Optimization of COVID-19-Free Supply Chains

Drago Pupavac,Ljudevit Krpan,Robert Maršanić

doi:10.7307/ptt.v33i2.3643

Abstract

The basic aim of this paper is to research the importance of supply chain optimization in the circumstances of the COVID-19 crisis. The research object is the optimum selection of active participants before and after the COVID-19 crisis. The initial hypothesis of this paper is that optimal COVID-19-free supply chains can be formed with a dynamic programming method, the costs of which will be higher than those when this restriction would not exist, but significantly lower than those formed if the optimization principle in the selection of supply chain stakeholders would be neglected. Research results in this scientific discussion paper are based on the analysis and synthesis method, comparative method, and dynamic programming method. The main findings of this paper point to the conclusion that the COVID-19 crisis affected the reduction of goods flow within supply chains, reduction of potential participants in supply chains, reduction of supply chains business safety, and increase in business costs.

Highlights

COVID-19 has fundamentally changed the social and economic life of the world
The initial hypothesis of this paper is that optimal COVID-19-free supply chains can be formed with a dynamic programming method, the costs of which will be higher than those when this restriction would not exist, but significantly lower than those formed if the optimization principle in the selection of supply chain stakeholders would be neglected
Before an appropriate supply chain network is designed, it is important to bear in mind that it is not necessary to take into consideration all potential supply chain participants

Summary

Introduction

COVID-19 has fundamentally changed the social and economic life of the world. Since this new coronavirus was first identified at the end of 2019 in Wuhan, the capital of the Hubei province in Central China, more than 5 million people have been infected in 213 countries and territories, leading to over 333 446 deaths [1]. The world economy decline may amount up to 2%, and in the conditions of the extended pandemic even up to 4% [3]. Unemployment will most probably increase, changing the supply-side shock for the economy to demand-side shock [6]. Questions arising in the whole business world that should be given scientifically based answers are the following: how to ensure survival in the market and gain as much profit as possible in business conditions changed by the COVID-19? Could COVID-19 be the “black swan” event [7] that forces many companies to rethink and transform their global supply chain model from traditional linear supply chain model into a digital supply network? How to provide full visibility within the logistic chain and its ability to respond to shocks on both the supply and demand side? Can protectionist measures result in returning to traditional supply chain models? How to make a supply chain shorter? How to provide full cooperation within a supply chain? How to increase supply chain flexibility? Should a supply chain be based on a larger or smaller number of stakeholders? How to choose active supply chain stakeholders? How to optimize a supply chain?

Objectives

Results

Conclusion