Disruption Tails and Post-Disruption Instability Mitigation in the Supply Chain

Abstract

We study the coordination effects of production and ordering policies in the supply chain (SC) that experiences capacity disruptions and recovery. Discrete-event simulation methodology is used for analysis with real company data and real disruptions. It has been revealed that disruption-driven changes in SC behavior may result in post-disruption instability caused by backlog and delayed orders the accumulation of which in the post-disruption period we call as “disruption tails”. A transition of these residues into the post-disruption period destabilizes the normal operation mode resulting in further delivery delays and non-recovery of SC performance. The results provide evidence that coordinated contingency policies need to be applied during the disruption period to avoid the disruption tails.