Dr. Amini Published in the International Journal of Production Research

MEMPHIS, TN—April 12, 2019. Dr. Mehdi Amini, George Johnson Professor of Marketing and Supply Chain Management of the Fogelman College of Business and Economics at the University of Memphis has a forthcoming paper to appear in the premier International Journal of Production Research titled "The Impact of Supply Chain Disruption on the Closed-Loop Supply Chain Configuration Profit: A Study of Sourcing Policies." The paper is co-authored by Professors Jighyasu Gaur at the T. A. Pai Management Institute, India, and A. K. Rao at the ICFAI Business School (IBS) Hyderabad, Hyderabad, India.

A Closed-Loop Supply Chain Configuration (CLSCC) encompasses the decisions related to the optimal selection of options at each stage of a Closed-Loop Supply Chain (CLSC) for the introduction and reconstruction of new products. Various natural and manmade incidents might cause supply disruptions that affect the performance of closed-loop supply chain. A common strategy applied to mitigate the risk of potential supply disruptions is multi-sourcing.

To assess the relative effect of single- vs. multi-sourcing strategies on the closed-loop supply chain performance, the study: (1) offers an integrated multi-sourcing CLSCC optimization model for new and reconstructed products; (2) presents a real-world case study based on an auto-parts manufacturer in India; and (3) conducts a comprehensive set of computational experiments and CLSCC scenario analyses. The key findings are: (a) CLSCC under potential supply disruption enjoys a significantly higher profitability by adopting a multi-sourcing strategy compared to a single-sourcing policy; (b) To reduce total lead-time, in configuring a CLSC one can exploit the positive relationship among lead-time, pipeline, and safety-stock costs in determining financial incentive offerings to suppliers. This effort would also improve the customer service level, competitive advantage, and brand equity; (c) Considering multi-sourcing in CLSCC settings, the sourcing limit should be decided taking into consideration not only the actual profit but also the risk of supply loss and the likelihood of supply failure; (d) There is positive relationship between sourcing limit and profit. However, the return rate is a moderator of this relationship. Therefore, firms can exploit the moderation effect of return rate to determine the sourcing limit; (e) It is observed that the selection of suppliers for both FSC and RSC should depend on return rate. As the company prefers a long-term association with suppliers, while making a selection decision, the company should take into consideration not only the current but also future return rates to arrive at an optimal decision.

Gaur, J., M. Amini, and A.K. Rao, "The Impact of Supply Chain Disruption on the Closed-Loop Supply Chain Configuration Profit: A Study of Sourcing Policies," International Journal of Production Research, Forthcoming, 2019.