The Power of Flexibility for Mitigating Supply Chain Risks

International Journal of Production Economics, Vol. 116, No. 1, pp. 12-27

Posted: 24 Apr 2009

See all articles by Christopher S. Tang

Christopher S. Tang

University of California, Los Angeles (UCLA) - Decisions, Operations, and Technology Management (DOTM) Area

Tomlin Brian

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Date Written: November 1, 2008

Abstract

Lee [2004. The triple - a supply chain. Harvard Business Review 102–112] articulated that alignment, adaptability, and agility are the basic ingredients for managing supply chain risks. While it is clear that flexibility (agility) enhances supply chain resiliency, it remains unclear how much flexibility is needed to mitigate supply chain risks. Without a clear understanding of the benefit associated with different levels of flexibility, firms are reluctant to invest in flexibility especially when reliable data and accurate cost and benefit analysis are difficult to obtain. In this paper, we present a unified framework and 5 stylized models to illustrate that firms can obtain significant strategic value by implementing a risk reduction program that calls for a relatively low level of flexibility. Some of our model analyzes are based on or motivated by models presented in recent literature. Our findings highlight the power of flexibility, and provide convincing arguments for deploying flexibility to mitigate supply chain risks.

Suggested Citation

Tang, Christopher S. and Brian, Tomlin, The Power of Flexibility for Mitigating Supply Chain Risks (November 1, 2008). International Journal of Production Economics, Vol. 116, No. 1, pp. 12-27. Available at SSRN: https://ssrn.com/abstract=1393868

Christopher S. Tang (Contact Author)

University of California, Los Angeles (UCLA) - Decisions, Operations, and Technology Management (DOTM) Area ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

HOME PAGE: http://www.anderson.ucla.edu/x980.xml

Tomlin Brian

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

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