Global Supply Chains Risks and Covid-19: Supply Chain Structure as a Mitigating Strategy for Small and Medium-Sized Enterprises

Abstract

After the COVID-19 pandemic, more research is needed to understand how the impacts of global events differ among alternative network structures in the presence of supply chain risks, and how relevant these potential risk mitigation strategies are for Small and Medium Enterprises(SMEs). Thus, our main motivation is to show how SMEs can configure their supply chains, and cost-effectively mitigate the risk created by major disruptions. We combined a case study with a simulation model. The results suggest the greater usefulness of certain network configuration strategies (e.g., collaboration, multi-sourcing) compared to others during catastrophic events. Our results indicate that SMEs can avoid suffering more harm than larger competitors by adopting strategies consisting of an adequate mix of proactive and reactive elements, and that an effective proactive strategy involves building flexibility by increasing the number of geographically spread supply chain partners, allowing for deeper discounts to preserve demand without hurting profits.