Product complexity and supply chain design

Abstract

To assemble a product, each and every part is required. Hence, the more parts in the product, the greater the risk of disruption. Compared with retailers or assemblers of simple products, manufacturers of complex products are much more sensitive to supply chain delays. This heightened vulnerability to supply chain disruptions should lead complex product assemblers to design less risky supply chains. Supply chain design should depend on the complexity of the product assembled or manufactured. This paper models how product complexity drives the likelihood of disruption for given component supply chain reliabilities. The paper provides insights for supply chain design that comprehends the impact of product complexity.