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Contingent Management of Supply Chain Disruption: Effects of Dual or Triple Sourcing

Davarzani, Hoda LU ; Zegordi, Seyed Hessameddin and Norrman, Andreas LU (2011) In Scientia Iranica 18(6). p.1517-1528
Abstract
This paper studies a single product setting in which a firm can source from multiple suppliers. One supplier has unreliable capacity while other suppliers are reliable but have lower product quality. The addressed context (where a case study has been made) is disruptions due to sanctions which cause failure in the supply from the unreliable source. The important question which emerges here is how the companies should use different strategies for single/dual/multiple sourcing to handle those potential disruptions.

In this paper two possible strategies of dual and triple sourcing are addressed and compared, when the demand is sensitive to the price and level of supply risk. Dual sourcing provides the firm with the opportunity of... (More)
This paper studies a single product setting in which a firm can source from multiple suppliers. One supplier has unreliable capacity while other suppliers are reliable but have lower product quality. The addressed context (where a case study has been made) is disruptions due to sanctions which cause failure in the supply from the unreliable source. The important question which emerges here is how the companies should use different strategies for single/dual/multiple sourcing to handle those potential disruptions.

In this paper two possible strategies of dual and triple sourcing are addressed and compared, when the demand is sensitive to the price and level of supply risk. Dual sourcing provides the firm with the opportunity of rerouting (from a low quality supplier) after disruption. However, problems of monopoly rise after the disruption and the buying firm lose bargaining power. Whereas, in triple sourcing, the setup cost could be higher, but after the disruption there would still be competition between two suppliers and the price would not increase unreasonably. The main focus of current work is on defining the share of each supplier, and finding suitable sourcing policy (single, dual or triple) to apply for different probabilities of disruption. The proposed model is applied in decision making process of a studied supply chain in automotive industry. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
sourcing strategy, supply chain disruption, sanction, triple-sourcing, dual-sourcing
in
Scientia Iranica
volume
18
issue
6
pages
1517 - 1528
publisher
Office of Scientia Iranica, Sharif University of Technology
external identifiers
  • wos:000300174500049
  • scopus:84855905385
ISSN
1026-3098
DOI
10.1016/j.scient.2011.02.001
language
English
LU publication?
yes
id
7fc40fbb-4718-4d44-bcfc-85414db75c63 (old id 1887869)
date added to LUP
2011-04-05 11:50:51
date last changed
2017-03-12 03:46:57
@article{7fc40fbb-4718-4d44-bcfc-85414db75c63,
  abstract     = {This paper studies a single product setting in which a firm can source from multiple suppliers. One supplier has unreliable capacity while other suppliers are reliable but have lower product quality. The addressed context (where a case study has been made) is disruptions due to sanctions which cause failure in the supply from the unreliable source. The important question which emerges here is how the companies should use different strategies for single/dual/multiple sourcing to handle those potential disruptions. <br/><br>
In this paper two possible strategies of dual and triple sourcing are addressed and compared, when the demand is sensitive to the price and level of supply risk. Dual sourcing provides the firm with the opportunity of rerouting (from a low quality supplier) after disruption. However, problems of monopoly rise after the disruption and the buying firm lose bargaining power. Whereas, in triple sourcing, the setup cost could be higher, but after the disruption there would still be competition between two suppliers and the price would not increase unreasonably. The main focus of current work is on defining the share of each supplier, and finding suitable sourcing policy (single, dual or triple) to apply for different probabilities of disruption. The proposed model is applied in decision making process of a studied supply chain in automotive industry.},
  author       = {Davarzani, Hoda and Zegordi, Seyed Hessameddin and Norrman, Andreas},
  issn         = {1026-3098},
  keyword      = {sourcing strategy,supply chain disruption,sanction,triple-sourcing,dual-sourcing},
  language     = {eng},
  number       = {6},
  pages        = {1517--1528},
  publisher    = {Office of Scientia Iranica, Sharif University of Technology},
  series       = {Scientia Iranica},
  title        = {Contingent Management of Supply Chain Disruption: Effects of Dual or Triple Sourcing},
  url          = {http://dx.doi.org/10.1016/j.scient.2011.02.001},
  volume       = {18},
  year         = {2011},
}