Epidemic impacts on supply chains—analysis paper

March 30, 2020 Gavin Wilkinson

Epidemic impacts on supply chains—analysis paper

Join us online for our webinar: Identifying Unknown Risks In Your Supply Chain Through Analytics. Attendees will also receive our supply chain risk management toolkit after the webinar. The kit provides a deeper dive into the webinar topic and shows how science and business tackle disruptive risks using digital supply chain design, analysis, and optimization.

When almost 25% of the world’s population is ordered to stay at home how can global supply chains mitigate the associated risks? Can anyone, or any company, be prepared for a global pandemic like the COVID-19 Coronavirus outbreak?

In a now eerily prescient exchange last September, Micah Zenko asked a vice president for risk at a Fortune 100 company in Washington, D.C “What are you most worried about?” The reply came without hesitation “A highly contagious virus that begins somewhere in China and spreads rapidly.”

Furthermore, the vice president, whose company has offices throughout East Asia, went on to describe the preventative mitigating steps the company had adopted to counter this potential threat.

The vision and planning of the vice president left an impression on Zenko who goes on to note that ‘Most leaders lack the discipline to do routine risk-based horizon scanning, and fewer still develop the requisite contingency plans. Even rarer is the leader who has the foresight to correctly identify the top threat far enough in advance to develop and implement those plans.’

So, people and companies can foresee and prepare, but how do they achieve this?

Prof. Dr. Dmitry Ivanov presents a possibility in a paper on the impacts of COVID-19 on supply chains. It identifies specific epidemic risks for supply chains, demonstrates the usefulness of simulation-based analysis, and promotes the need for a guided framework when developing pandemic plans for supply chains.

In his analysis, Ivanov articulates the specific features of supply chain risks that are caused by epidemic outbreaks. Among his many observations, he notes the ripple effect of disruption and how disruptions simultaneously affect supply, demand, and logistics infrastructure.

The paper also demonstrates, with anyLogistix software, how simulation helps examine and predict the impacts of epidemic outbreaks on supply chain performance. A major observation being the timing of opening and closing facilities having a greater impact on supply chain performance than upstream disruption or the speed at which the epidemic spreads.

Using simulation, Ivanov questions:

  • What is the impact of the epidemic outbreak on supply chain performance?
  • How long does it take for a supply chain to recover after an epidemic outbreak?
  • How long can a supply chain sustain such a disruption?
  • What is the role of the scope and timing of disruption propagations?
  • Which operating policy most efficiently copes with disruptions at different levels of severity of epidemic dispersal?
  • What are the most critical scenarios of epidemic propagation?

The paper shows how analysis is useful for identifying the right and wrong methods for mitigation and preparation and also how it helps determine recovery policies in the wake of an epidemic.

Read the paper

Predicting the impacts of epidemic outbreaks on global supply chains: A simulation-based analysis on the coronavirus outbreak (COVID-19/SARS-CoV-2) case. [Paper]

As mentioned in the paper, simulation can be used by supply chain decision-makers to predict the operational and long-term impacts of epidemic outbreaks and help to develop pandemic supply chain plans. To learn more, take a look at these materials:

  • Managing Risks in Supply Chains with Digital Twins and Simulation [Whitepaper]
  • Logistics Preparedness for Disaster Response [Case study]
  • Supply Chain Risk Management [Overview]