Decision-making models for implementing physical internet to build resilience against supply chain and logistics risks

Abstract

Purpose: This study examines the physical internet (PI) concept, characterised as a global, open, interconnected logistics system, as a robust framework for reducing supply chain and logistics risks and significantly improving overall network resilience. PI addresses the systemic inefficiencies and lack of adaptive capability inherent in traditional dedicated logistics structures. Design/methodology/approach: This study identifies a comprehensive set of 26 supply chain and logistics risks across four major categories: supply, demand, operational and external environmental risks. A quantitative decision-making model was employed to assess the capability of the emerging PI paradigm to mitigate these risks. The effectiveness of PI as a risk mitigation solution is assessed by evaluating the four core components of the logistics web, mobility, distribution, realisation, and supply, against the identified risks using the Fuzzy TOPSIS (Fz–Ts) approach. Findings: The implementation of the PI framework demonstrates significant potential to build resilience, especially against possible supply chain risks. The Fz–Ts analysis, based on expert judgment, quantified the mitigating impact of the PI on major risks. The top three risks prioritised for reduction by PI implementation are logistics outsourcing risks, supplier logistics service risks and risk in custom clearances. The underlying flexibility and greater agility afforded by PI's interconnected logistics services outperform classic models in terms of resilience when facing facility disruptions. Practical implications: New PI capabilities are synthesised through the encapsulation component of the logistics network to address supply chain risks. Organisations in the logistics sector can use the results of this study to develop more effective risk management strategies in the context of PI. Organisations will find PI useful for monitoring emerging risks, updating processes and integrating new technologies to stay ahead of potential disruptions to their operations. Originality/value: This study formalises the risk spectrum of supply chains and their management using PI elements. PI web capabilities, such as realisation, distribution, mobility and supply webs, have been innovatively used to propose risk mitigation and management insights. The new capabilities of PI are synthesised by encapsulating the components of the logistics web to address supply chain resilience.