Product Sourcing and Distribution Strategies under Supply Disruption and Recall Risks

• 成果类型: Article
• 署名作者: He, Long; Rong, Ying; Shen, Zuo-Jun Max
• 署名单位: National University of Singapore; Shanghai Jiao Tong University; University of California System; University of California Berkeley; University of California System; University of California Berkeley
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.13065
• 发表日期: 2020
• 页码: 9-23
• 关键词: Product Recall; Supply Disruption; operations strategy; product distribution

摘要

When product recalls happen, firms not only have to incur additional logistics costs but also suffer from a damaged reputation. Besides, they may also supply disruption risk, under which a supplier could fail to deliver the quantity ordered at all. In this study, we discuss how to mitigate supply disruption and recall risks in the perspective of (outbound) product distribution strategy in joint with (inbound) sourcing decision. Specifically, we compare the dedicated and uniform distribution strategies as follows: in the dedicated strategy, the firm divides its market into several regions, and ships products from different suppliers based on the regions; whereas, in the uniform strategy, the firm serves the entire market by randomly shipping the products from several suppliers without distinguishing their sources. Through the comparison of both strategies, we show that the role of recall risk is different from that of supply disruption on the sourcing and distribution decision. In particular, single sourcing is optimal when both recall risk and disruption probability are low; dual sourcing with the dedicated strategy is optimal when the disruption probability is moderate and the recall risk is high; dual sourcing with the uniform strategy is optimal when the disruption probability is high. We also find that the positive correlation in recalls improves (undermines) the performance of the uniform (dedicated) strategy. In contrast, the positive correlation in supply disruptions only undermines the performance of the uniform strategy.