Recovery from plant-level supply chain disruptions: supply chain complexity and business continuity management

Abstract

PurposeThe purpose of our study is to investigate how a manufacturing plant’s internal operations along with its network of connections (upstream and downstream) can have an impact on its recovery time from a disruption. The authors also examine the inverse-U impact of complexity. Finally, the authors test the moderating role that business continuity management plans (BCP) at the plant level have on recovery time.Design/methodology/approachTo test our hypotheses, the authors partnered with Resilinc Corporation, a Silicon Valley-based provider of supply chain risk management solutions to identify focal firms’ suppliers, customers and plant-level data including information on parts, manufacturing activities, bill of materials, alternate sites and formal business continuity plans. The authors employed censored data regression technique (Tobit).FindingsSeveral important findings reveal that the plant’s internal operations and network connections impact recovery time. Specifically, the number of parts manufactured at the plant as well as the number of internal plant processes significantly increase disruption recovery time. In addition, the number of supply chains (upstream and downstream) involving the plant as well as the echelon distance of the plant from its original equipment manufacturer significantly increase recovery time. The authors also find that there exists an inverted-U relationship between complexity and recovery time. Finally, the authors find partial support that BCP will have a negative moderating effect between complexity and recovery time.Originality/valueThis research highlights gaps in the literature related to supply chain disruption and recovery. There is a need for more accurate methods to measure recovery time, more research on recovery at the supply chain site level and further analysis of the impact of supply chain complexity on recovery time.