Multi-tier analysis of the medical equipment supply chain network: empirical analysis and simulation of a major rupture

Abstract

Purpose

While a global supply network can provide stability to address localized interruptions, however, the recent global pandemic materialized many concerns and risks associated with the global supply network. Considering the short-term and long-term effects of changes in the global supply chain, this research explores how the location characteristics of the firms across the supply chain affect their performance.

Design/methodology/approach

Using the mined data from five tiers of the backward supply chain of medical equipment, the authors constructed a large supply chain network consisting of close to 160,000 dyadic connections. The authors used various network centrality and clustering algorithms to measure the influence of each firm across the supply chain structure. Furthermore, the authors ran a scenario to simulate the elimination of Chinese firms from the global supply chain and recalculated all centralities. Regression analysis was used to measure the effect of supply chain network centralities on firms' performance across the supply chain with and without Chinese firms.

Findings

The complexity of global purchasing across global tiers of supply networks had been recognized as a source of uncertainty before the COVID-19 pandemic. This pandemic was the black swan that the medical supply chain professionals had noted its threat in recent years. While a global supply network can provide stability to address localized interruptions, however, the recent global pandemic materialized many concerns and risks associated with the global supply network. Considering the short-term and long-term effects of changes in the global supply chain, this research explores how the location characteristics of the firms across the supply chain affect their performance.

Research limitations/implications

This research has three main implications. First, it provides a benchmark for manufacturing firms and distributors around the world operating in the post-COVID-19 business environment to better understand the relationship of their supply chain strategy and firms' financial performance. Second, investors and asset managers can evaluate their portfolios in light of the changing relationship as a result of possible protectionism initiatives. Finally, policymakers can apply the research methodology of this work in various industries while reevaluating post-COVID-19 international relations and trades policies at the firm, industry and country levels.

Practical implications

Policymakers working on global connection can utilize the outcome of this research to explore the consequences of local and global policies on trade patterns, organizational performance as well as individuals' movements. Another implication of this study for policymakers is that it provides a powerful simulation and analytical tool to launch or combat the global ruptures, including trade wars and natural disasters stemming from natural events (e.g. climate change) and human-made events (e.g. wars, supply-chain interruptions, sanctions).

Originality/value

To the best of our knowledge, this is the first large-scale empirical study that measures the effect of supply chain structure across multiple (five) tiers of the global supply chain on firms' performance. The present study uses the original supply chain network data mined by the authors from financial publications.

Citation

Miri Lavassani, K., Iyengar, R. and Movahedi, B. (2023), "Multi-tier analysis of the medical equipment supply chain network: empirical analysis and simulation of a major rupture", Benchmarking: An International Journal, Vol. 30 No. 2, pp. 333-360. https://doi.org/10.1108/BIJ-02-2021-0095