Epidemic outbreaks are one of the important sources of the
risk in the global supply chains. Before the COVID-19 pandemic, global
industries that were unprepared for disruptions experienced a decline due to
the pandemic. A global supply chain is a complex system set of dynamics that
could be analyzed by the system dynamics approach. In this article, the impact
of the recent pandemic on the global supply chain is simulated in different
scenarios. A system dynamic model is developed to carry out the simulations. In
order to consider the impact of the pandemic on the exogenous and endogenous
variables, a force majeure factor is defined in the model. Global features
considered in this article are the export and import operations, the exchange
rate and the rate of tariff. In this article, a scenario analysis is performed
to analyze two important factors of the global supply chain: force majeure
factor and delivery delay. Results showed that improving the flexibility of
production capacity is one of the important strategies that global supply chain
managers should pursue.
The COVID-19 pandemic has caused unprecedented disruption to
normal operations of supply chains. Many industries have been negatively
affected by restrictions due to COVID-19, especially those working globally.
Based on the World Trade Organization (WTO), the volume of global merchandise
trade fall more than 20%, by year-end 2020. In the first six months of 2020,
many industrial countries experienced a significant slowdown in their regular
trades. In the last half of 2020, because of the continued disruptions in the
transportation sector, import and export activities faced many uncertainties.
The negative annual growth is obvious in recent years, but in the
last year, the declines became much more pronounced. Almost 95per cent of
Fortune 1,000 companies were encountering direct inventory flow interruptions
during the pandemic. The outbreak also has caused disruptions in the automobile
industry. For example, Volkswagen, Hyundai and Nissan have been forced to shut
down their global factories due to travel restrictions and lack of parts. Also,
freight transportation has been affected deeply by the outbreak. The Institute
of Shipping Economics and Logistics (ISL) reported that the container
throughput index declined almost 10% in comparison with the past year
(Institute for Shipping Economics and Logistics, n.d.). In addition, the
International Air Travel Association (IATA) announced that cargo
tonne-kilometres (CTKs) in the first half of 2020 decreased 15% (IATA, n.d.).
Epidemic outbreaks are one of the major risks in the supply chain
management (SCM) operation. Simulation as a powerful tool in uncertain
conditions could be used to analyze and predict the supply chain behaviour over
time. Three main simulation techniques could be considered: agent based
simulation, discrete event simulation and system dynamics. Agent based
simulation is a bottom-up approach that focuses on the individual autonomous
components of a system, invoking the actions, reactions and intercommunication
protocols among them. Discrete event simulation is a stochastic modeling
approach that considers process time and times between arrivals into the system
and is mainly used to simulate the operation of queuing systems over time.
System dynamics (SD) is a computer aided approach, typically used for strategic
decisions and policy design.