Systems thinking for modeling risk propagation in supply networks

Abstract

Large scale systems like supply chains are growing more global and complex. Quantifying supply chain risks is challenging due to their uncertain nature. Understanding of the risk propagation is expected to provide new directions for effective supply chain risk management. Using systems thinking approach for modeling risk propagation in supply chain, we have developed a conceptual understanding of risk propagation levels and dimensions. A case study of the Japanese tsunami (2011) has been analyzed and presented in a multi-dimensional perspective to validate the conceptual development of risk propagation. Key supply chain risks and their approximate risk propagation durations are identified for a typical natural disaster disrupting global supply chain network. Case study has validated the classification of risks based on their propagation zones in supply network. © 2011 IEEE.