Supply Chain Reconfiguration for a New Product Development with Risk Management Approach

Abstract

We are living in an era that innovation is increasingly growing and products’ lifetime is decreasing. In this situation new product development is an advantage that makes it possible to survive in the competitive market. However, risks are unavoidable in new product development in any industries. Therefore, identifying, management and mitigation of risks are considered of high significance for companies. By taking risk management into account, this study introduces a new, multi-objective, mathematical model for supply chain configuration in the presence of a new product. The considered supply chain is multi-echelon, multi-resources, multi-period, and multi-product. In order to manage the risk in this supply chain, appropriate mitigation strategies were chosen from various risk response strategies considering their cost and effectiveness as well as influence of each choice on supply chain was also taken into account in the mathematical model. The assumed model explored the optimum tactical and operational SCM decisions. The ability of the model was assessed by solving an example. The result showed that the choice of various response strategies as well as new product production influenced supply chain configuration.