Essays on Sustainable and Resilient Supply Chains

Abstract

This dissertation presents three essays on sustainable and resilient supply chains. The first chapter, joint work with Robert Swinney, examines the profit and environmental implications of supply chain responsiveness. We use a model wherein responsiveness increases fixed and marginal costs, decreases leadtimes, and changes the per-unit environmental impact of production and distribution. We observe that a win-win outcome for the firm and the environment involving responsiveness is most likely to occur when demand variability is high and unsatisfied customers substitute with a less sustainable product.The second chapter, joint work with Robert Swinney and Nitin Bakshi, studies the value of two vertical control strategies, vertical integration and direct sourcing, in building supply chain resilience. We analyze a model of sourcing of a buyer in a three-tier supply chain where Tier 2 suppliers are disruption-prone. With vertical integration, the buyer purchases one or more Tier 1 suppliers, and with direct sourcing, the buyer purchases raw materials directly from Tier 2 and sells to Tier 1. We show that vertical control in general is most valuable to the buyer when correlation in Tier 2 disruption risk is high, the probability of a disruption is moderate, and disruptions are of moderate severity.The third chapter, joint work with Robert Swinney, investigates the profit and environmental implications of nearshoring in a decentralized setting. We study a two-tier supply chain with a buyer and a supplier, where the firms first decide whether to reshore or not. Firms' reshoring decisions change their costs, the per-unit environmental impact of their production and distribution processes, and when the buyer has to make procurement or production decisions. We find that if the buyer is more powerful, either a fully offshore or a fully nearshore supply chain has the potential to simultaneously be the equilibrium supply chain configuration and optimal for the environment. If the supplier is more powerful, we observe that either a fully offshore or a hybrid supply chain has this potential.