IDEAS home Printed from https://ideas.repec.org/a/eee/jomega/v73y2017icp114-124.html
   My bibliography  Save this article

Building up Resilience in a Pharmaceutical Supply Chain through Inventory, Dual Sourcing and Agility Capacity

Author

Listed:
  • Lücker, Florian
  • Seifert, Ralf W.

Abstract

This paper is inspired by a risk management problem faced by a leading pharmaceutical company. Key operational risk mitigation measures include Risk Mitigation Inventory (RMI), Dual Sourcing and Agility Capacity. We study the relationship between these three measures by modeling the drug manufacturing firm that is exposed to supply chain disruption risk. The firm determines optimal RMI levels for assumed Dual Sourcing and Agility Capacity. We quantify the decrease in RMI levels in the presence of Dual Sourcing and Agility Capacity. Furthermore, using an example, we analyze RMI, Dual Sourcing and Agility Capacity decisions jointly. It turns out that RMI and Agility Capacity can be substitutes as long as no Dual Source is available. Once the Dual Source is available, Agility Capacity and Dual Sourcing appear to be substitutes. We further show that for long disruption times, the optimal Dual Source production rate may decrease in the disruption time. Within our modeling framework, we introduce an operational metric that quantifies Supply Chain Resilience. Supply chain disruptions can have a severe business impact and need to be managed appropriately.

Suggested Citation

  • Lücker, Florian & Seifert, Ralf W., 2017. "Building up Resilience in a Pharmaceutical Supply Chain through Inventory, Dual Sourcing and Agility Capacity," Omega, Elsevier, vol. 73(C), pages 114-124.
    • Handle: RePEc:eee:jomega:v:73:y:2017:i:c:p:114-124
    DOI: 10.1016/j.omega.2017.01.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305048317300294
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.omega.2017.01.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ranga V. Ramasesh & J. Keith Ord & Jack C. Hayya & Andrew Pan, 1991. "Sole Versus Dual Sourcing in Stochastic Lead-Time (s, Q) Inventory Models," Management Science, INFORMS, vol. 37(4), pages 428-443, April.
    2. Sawik, Tadeusz, 2014. "Joint supplier selection and scheduling of customer orders under disruption risks: Single vs. dual sourcing," Omega, Elsevier, vol. 43(C), pages 83-95.
    3. Brian Tomlin, 2006. "On the Value of Mitigation and Contingency Strategies for Managing Supply Chain Disruption Risks," Management Science, INFORMS, vol. 52(5), pages 639-657, May.
    4. Liberatore, Federico & Scaparra, Maria P. & Daskin, Mark S., 2012. "Hedging against disruptions with ripple effects in location analysis," Omega, Elsevier, vol. 40(1), pages 21-30, January.
    5. Chen, Junlin & Zhao, Xiaobo & Zhou, Yun, 2012. "A periodic-review inventory system with a capacitated backup supplier for mitigating supply disruptions," European Journal of Operational Research, Elsevier, vol. 219(2), pages 312-323.
    6. Bin Hu & Dimitris Kostamis, 2015. "Managing Supply Disruptions when Sourcing from Reliable and Unreliable Suppliers," Production and Operations Management, Production and Operations Management Society, vol. 24(5), pages 808-820, May.
    7. Kevin B. Hendricks & Vinod R. Singhal, 2005. "Association Between Supply Chain Glitches and Operating Performance," Management Science, INFORMS, vol. 51(5), pages 695-711, May.
    8. Ruiz-Torres, Alex J. & Mahmoodi, Farzad, 2007. "The optimal number of suppliers considering the costs of individual supplier failures," Omega, Elsevier, vol. 35(1), pages 104-115, February.
    9. Berger, Paul D. & Gerstenfeld, Arthur & Zeng, Amy Z., 2004. "How many suppliers are best? A decision-analysis approach," Omega, Elsevier, vol. 32(1), pages 9-15, February.
    10. Silbermayr, Lena & Minner, Stefan, 2014. "A multiple sourcing inventory model under disruption risk," International Journal of Production Economics, Elsevier, vol. 149(C), pages 37-46.
    11. James R. Bradley & Bruce C. Arntzen, 1999. "The Simultaneous Planning of Production, Capacity, and Inventory in Seasonal Demand Environments," Operations Research, INFORMS, vol. 47(6), pages 795-806, December.
    12. Tang, Christopher S., 2006. "Perspectives in supply chain risk management," International Journal of Production Economics, Elsevier, vol. 103(2), pages 451-488, October.
    13. Gad Allon & Jan A. Van Mieghem, 2010. "The Mexico-China Sourcing Game: Teaching Global Dual Sourcing," INFORMS Transactions on Education, INFORMS, vol. 10(3), pages 105-112, May.
    14. Kamran Moinzadeh & Prabhu Aggarwal, 1997. "Analysis of a Production/Inventory System Subject to Random Disruptions," Management Science, INFORMS, vol. 43(11), pages 1577-1588, November.
    15. ManMohan S. Sodhi & Christopher S. Tang, 2012. "Managing Supply Chain Risk," International Series in Operations Research and Management Science, Springer, edition 127, number 978-1-4614-3238-8.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ana Carolina Silva & Catarina Moreira Marques & Jorge Pinho de Sousa, 2023. "A Simulation Approach for the Design of More Sustainable and Resilient Supply Chains in the Pharmaceutical Industry," Sustainability, MDPI, vol. 15(9), pages 1-23, April.
    2. Basu R, Jothi & Abdulrahman, Muhammad D. & Yuvaraj, M., 2023. "Improving agility and resilience of automotive spares supply chain: The additive manufacturing enabled truck model," Socio-Economic Planning Sciences, Elsevier, vol. 85(C).
    3. Liu, Chong & Tang, Jiaze & Zhang, Zhi-Hai, 2024. "Impacts of capacity redundancy and process flexibility on risk mitigation in e-waste recycling supply chain management," Omega, Elsevier, vol. 128(C).
    4. Dmitry Ivanov, 2022. "Viable supply chain model: integrating agility, resilience and sustainability perspectives—lessons from and thinking beyond the COVID-19 pandemic," Annals of Operations Research, Springer, vol. 319(1), pages 1411-1431, December.
    5. Alikhani, Reza & Ranjbar, Amirhossein & Jamali, Amir & Torabi, S. Ali & Zobel, Christopher W., 2023. "Towards increasing synergistic effects of resilience strategies in supply chain network design," Omega, Elsevier, vol. 116(C).
    6. Munir, Muhammad Adeel & Hussain, Amjad & Farooq, Muhammad & Rehman, Ateekh Ur & Masood, Tariq, 2024. "Building resilient supply chains: Empirical evidence on the contributions of ambidexterity, risk management, and analytics capability," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    7. Marta Negri & Enrico Cagno & Claudia Colicchia & Joseph Sarkis, 2021. "Integrating sustainability and resilience in the supply chain: A systematic literature review and a research agenda," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 2858-2886, November.
    8. Antonio Zavala-Alcívar & María-José Verdecho & Juan-José Alfaro-Saiz, 2020. "A Conceptual Framework to Manage Resilience and Increase Sustainability in the Supply Chain," Sustainability, MDPI, vol. 12(16), pages 1-38, August.
    9. Rana Azghandi & Jacqueline Griffin & Mohammad S. Jalali, 2018. "Minimization of Drug Shortages in Pharmaceutical Supply Chains: A Simulation-Based Analysis of Drug Recall Patterns and Inventory Policies," Complexity, Hindawi, vol. 2018, pages 1-14, December.
    10. Hosseini, Seyedmohsen & Ivanov, Dmitry & Dolgui, Alexandre, 2019. "Review of quantitative methods for supply chain resilience analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 285-307.
    11. René Y. Glogg & Anna Timonina-Farkas & Ralf W. Seifert, 2022. "Modeling and mitigating supply chain disruptions as a bilevel network flow problem," Computational Management Science, Springer, vol. 19(3), pages 395-423, July.
    12. Aarti Singh & Ratri Parida, 2022. "Decision-Making Models for Healthcare Supply Chain Disruptions: Review and Insights for Post-pandemic Era," International Journal of Global Business and Competitiveness, Springer, vol. 17(2), pages 130-141, December.
    13. Babai, M. Zied & Ivanov, Dmitry & Kwon, Oh Kang, 2023. "Optimal ordering quantity under stochastic time-dependent price and demand with a supply disruption: A solution based on the change of measure technique," Omega, Elsevier, vol. 116(C).
    14. Chen, Liwei & Dui, Hongyan & Zhang, Chi, 2020. "A resilience measure for supply chain systems considering the interruption with the cyber-physical systems," Reliability Engineering and System Safety, Elsevier, vol. 199(C).
    15. Jędrzej Charłampowicz, 2018. "Supply Chain Efficiency On The Maritime Container Shipping Markets – Selected Issues," Business Logistics in Modern Management, Josip Juraj Strossmayer University of Osijek, Faculty of Economics, Croatia, vol. 18, pages 357-368.
    16. Saha, Esha & Rathore, Pradeep & Parida, Ratri & Rana, Nripendra P., 2022. "The interplay of emerging technologies in pharmaceutical supply chain performance: An empirical investigation for the rise of Pharma 4.0," Technological Forecasting and Social Change, Elsevier, vol. 181(C).
    17. Wissuwa, Florian & Durach, Christian F. & Choi, Thomas Y., 2022. "Selecting resilient suppliers: Supplier complexity and buyer disruption," International Journal of Production Economics, Elsevier, vol. 253(C).
    18. Azadegan, Arash & Modi, Sachin & Lucianetti, Lorenzo, 2021. "Surprising supply chain disruptions: Mitigation effects of operational slack and supply redundancy," International Journal of Production Economics, Elsevier, vol. 240(C).
    19. Dmitry Ivanov & Boris Sokolov, 2019. "Simultaneous structural–operational control of supply chain dynamics and resilience," Annals of Operations Research, Springer, vol. 283(1), pages 1191-1210, December.
    20. Furstenau, Leonardo Bertolin & Zani, Carolina & Terra, Stela Xavier & Sott, Michele Kremer & Choo, Kim-Kwang Raymond & Saurin, Tarcisio Abreu, 2022. "Resilience capabilities of healthcare supply chain and supportive digital technologies," Technology in Society, Elsevier, vol. 71(C).
    21. Iacocca, Kathleen & Mahar, Stephen & Daniel Wright, P., 2022. "Strategic horizontal integration for drug cost reduction in the pharmaceutical supply chain," Omega, Elsevier, vol. 108(C).
    22. Huang, Anqiang & Zhang, Weijian & Shi, Xianliang & Hua, Guowei & Cheng, T.C.E. & Wang, Shouyang, 2024. "Optimal reserve policies for emergency medical supplies: Joint consideration of reserving safety stocks, production capacity, and capital," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 189(C).
    23. Shashi & Piera Centobelli & Roberto Cerchione & Myriam Ertz, 2020. "Managing supply chain resilience to pursue business and environmental strategies," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1215-1246, March.
    24. Shabnam Rekabi & Ali Ghodratnama & Amir Azaron, 2022. "Designing pharmaceutical supply chain networks with perishable items considering congestion," Operational Research, Springer, vol. 22(4), pages 4159-4219, September.
    25. Luo, Sha & Ahiska, S. Sebnem & Fang, Shu-Cherng & King, Russell E. & Warsing, Donald P. & Wu, Shuohao, 2021. "An analysis of optimal ordering policies for a two-supplier system with disruption risk," Omega, Elsevier, vol. 105(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Faiza Hamdi & Ahmed Ghorbel & Faouzi Masmoudi & Lionel Dupont, 2018. "Optimization of a supply portfolio in the context of supply chain risk management: literature review," Journal of Intelligent Manufacturing, Springer, vol. 29(4), pages 763-788, April.
    2. Svoboda, Josef & Minner, Stefan & Yao, Man, 2021. "Typology and literature review on multiple supplier inventory control models," European Journal of Operational Research, Elsevier, vol. 293(1), pages 1-23.
    3. Ray, Pritee & Jenamani, Mamata, 2016. "Mean-variance analysis of sourcing decision under disruption risk," European Journal of Operational Research, Elsevier, vol. 250(2), pages 679-689.
    4. Sarkar, Ashutosh & Mohapatra, Pratap K.J., 2009. "Determining the optimal size of supply base with the consideration of risks of supply disruptions," International Journal of Production Economics, Elsevier, vol. 119(1), pages 122-135, May.
    5. Maheswar Singh Mahapatra & Pravash Chandra Pradhan & J. K. Jha, 2022. "Sourcing decisions with order allocation under supply disruption risk considering quantitative and qualitative criteria," Operational Research, Springer, vol. 22(4), pages 3291-3333, September.
    6. Kelei Xue & Ya Xu & Lipan Feng, 2018. "Managing Procurement for a Firm with Two Ordering Opportunities under Supply Disruption Risk," Sustainability, MDPI, vol. 10(9), pages 1-32, September.
    7. PrasannaVenkatesan, S. & Goh, M., 2016. "Multi-objective supplier selection and order allocation under disruption risk," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 95(C), pages 124-142.
    8. Mishra, Deepa & Sharma, R.R.K. & Kumar, Sameer & Dubey, Rameshwar, 2016. "Bridging and buffering: Strategies for mitigating supply risk and improving supply chain performance," International Journal of Production Economics, Elsevier, vol. 180(C), pages 183-197.
    9. Pritee Ray & Mamata Jenamani, 2016. "Sourcing decision under disruption risk with supply and demand uncertainty: A newsvendor approach," Annals of Operations Research, Springer, vol. 237(1), pages 237-262, February.
    10. Chao Fang & Xiangxiang Liao & Min Xie, 2016. "A hybrid risks-informed approach for the selection of supplier portfolio," International Journal of Production Research, Taylor & Francis Journals, vol. 54(7), pages 2019-2034, April.
    11. Bodendorf, Frank & Sauter, Maximilian & Franke, Jörg, 2023. "A mixed methods approach to analyze and predict supply disruptions by combining causal inference and deep learning," International Journal of Production Economics, Elsevier, vol. 256(C).
    12. Yixin Zhang & Xifu Wang, 2019. "Procurement Strategy with Backup Sourcing under Stochastic Supply Risk," Complexity, Hindawi, vol. 2019, pages 1-15, March.
    13. Abdolreza Roshani & Philip Walker-Davies & Glenn Parry, 2024. "Designing resilient supply chain networks: a systematic literature review of mitigation strategies," Annals of Operations Research, Springer, vol. 341(2), pages 1267-1332, October.
    14. Pritee Ray & Mamata Jenamani, 2016. "Sourcing decision under disruption risk with supply and demand uncertainty: A newsvendor approach," Annals of Operations Research, Springer, vol. 237(1), pages 237-262, February.
    15. Zeng, Amy Z. & Xia, Yu, 2015. "Building a mutually beneficial partnership to ensure backup supply," Omega, Elsevier, vol. 52(C), pages 77-91.
    16. Luo, Sha & Ahiska, S. Sebnem & Fang, Shu-Cherng & King, Russell E. & Warsing, Donald P. & Wu, Shuohao, 2021. "An analysis of optimal ordering policies for a two-supplier system with disruption risk," Omega, Elsevier, vol. 105(C).
    17. Meena, P.L. & Sarmah, S.P. & Sarkar, A., 2011. "Sourcing decisions under risks of catastrophic event disruptions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(6), pages 1058-1074.
    18. Silbermayr, Lena & Minner, Stefan, 2016. "Dual sourcing under disruption risk and cost improvement through learning," European Journal of Operational Research, Elsevier, vol. 250(1), pages 226-238.
    19. Wagner, Stephan M. & Bode, Christoph & Koziol, Philipp, 2009. "Supplier default dependencies: Empirical evidence from the automotive industry," European Journal of Operational Research, Elsevier, vol. 199(1), pages 150-161, November.
    20. Kamalahmadi, Masoud & Parast, Mahour Mellat, 2017. "An assessment of supply chain disruption mitigation strategies," International Journal of Production Economics, Elsevier, vol. 184(C), pages 210-230.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jomega:v:73:y:2017:i:c:p:114-124. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/375/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.