Grey swans, discruption
Article 1: Supply chain tsunamis: research on low‐probability, high‐
impact disruptions.
1. Suply chain tsunamis
− Definition: a supply chain tsunami as a rarely occurring supply chain phenomenon with a
sudden and devastating impact on a focal firm, its supply network, or even the entire
industry.
2. Positioning SC tsunamis in the OSCM literature
− “Supply chain resilience” describes the ability to cope with the consequences of
unavoidable risk events and resume normal operations or move to a new, more
desirable state after a disruption
− “Supply chain robustness” is defined as “the ability of the supply chain to maintain its
function despite internal or external disruptions”
− “Supply chain agility” is defined as the ability of the firm, both internally and in
conjunction with its key suppliers and customers, to adapt or respond swiftly to
marketplace changes, as well as to potential and actual disruptions
, 3. The anatomy of a supply chain tsunami
3.1 Towards a typology of supply chain tsunamis
− “Demand bubble tsunami” originates with the focal firm's customers and even with
their customers
− “Schedule Pressure tsunami” originates in the engineering processes and component
manufacturing, which are often outsourced, i.e., far upstream
− “Quality cascade tsunami” originate from down in the “boiler room” of service supply
chains, in their internal support processes
− “Relationship spiral tsunamis” originates from buyer-supplier dyads
3.2 A demand bubble tsunami: the Cisco 2001 case
− Cisco 2000 to 2001
• Cisco’s customers: in a rush to meet the challenges from the Internet economy, had
ordered equipment aggressively, often ordering ahead and even placing double or triple
orders
• Response: to anticipated shortages and delivery delays. Cisco decided to place fixed
orders with its supply base
• Soon inventories were growing faster than sales, and the supply chain collapsed.
3.3 The anatomy of a supply chain tsunami
− The following sequence of events can be observed from the outside whena business
tsunami “hits” a company and its supply chain:
Article 1: Supply chain tsunamis: research on low‐probability, high‐
impact disruptions.
1. Suply chain tsunamis
− Definition: a supply chain tsunami as a rarely occurring supply chain phenomenon with a
sudden and devastating impact on a focal firm, its supply network, or even the entire
industry.
2. Positioning SC tsunamis in the OSCM literature
− “Supply chain resilience” describes the ability to cope with the consequences of
unavoidable risk events and resume normal operations or move to a new, more
desirable state after a disruption
− “Supply chain robustness” is defined as “the ability of the supply chain to maintain its
function despite internal or external disruptions”
− “Supply chain agility” is defined as the ability of the firm, both internally and in
conjunction with its key suppliers and customers, to adapt or respond swiftly to
marketplace changes, as well as to potential and actual disruptions
, 3. The anatomy of a supply chain tsunami
3.1 Towards a typology of supply chain tsunamis
− “Demand bubble tsunami” originates with the focal firm's customers and even with
their customers
− “Schedule Pressure tsunami” originates in the engineering processes and component
manufacturing, which are often outsourced, i.e., far upstream
− “Quality cascade tsunami” originate from down in the “boiler room” of service supply
chains, in their internal support processes
− “Relationship spiral tsunamis” originates from buyer-supplier dyads
3.2 A demand bubble tsunami: the Cisco 2001 case
− Cisco 2000 to 2001
• Cisco’s customers: in a rush to meet the challenges from the Internet economy, had
ordered equipment aggressively, often ordering ahead and even placing double or triple
orders
• Response: to anticipated shortages and delivery delays. Cisco decided to place fixed
orders with its supply base
• Soon inventories were growing faster than sales, and the supply chain collapsed.
3.3 The anatomy of a supply chain tsunami
− The following sequence of events can be observed from the outside whena business
tsunami “hits” a company and its supply chain:
