Supply chain redesign implications to information disruption impact

Area of Science:

• Supply Chain Management
• Information Security
• Operations Research

Background:

• Supply chain reconfiguration decisions traditionally focus on operational risk.
• Simplification and risk pooling strategies improve financial performance but their impact on disruption risk, particularly information security breaches (ISB), is unclear.
• Information security breaches (ISB) pose significant financial risks to businesses.

Purpose of the Study:

• To examine the impact of information security breaches (ISB) on supply chain simplification and risk pooling strategies.
• To analyze these impacts across three different order replenishment systems.
• To evaluate the effectiveness of supply chain reconfiguration in both non-breach and breached scenarios.

Main Methods:

• Utilized an agent-based simulation approach.
• Employed statistical analysis to examine the data.
• Investigated supply chain reconfiguration under varying information security scenarios and ordering policies.

Main Results:

• Supply chain reconfiguration offers no benefit with a parameter-based replenishment policy (Option I) in both breach and non-breach scenarios.
• Reconfiguration provides significant advantages with batch ordering (Option II) or combined batch-and-parameter ordering (Option III).
• Batch ordering systems favor risk pooling, while combined systems favor simplification, especially at the wholesaler tier.

Conclusions:

• The effectiveness of supply chain reconfiguration strategies is contingent on the chosen order replenishment system.
• Information security breaches (ISB) necessitate careful consideration of supply chain design and ordering policies.
• This study provides novel insights into the interplay between ISB, supply chain configuration, and ordering decisions.