Adapting supply chain operations in anticipation of and during the COVID-19 pandemic

Abstract

This article investigates the impacts of the COVID-19 pandemic and their proactive mediation by adaptive operational decisions in different network design structures in anticipation of and during the pandemic. In generalized terms, we contribute to the understanding of the effect of preparedness and recovery decisions in a pandemic setting on supply chain operations and performance. In particular, we examine the impact of inventory pre-positioning in anticipation of a pandemic and the adaptation of production-ordering policy during the pandemic. Our model combines three levels, which is not often seen jointly in operations management literature, i.e., pandemic dynamics, supply chain design, and operational production-inventory control policies. The analysis is performed for both two- and three-stage supply chains and different scenarios for pandemic dynamics (i.e., uncontrolled propagation or controlled dispersal with lockdowns). Our findings suggest that two-stage supply chains exhibit a higher vulnerability in disruption cases. However, they are exposed to a lower system inertia and show positive effects at the recovery stage. Supply chain adaptation ahead of a pandemic is more advantageous than during the pandemic when specific operational recovery policies are deployed. We show that it is instructive to avoid simultaneous changes in structural network design and operational policies since that can destabilize the production-inventory system and result in higher product shortages.