Horizontal collaboration between suppliers to mitigate supply chain disruption: A secure resource sharing strategy

Abstract

Resource sharing is a flexible recovery strategy that has attracted attention with the outbreak of global disruption. Horizontal cooperation could lead to mutual benefits and reduce the negative consequences during the recovery period. This paper emphasizes the advantages of sharing resources between two competing suppliers under disruption. Suppliers share a secure source of inventory to absorb the shocks of disruption. The stability of relationships between suppliers is sensitive to several factors. Accordingly, an evolutionary game model is developed followed by a replicator dynamic analysis to study the stability of strategies under disruption scenarios. A hybrid agent-based system dynamics framework is built using AnyLogic software to simulate the relationships, interactions, and the effect of parameters in the adopted strategies of suppliers. Compared with mutual incentives and penalty costs, findings indicate that the value of secure resources and the number of shortages have higher impacts on the stability of cooperation. A higher rate of shortages could undermine collaboration. Results show that the initial mindset of suppliers to follow a collaborative approach is a key driver for the stable implementation of collaborative resource sharing. This paper highlights the benefits of implementing new technologies to improve supply flexibility through horizontal integration with competitors.