Read this article on the impact of transportation disruptions in a supply chain, and then answer each of the following questions in 6-10 sentences. Provide a critical assessment based on the above article, text readings, scholarly research, and personal experience. Cite your resources using APA format.
How does transportation add value in a supply chain?
What are the potential disruptions in transportation?
How do the disruptions impact the performance of a supply chain?
What are the ways to minimize transportation disruptions?
Q&A style, also in APA style.
The impact of transportation disruptions on supply
chain performance
Martha C. Wilson
*
College of Business Administration, California State University, Sacramento 6000 J Street,
Sacaremento, CA 95819-6088, United States
Received 6 January 2004; received in revised form 14 July 2005; accepted 23 September 2005
Abstract
This paper investigates the effect of a transportation disruption on supply chain performance using system dynamics
simulation, comparing a traditional supply chain and a vendor managed inventory system (VMI) when a transportation
disruption occurs between 2 echelons in a 5-echelon supply chain. The greatest impact occurs when transportation is dis-
rupted between the tier 1 supplier and warehouse. In the traditional structure the retailer, warehouse, and tier 1 supplier
experience the greatest inventory fluctuations and the highest goods in transit to their facilities. These impacts are less
severe for the VMI structure, although unfilled orders are approximately the same for each.
Ó
2005 Elsevier Ltd. All rights reserved.
Keywords:
Supply chain; System dynamics; Transportation disruption; Supply chain risk
1. Introduction
The vulnerability of supply chains has undoubtedly received more attention since the attacks on the World
Trade Centers on September 11, 2001, even though supply chains have always been faced with assessing their
vulnerabilities and managing risk. Risks faced by supply chains are quite diverse, arising from sources both
within and external to the supply chain. These include disruptions, delays, information and networking, fore-
casting, intellectual property, procurement, customers, inventory, and capacity (
Chopra and Sodhi, 2004
).
Supply chain disruptions are costly (
Hendricks and Singhal, 2005
), and we need to understand how a dis-
ruption affects a supply chain in order to develop appropriate strategies for ameliorating the impact. A disrup-
tion is defined as an event that interrupts the material flows in the supply chain, resulting in an abrupt cessation
of the movement of goods. It can be caused by a natural disaster, labor dispute, dependence on a single supplier,
supplier bankruptcy, terrorism, war, and political instability. There are many examples of disruptions resulting
from these types of events. The Kobe earthquake in 1994 left many companies without parts (
Yoshiko, 1995
);
the northeastern US blackouts in August 2003 adversely affected many businesses (
Brooks and Vogel, 2003
);
1366-5545/$ – see front matter
Ó
2005 Elsevier Ltd. All rights reserved.
doi:10.1016/j.tre.2005.09.008
*
Tel.: +1 916 278 7198; fax: +1 916 278 5437.
E-mail address:
mcwilson@csus.edu
Transportation Research Part E 43 (2007) 295–320
www.elsevier.com/locate/tre
a fire at one of Ericsson’s sub-suppliers created serious problems for Ericsson (
Norrmann and Jansson, 2004
).
The labor strikes that shut down 29 ports on the West coast of the US in October 2002 caused the closure of the
New United Motor Manufacturing plant in Fremont, California (
Sarkar et al., 2002
). This labor strike is an
interesting example for the US because many suppliers to US industries are located in China. East Asia
accounts for over 90% of the shipping through the Port of Long Beach, trading primarily with China, Hong
Kong, Japan, South Korea and Taiwan.
1
The Port of Los Angeles, located next to the Port of Long Beach also
trades primarily with East Asia, importing furniture, apparel, electronic products, toys, and computers.
2
Sev-
enty five percent of the total dollar value of imports to the West Coast are handled by these two ports (
Raine,
2004
). Although businesses were aware of the impending labor strikes and could take some measure to avoid
the full impact of a disruption, it was still a costly shutdown that affected many businesses and consumers.
Unlike disruptions in general, a transportation disruption can occur only as a result of a subset of the driv-
ers identified by
Chopra and Sodhi (2004)
, which include natural disasters, labor disputes, terrorist activities,
and infrastructure failures, for example. This research makes a distinction between a transportation disruption
and other types of disruptions. For comparison, consider supplier-related disruptions that could shut down a
plant (supplier bankruptcy) or drastically reduce capacity (the fire at Ericsson). These types of disruptions not
only stop the flow of goods, but also the production of goods, whereas a transportation disruption stops only
the flow of goods and, in that sense, is probably less severe. The uniqueness of a transportation disruption is its
specificity, distinctive in that goods in transit have been stopped, although all other operations of the supply
chain are intact. For that reason, a transportation disruption arises when the material flow is interrupted
between two echelons in a supply chain, temporarily stopping the transit of these goods, regardless of the
source of the disruption.
3
This paper investigates how a transportation disruption affects the supply chain performance of a tradi-
tional supply chain and a vendor managed inventory system. Applying system dynamics simulation, this study
determines how each of these structures responds to a transportation disruption between different echelons in
the supply chain. Supply chain response is measured by the number of unfilled customer orders, inventory
fluctuations, and the behavior of goods in transit. Finally, this paper briefly discusses how individual supply
chain risks are connected and suggests strategies for mitigating the risk from a transportation disruption.
1.1. Literature review
Not only have
Chopra and Sodhi (2004)
categorized nine types of risk in order to develop risk mitigation
strategies, but also
Kleindorfer and Saad (2005)
, who have identified two categories of risk: risk from coor-
dinating supply and demand, and risks resulting from disruptions to normal activities. The supply chain man-
agement literature has addressed many of these risks, discussed how they are interconnected, and analyzed the
supply chain response. This is especially evident for studies that fall in the risk category Kleindorfer and Saad
described as coordinating supply and demand. Although these studies may not be labeled as ‘‘risk studies’’,
they are certainly concerned with managing risk associated with mismatches between supply and demand
throughout the supply chain. Examples include research on inventory and capacity planning, demand uncer-
tainty and forecast accuracy, information distortion, purchasing and procurement strategies, and price vari-
ation (
Lee and Billington, 1992; Levy, 1995; Lee et al., 1997a,b; Sterman, 1989; Chen et al., 2000; Lee, 2002;
Cachon, 2004; Zsidisin and Ellram, 2003
). These studies have also suggested several methods for mitigating
risks, which include information sharing, electronic data interchange, collaborative planning forecasting
and replenishment, lead time reductions, consistent low prices, and vendor managed inventory. Vendor man-
aged inventory, however, is not new, having been conceived by
Magee (1958)
and revisited by
Lee et al.
(1997a)
.
1
Port of Long Beach web site:
http://www.polb.com/html/1_about/overview.html
.
2
Port of Los Angeles web site:
http://www.portoflosangeles.org/factsfigures_Portataglance.htm
.
3
Although a disruption in transportation will certainly delay the arrival of goods at their destination, a distinction is being made
between a transportation disruption and a transportation delay, which falls into another risk category. Because the risk drivers for a delay
are different than those for a disruption, a distinction must also be made in order to develop specific strategies for risk mitigation (
Chopra
and Sodhi, 2004
).
296
M.C. Wilson / Transportation Research Part E 43 (2007) 295–320
