A Systemic Approach for Risk and Resilience Assessment of Food Supply Chains
The food supply chain system is a network of activities and processes involved in producing, distributing, and delivering food products from their sources to consumers. The internal operations and the external environment in which the system functions create a dynamic that can lead to disturbances in the flow of materials, information, and financial resources. Employing a proactive and effective risk management system is crucial for achieving smooth performance, particularly for supply chains with perishable products. Improving safety and reliability within the food supply chain were two significant dimensions frequently covered through prior research studies. However, the complex interrelationship between elements of food supply chain systems influenced by risk events and their dynamic feedback has received little attention in previous literature. Adopting a new technique that goes beyond the traditional risk assessment method to obtain a reliable risk management system is essential. This research addresses this gap by adopting a system dynamic modelling approach to create a comprehensive systemic risk management model. The primary goal of this study is to synthesise, model, analyse, and understand the dynamics of complex food supply chain systems, specifically, the cheese supply chain, affected by the different risks to protect them from disruptions and negative consequences while providing valuable insights for supply chain practitioners to mitigate these risks. Aligned with the research aim of this study, a robust model utilising a system dynamics approach is developed as a basis for simulating behavioural changes in cheese supply chain variables when risk factors integrate into the system. The developed model for this research assesses the dynamics of three pivotal processes within the cheese supply chain: production, logistics service provider activities, and retailing. Given this comprehensive model, including these critical processes, this study can provide a more holistic view of interdependencies and feedback mechanisms of the cheese supply chain affected by risk under seven risk scenarios, ranging from natural disasters, disease, labour strikes risk, demand fluctuation, supply quality risk, internal operation risk, and excessive inventory. Leveraging an advanced system dynamics modelling approach, this study explores several overlooked risks, indicating a notable methodological enhancement. The system dynamics model's capability to adapt to a wide range of adverse events and to visualise and quantify complex feedback interactions not only improves cheese supply chain resilience but also provides a template for other food supply chains, extending its applicability in mitigating intricate supply chain risks. The analysis outcomes highlight significant information concerning the sensitive and vulnerable variables when integrated with various risks, including risks brought up by recent events such as the COVID-19 pandemic and labour strikes and the cascading impact of these risks across the cheese supply chain. The research findings under the labour strike scenario reveal significant disruption in the production efficiency of the cheese supply chain, which cascades to other supply chain variables. These behavioural changes under this risk highlight the critical dependence of the cheese supply chain on its workforce. Disease outbreaks, particularly COVID-19, severely changed demand dynamics and compromised logistics operations, indicating considerable challenges in sustaining supply chain consistency. Natural disasters, specifically flooding, drastically affected logistics and inventory management, suggesting the necessity for employing effective contingency plans to address such major disruptions. Supply quality risks, notably microbiological contamination of dairy products, significantly reduced production rates, which led to a ripple impact across downstream processes, underscoring the imperative for strict quality control protocols. Equipment failures, as important internal operation risks, disrupted production stability and the overall functionality of the cheese supply chain. Moreover, excessive inventory, triggered by an imbalance between supply and demand rates, causes a growth in holding costs and potential spoilage, posing considerable problems in industries involved with perishable products. These research outcomes highlight an urgent need to develop adaptable risk management approaches that respond to complex and dynamic dairy supply chain disruptions. By illustrating interconnections between cheese supply chain elements, the research findings also emphasise the significance of adopting effective risk management strategies that cover the entire system and its key players and propose robust recommendations to enable decision-makers and practitioners to enhance their existing risk assessment approach and corresponding contingency strategies.
system dynamics, stock-flow diagrams, resilience, causal loop diagrams, food supply chain, dairy supply chain, cheese supply chain, risk management, simulation, risk, food supply chain risk management, systems thinking
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