Abstract
Background: COVID-19 has disrupted and adversely affected supply chains worldwide. A global supply chain network that considers disruptions is needed. This study strategically analyzes the economic and structural effects of disruption on a global supply chain network with customs duty and the trans-pacific partnership (TPP) agreement. Methods: We present a cost minimization model which helps in understanding the difficulty of supplying materials or products to factories or customers if the supplier’s cities are facing disruption. This enables us to model and evaluate simultaneous considerations of supplier disruption, customs duty, and TPP in redesigning a global supply chain network. This network is modeled and formulated using integer programming, disruption scenarios, and a sensitivity analysis for customs duty. Results: Regarding the impact of disruptions on suppliers, two patterns emerge in the reconfigured network: direct changes due to supplier disruptions and indirect changes due to factory relocation. The sensitivity analysis for customs duty shows that the TPP has a positive impact on cost maintained, even in the presence of disruptions. Conclusions: Suppliers should be switched depending on the scale of disruption; when many distant suppliers need to be switched, the factory should be relocated to the country where these suppliers are located.
Highlights
A global supply chain is a series of links between procurement, production, storage, transportation, and sales across national borders [1]
The customs duty of parts depends on their procurement cost; with a higher customs duty, the total customs duty of parts is increased. These results show that the increment rate in the total cost for maintaining the factory in operation without relocation depends greatly on the scenario
Size: The disruption scale affects the total cost increment and the factory relocation from one of the selected factories at baseline, which is in China, to the market country, which is in the US
Summary
A global supply chain is a series of links between procurement, production, storage, transportation, and sales across national borders [1]. Have changed their suppliers from China to other countries due to the impact of tariffs imposed by the U.S.-China trade friction One such agreement for a more globalized supply chain is the trans-pacific partnership (TPP) [4]. The TPP was never ratified by the U.S, which pulled out of the partnership in January 2017; the remaining 11 countries undertook their own agreement [5]. This agreement has been termed as the comprehensive and progressive agreement for trans-pacific partnership (CPTPP), which was agreed upon in January 2018.
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