Design of agile supply chains including the trade-off between number of partners and reliability

Abstract

The reliability of supply partners is particularly vital in agile supply chains as it is vulnerable to the inability of a supply partner to meet its high responsiveness and flexibility requirements resulting in the disruption of the whole network. Disruption can have expensive and extensive results for the entire agile supply chain. To mitigate the risk of disruption and improve the reliability of the whole agile supply chain, decision-makers need to pay more attention to supply chain design and construction while simultaneously taking into account the sourcing strategy decisions. This paper proposes a series of models for the design of agile supply chains using dynamic programming modeling. These provide decision-makers with a systematic way of analyzing one of the key decisions of sourcing strategy, namely the trade-off between the number of supply partners and reliability. The efficacy of the models is demonstrated through their application to a Chinese bus and coach manufacturer by way of an empirical illustration. The results show that this approach is effective for this application, and it can be applied in other related decision-making scenarios. The methods offered in this paper provide managers with a practical tool to design their agile supply chains while considering the trade-offs between the number of partners and the reliability of the entire agile supply chain.