Collaborate or not? A system dynamics study on disruption recovery

Purpose – The purpose of this paper is to investigate different combinations of collaboration strategies to deal with different types of supply chain disruptions, find the best combination, and provide targeting suggestions for investments. Design/methodology/approach – A system dynamics simulation is applied to study a supply chain with three tiers: a producer, a logistics service provider (LSP), and a retailer. There are three types of disruptions to simulate: a producer capacity disruption, an LSP capacity disruption, and a demand disruption. As each tier has the option to choose whether or not to collaborate with the other two tiers, eight (2×2×2) scenarios are generated to represent different combinations of collaboration strategies. Findings – For a producer capacity disruption, both the producer and the LSP should collaborate by providing their surge capacities, while the retailer does not have to collaborate. For an LSP capacity disruption, the producer should not provide its surge capacity, while the LSP should do so; the retailer does not have to collaborate. For a demand disruption, both the producer and the LSP should not provide their surge capacities, while the retailer should not collaborate but play shortage gaming. Targeting suggestions for investments are provided. Originality/value – Through system dynamics modeling, this study allows the discussion of surge capacity to help supply chain partners and the discussion of shortage gaming when products are oversupplied, in a disruption recovery system over time.