Analysis of the Ripple Effect for a Dow Chemical Supply Chain
The Suez Canal blockage in March 2021 caused a significant disruption in global trade, impacting numerous supply chains. Supply chain disruptions have far-reaching consequences, affecting not only individual companies but also the entire network of interconnected organizations. Understanding the ripple effect, which represents the spread of disruptions through a supply chain, is of high importance for mitigating the impact and improving supply chain resilience.
This is exactly what Sophie Thijssen researched in her master thesis at Dow Chemical named: “Analysis of the Ripple Effect for a Dow Chemical Supply Chain”.
Where it started
Dow Chemical is a multinational company specialized in the production of chemicals, materials, and solutions for various industries worldwide. This research originated from Dow Chemical’s recognition of the importance of understanding supply chain disruptions, with a specific focus on shipments passing through the Suez Canal. Understanding the implications of such disruptions on operational processes is a priority for Dow Chemical. Therefore, Sophie Thijssen was set out with the task to investigate the ripple effect for one of the supply chains of Dow Chemical, the one surrounding the shipments through the Suez Canal, and model its impact through the analysis of supply chain process data. By achieving this, Dow Chemical can enhance their understanding of disruptions.
The research employed data analysis and process mining techniques to understand the ripple effect caused by the Suez Canal blockage in Dow Chemical’s supply chain. Six reports on shipments, orders, change reasons, complaints, inventory, and production were analyzed. Outlier detection analysis identified shipment delays, and their impacts were examined by assessing order changes, inventory levels, customer complaints, and order rejections. The findings showed increased delays during the disruptive event. Furthermore, the delays do not always have the same impact. This is because the impact on the plant is also dependent on unknown external variables. The insights obtained confirmed the presence of the ripple effect in Dow Chemical’s supply chain, as the effects are not isolated to either the shipping plant or receiving plant. Also, the research confirmed the effectiveness of existing mitigation strategies.
Although the research provided valuable insights, further investigation is required to fully understand the impacts of disruptions and develop effective simulation or detection tools. Dow Chemical should consider researching the ripple effect more comprehensively. Additionally, they should delve deeper into simulation possibilities and continue investigating the link between disruptions and delays. Moreover, the challenge of directly attributing a disruption to a delay calls for further research. By exploring these areas further, Dow Chemical can continue to deepen their understanding of the ripple effect and its consequences within their supply chain.