Disentangling the multifaceted effects of supply base complexity on supply chain agility and resilience

The study investigates how supply base structural complexity influences both supply chain agility and resilience. It employs Normal Accident Theory and Portfolio Theory to disentangle the effects of three structural facets of complexity – numerousness; technical and functional diversity; geographical distribution of suppliers – on the two capabilities simultaneously.

The study is grounded in the Italian footwear industry. 31 manufacturing firms with their global supply base have provided a cross-sectional time series database over a 10-year period (310 observations).

The results show that supply base numerousness has nonlinear effects on both supply chain agility and resilience. The directions of these effects are opposites. They also show that supply base diversity has an inverted U-shaped effect on supply chain agility while it is insignificant for resilience. Finally, the results show that suppliers' geographical dispersion is detrimental to both capabilities.

This is the first study that considers the multifaceted effects of supply base complexity on both supply chain agility and resilience. In doing so, it also sheds light on some of the most common trade-offs that firms address when they seek a balance between different strategies, such as increasing agility without damaging supply base resilience and vice versa. Considering the resource constraints firms normally face, by disentangling the dual effects of each complexity facet, this study helps decision-makers to develop scalability and leverage the supply base characteristics in order to survive and prosper in uncertain markets.