Disruption Tails and Revival Policies in the Supply Chain

We study capacity disruption and recovery policy impacts on supply chain (SC) performance. Discrete event simulation methodology is used for analysis with real company data and real disruptions. Two novel findings are shown. First, disruption-driven changes in SC behaviour may result in backlog and delayed orders, the accumulation of which in the post-disruption period we call ‘disruption tails’. A transition of these residues into the post-disruption period causes the post-disruption SC instability, resulting in further delivery delays and non-recovery of SC performance. Second, a smooth transition from the contingency policy through a special ‘revival policy’ to the normal operation mode allows the negative effects of the disruption tails to be partially mitigated. These results suggest three managerial insights. First, contingency policies need to be applied during the disruption period to avoid disruption tails. Second, recovery policies need to be extended towards an integrated consideration of both disruption and the post-disruption periods. Third, revival policies need to be developed for the transition from the contingency to the disruption-free operation mode. A revival policy intends to mitigate the negative impact of the disruption tails and stabilize the SC control policies and performance. The experimental results suggest the revival policy should be included in the SC resilience framework if the performance cannot be recovered fully after the capacity recovery.