Multi-echelon closed-loop supply chain network design and configuration under supply risks and logistics risks

Abstract

Present day supply chains are dynamically expanding with the increase in globalisation but susceptible towards a number of risks too. The risks cause disturbances in supply chain and hinder the movement of products across their stage which ultimately leads to overall increases in supply chain costs. In this paper, a multi-echelon closed-loop supply chain model is considered, where supplier's quality risks (production issues), logistics risks (transportation issues) are mathematically modelled using mixed integer linear programming (MILP) formulation. The paper highlights benefits of adopting the supply chain network design under risk. The comparison of risk and no risk situation is illustrated for a generic closed-loop supply chain network. The findings suggest that risk consideration in supply chain network design is very useful, and its cost is not much higher to the organisation too. The supply chain resilience can be achieved with a moderate risk premium. The firms which can pay 10-13% more will be able to sustain in risk events and their network configuration will be robust under supply and logistics risks happenings.