Modelling and Scenario Analysis of the Causal Conditions of the Ripple Effect in the Supply Chain of Iran's Food Industry

Document Type : Persian Research paper

Authors

Department of Business Administration, Faculty of Financial Science, Management and Entrepreneurship, University of Kashan, Kashan, Iran

Abstract

Purpose: The ripple effect, which refers to disturbances with a low probability of occurrence but a high impact, has been able to have many negative effects on the supply chain of Iran's food industry. Considering the strategic importance of the food industry, it is necessary to investigate the causal conditions of this effect.
Design/methodology/approach: This study has been performed in two phases with a mixed approach. The qualitative phase was conducted to identify the causes of the ripple effect and the quantitative phase was conducted to model and analyze the scenario. The participants in the qualitative phase were industrial experts, and judgmental sampling was used to collect data. The sample included 15 respondents, and the data analysis method was thematic analysis. The statistical population of the quantitative phase included industrial experts and university professors, and judgmental sampling was used to collect data. The sample included 10 respondents, and the data analysis method was fuzzy cognitive mapping. To analyze the scenarios, two categories of backward and forward scenarios have been designed. FCMapper software has been used to design the scenarios.
Findings: The results of the thematic analysis indicated 56 causes, which were grouped into 14 sub-categories: “business planning”, “production problems”, “financial problems of the organization”, “logistical problems”, “supply chain management”, “supplier problems”, “human disasters”, “natural disasters”, “legislative issues and law enforcement”, “political crises”, “macroeconomic issues”, “the increasing complexity and uncertainty of the business environment’, “infrastructure problems”, and “problems of production of complementary industries”. Finally, the sub-categories were grouped in four main categories: "business-level problems", "supply chain-level problems", "natural and unnatural disasters", and "macro problems of the country". The results of the second phase indicated that "political crises", "macroeconomic issues", and "complexity and uncertainty of the business environment" had the highest degree of influence. The results of the analysis of the scenarios implied the significance of "complexity and uncertainty of the business environment", "macroeconomic issues", and "political crises".
Research implications: Since inventory plays a significant role in dealing with the ripple effect, and inventory in the food industry is perishable, it is necessary to investigate how to balance the amount of buffer and perishable inventory. Another important issue in the supply chain of the food industry is the lack of advanced technologies and sufficient information on the areas under cultivation, the amount of harvest, and the amount of surplus or shortage of products in different parts, which strengthens the ripple effect. Studying the obstacles, challenges and key success factors of using advanced technologies in the supply chain of the food industry can help solve this problem.
Practical implications: According to the findings, it is suggested to include long-term factors, price flexibility, and support clauses in the contract with suppliers. For foreign products, it is recommended to contract with companies that have active agencies inside the country. The purchase of critical layers of the supply chain (vertical integration) is recommended to reduce risk. Contingency plans are necessary to deal with the ripple effect, while environmental and political issues must be monitored carefully to develop suitable contingency plans. As a result, it is necessary to form management teams in the food industry to investigate environmental and political issues and communicate with people with political influence to receive news faster.
Originality/value: Considering the problems that the supply chain of Iran's food industry has with the occurrence of a ripple effect, in this research the reasons for such an effect were investigated for the first time. Modelling and scenario analysis of the causes of the ripple effect was also performed for the first time.

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Main Subjects

References

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