Dynamic supply chain risk management plans for mitigating the impacts of the COVID-19 pandemic

Abstract

COVID-19 pandemic prompted supply chain (SC) disruptions and heightened demand for crucial items like facemasks and ventilators. Lockdowns and border closures hindered raw material supply and manufacturing capacity expansion. Consequently, manufacturers faced challenges in inventory, transport, and delivery, resulting in higher shortage costs, elevated SC expenses, and reduced SC efficacy. Using an integrated agent-based model (ABM) and optimisation, this paper examines COVID-19's multifaceted impacts on facemask SCs. It assesses four primary resilience strategies: enhancing manufacturing capacity, improving raw material supply, increasing transportation and distribution facilities, and maintaining dynamic inventory policy. Moreover, the model tested the proposed strategies under different scenarios by optimising the inventory policy and transportation strategies, leading to improved facemask production and delivery during extreme events. Our study found that increased production capacity through an optimal inventory and transportation strategy for a long period reduced the multiple impacts of the pandemic on facemask SCs, resulting in diminished total SC costs and increased consumer access to finished products. Based on demand forecasts, maintaining dynamically optimal reordering points and order up to levels can help maximise raw material supply and inventory levels, thereby minimising risks. Using these findings, future risks related to outbreaks and pandemics can be more effectively planned.