A three-echelon system dynamics model on supply chain risk mitigation through information sharing

Supply chains in the globally interconnected society have more complex structures and are more susceptible to disruptions such as natural disasters and diseases. The impact of the risks and disruptions that occur to one business entity can propagate to the entire supply chain. However, it has been proposed that cooperation amongst business entities can mitigate the impact of the risks. This paper aims to investigate the value of information sharing in a generalized three-echelon supply chain with dual suppliers. The supply chain model is built in a system dynamics software, and three decision making rules based on different levels of information sharing are developed. Performance metrics to measure the resilience of the supply chain under different shock scenarios are defined, and performances of the three ordering policies with shock applied are compared. The results of the experiments illustrates the value of information sharing in the supply chain when shock exists.