream; whereas, agility (proactive stocking policies in response to imminent disruptions) can be most helpful when flexibility is deployed upstream.
Keywords: COVID-19, supply chain disruption, robust network design, flexibility, agility, preparedness
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1.BACKGROUND
The COVID-19 pandemic has profoundly impacted the health and well-being of humanity, having caused over six million deaths as of October of 2022 (World Health Organization). The crisis has severely affected businesses across the world as well due to lockdowns, trading disruptions, production halts, and consumption patterns changes.
The pandemic has also reminded us, especially the supply chain executives, how tightly global economies are interdependent. As soon as the suppliers in Korea took the hit, manufacturers in Europe went down. As soon as Korean manufacturers were back in action, they had to adjust to the weakened global demand. The average capacity utilization of manufacturing industry in Korea was as low as 68.6% in April-the lowest ever since the 2009 financial crisis (Statistics Korea 2020). While the domestic economy is picking up as the Korean government has found success containing the Coronavirus locally, it is unable to feed the supply chain flow under global lockdown. Japan...