Optimal Resilience Strategy for Manufacturers to Deal with Supply Disruptions : Investment in Supply Stability Versus Dual Sourcing

Enhancing supply chain resilience is fundamental to the stable development of manufacturing enterprises. By comparing three resilience strategies, that is investment in fixed suppliers for stable supply, dual sourcing by adding emergency suppliers, and hybrid strategy, we investigate their effects on improving supply chain resilience under supply disruption and selecting resilience strategies for manufacturing enterprises in a complex supply chain environment. We then propose a corresponding management approach for manufacturers. This study finds that (1) compared to the no-resilience strategy, the dual-sourcing strategy is effective in enhancing supply chain resilience, while the investment strategy for supply stability and the hybrid strategy are not necessary, especially when the investment cost is high. (2) Manufacturers who prefer supply stability will always adopt a hybrid strategy to ensure maximum expected sales quantity; manufacturers who prefer profit will adopt a hybrid strategy only when the investment cost is within a certain range, otherwise, they adopt a dual-sourcing strategy to obtain higher profits. (3) Compared to two single resilience strategies, the hybrid strategy has a lower wholesale price but not always a lower sale price. When the probability of disruption by contingency suppliers is low, manufacturers adopt a hybrid strategy with a higher sale price than a dual-sourcing strategy. (4) When contingent supplier costs and disruption probability are higher, manufacturers only sometimes increase sales quantity by adopting dual sourcing and hybrid strategy; adopting an investment strategy for supply stability is a more quantity-resilient strategy