Impacts of social distancing measures on global supply chain configuration

ABSTRACT

World Health Organisation has advised governments to prevent the spread of COVID-19 by introducing stringent social distancing measures (SDMs) in five levels, ranging from pandemic surveillance, stay-at-home recommendations, workplace closures, to national and international travel restrictions. These measures inevitably disrupt global business environment and supply chain configuration. Existing literature does not comprehensively analyze the five-level SDMs' impacts on firms and supply chains. Thus, we established a mixed-integer programming model to integrate environment changes in lead time and cost for transportation and processing, market size, and the number of countries (NoC) imposing the SDMs. Sensitivity analysis is conducted to evaluate propagation impacts on global supply chains when the SDMs are imposed on firms in different echelons of supply chains. Results show that (i) supply chain losses and disruptions primarily depend on the NoC, followed by restricted transportation, market size, and processing limitations. (ii) When the SDMs, especially restrictions on transportation, are implemented in downstream echelons, the propagation impacts on supply chains and firms become more significant. (iii) Compared with elastic-demand supply chains, the fixed-demand one, e.g. food supply chain, suffers more significantly with the stringent SDMs and high holding costs. Finally, managerial implications are discussed from supply chains, firms, and policymakers.