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The Effect of COVID-19 Pandemic on the Global Supply Chain Operations: A System Dynamics Approach

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  • Mojtaba Hajian Heidary

Abstract

Epidemic outbreaks are one of the important sources of the risk in the global supply chains. Before the COVID-19 pandemic, global industries that were unprepared for disruptions experienced a decline due to the pandemic. A global supply chain is a complex system set of dynamics that could be analyzed by the system dynamics approach. In this article, the impact of the recent pandemic on the global supply chain is simulated in different scenarios. A system dynamic model is developed to carry out the simulations. In order to consider the impact of the pandemic on the exogenous and endogenous variables, a force majeure factor is defined in the model. Global features considered in this article are the export and import operations, the exchange rate and the rate of tariff. In this article, a scenario analysis is performed to analyze two important factors of the global supply chain: force majeure factor and delivery delay. Results showed that improving the flexibility of production capacity is one of the important strategies that global supply chain managers should pursue. JEL Codes: F23, P45, C15, C63, E37, F17

Suggested Citation

  • Mojtaba Hajian Heidary, 2022. "The Effect of COVID-19 Pandemic on the Global Supply Chain Operations: A System Dynamics Approach," Foreign Trade Review, , vol. 57(2), pages 198-220, May.
    • Handle: RePEc:sae:fortra:v:57:y:2022:i:2:p:198-220
    DOI: 10.1177/00157325211060932
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    References listed on IDEAS

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    1. Deepankar Sinha & Virupaxi Bagodi & Debasri Dey, 2020. "The Supply Chain Disruption Framework Post COVID-19: A System Dynamics Model," Foreign Trade Review, , vol. 55(4), pages 511-534, November.
    2. Sanjoy Kumar Paul & Priyabrata Chowdhury, 2020. "Strategies for Managing the Impacts of Disruptions During COVID-19: an Example of Toilet Paper," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 21(3), pages 283-293, September.
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    Cited by:

    1. Moumita Basu & Rilina Basu & Ranjanendra Narayan Nag, 2024. "Understanding Pandemic Crisis in a Dependent Economy: A Structuralist Analysis," Foreign Trade Review, , vol. 59(4), pages 562-587, November.
    2. Tomasz Rokicki & Piotr Bórawski & Aneta Bełdycka-Bórawska, 2023. "Disruptions in the COVID-19 Pandemic in the Supply Chains of the Automotive Industry as Crucial for the Polish Economy," Sustainability, MDPI, vol. 16(1), pages 1-19, December.
    3. Haibo Wang & Lutfu Sagbansua & Jaime Ortiz, 2023. "Assessing the Effect of the Magnitude of Spillovers on Global Supply Chains Using Quantile Vector Autoregressive and Wavelet Approaches," Sustainability, MDPI, vol. 15(19), pages 1-28, October.
    4. Tomasz Rokicki & Piotr Bórawski & Aneta Bełdycka-Bórawska & András Szeberényi & Aleksandra Perkowska, 2022. "Changes in Logistics Activities in Poland as a Result of the COVID-19 Pandemic," Sustainability, MDPI, vol. 14(16), pages 1-24, August.

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    More about this item

    Keywords

    Global supply chain; COVID-19 pandemic; system dynamics; simulation;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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