Impact of just-in-time (JIT) on supply chain disruption risk: the moderating role of supply chain centralization
| DOI | https://doi.org/10.1108/IMDS-09-2021-0552 |
| Published date | 18 May 2022 |
| Date | 18 May 2022 |
| Pages | 1665-1685 |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
| Author | Yuxiao Ye,Mohammed Ali Suleiman,Baofeng Huo |
Impact of just-in-time (JIT)
on supply chain disruption risk:
the moderating role of supply
chain centralization
Yuxiao Ye
College of Management and Economics, Tianjin University, Tianjin, China
Mohammed Ali Suleiman
School of Management, Zhejiang University, Hangzhou, China, and
Baofeng Huo
College of Management and Economics, Tianjin University, Tianjin, China
Abstract
Purpose –The relationship between just-in-time (JIT) and supply chain disruption risk is unclear from the
existing literature. This paper aims to investigate the impact of supplier JIT and customer JIT on supplier
disruption risk (SDR), internal disruption risk (IDR), and customer disruption risk (CDR) and explore the
moderating role of supply chain centralization.
Design/methodology/approach –Based on survey data collected from 213 manufacturing firms in China,
this study employs structural equation modeling with SmartPLS 3.0 to test the main proposed model and
applies an ordinary least square regression to test the moderating effect.
Findings –The results demonstrate that supplier JIT is positively related to SDR and negatively associated
with IDR. Customer JIT is positively associated with CDR but has no significant effect on IDR. The results also
show that SDR and CDR lead to IDR and mediate the relationshipbetween supplier JIT, customer JIT, and IDR.
In addition, supply chain centralization amplifies the positive impacts of supply chain JIT on SDR and IDR.
Originality/value –This study makes two main contributions. First, the study provides a comprehensive
analysis of the relationship between supply chain JIT and disruption risk. Second, the study addresses that
implementing JIT in a supply chain with a centralized decision-making structure leads to a higher level of
disruption risk.
Keywords JIT, Supply chain disruption risk, Supply chain centralization
Paper type Research paper
1. Introduction
In todays’turbulent and uncertain environment, firms are more and more likely to be exposed to
disruptions (Sreedevi and Saranga, 2017;Tse et al., 2016). More importantly,as supplychains are
becoming complex and inter-connected, the risk tends to propagate throughout supply chain
partners, leading to a high level of supply chain disruption risk (Basole and Bellamy, 2014;
Christopher and Lee, 2004;Dolgui and Ivanov, 2021;Ojha et al.,2018;Scheibe and Blackhurst,
2018). The China-US trade war and the outbreak of COVID-19 ar e examples of major crises that
have shocked focal firms and disrupted supply chains with unquantifiable losses (Singh et al.,
2021). Unquestionably, supply chain disruptions are a significant threat that jeopardizes firms’
abilityto survivein the market (Kwak etal., 2018). This study focuses on supply chain disruption
risk (SCDR), defined as the likelihood of disruptions in the supply chain and the potential
magnitude of hazards associated with the disruptions (Elliset al., 2010;Habermannet al., 2015). It
is mainly managers’perceived likelihood of disruptions stemming from internal, supp lier-side
and customer-side relationships (Habermann et al.,2015;Li et al.,2021).
JIT’s impact on
SCDR
1665
This research was supported by National Natural Science Foundation of China (#72002150, #72091210/
#72091214, #71961137004).
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0263-5577.htm
Received 9 September 2021
Revised 30 January 2022
22 March 2022
Accepted 27 April 2022
Industrial Management & Data
Systems
Vol. 122 No. 7, 2022
pp. 1665-1685
© Emerald Publishing Limited
0263-5577
DOI 10.1108/IMDS-09-2021-0552
The ability to minimize SCDR lies in understanding what affects the rising of the
disruption risk and the propagation of the risk along the supply chains (Bode and Wagner,
2015;Scheibe and Blackhurst, 2018). While some studies focus on external environmental
conditions causing higher SCDR (e.g. Tse et al., 2016), other studies suggest that the inherent
design of supply chains and the practices adopted to manage supply chain relationships are
critical reasons (e.g. Bode and Wagner, 2015;Habermann et al., 2015). Indeed, some firms or
supply chains are more vulnerable to SCDR. A classic example is that when a fire accident
occurred in the Philips Electronics plant, two major customers that source cellphone chips
from the critical plant (i.e. Ericsson and Nokia) were affected differently. While Ericsson
suffered 200 million dollars losses, Nokia could source from different suppliers and minimize
the negative impact (Chopra and Sodhi, 2014). Along the lines, extant studies have probed
into supply-chain level factors leading to higher odds of supply chain disruptions (Ellis et al.,
2011). For instance, Schmitt et al. (2015) found that a centralized inventory system makes a
supply chain more prone to disruption risk. Habermann et al. (2015) indicated that supply
chain design decisions, such as the dispersion and the distance of supply chain partners, are
crucial determinants of SCDR. Scheibe and Blackhurst (2018) suggested that the supply chain
structure and dependence nature are related to the occurrence and spreading of disruptions in
supply chains. Bode and Wagner (2015) showed that complex supply chain designs predict
the likelihood of supply chain disruptions.
In this study, we advance the line of the rationale and consider important drivers of SCDR
from a supply chain perspective. Specifically, we focus on Just-in-Time (JIT) practices, one of
the most commonly adopted supply chain strategies, and explore how the practices adopted
internally, in the supplier and customer sides, give rise to SCDR. JIT is essential to the lean
philosophy, which facilitates delivering the right product at the right time in the right
quantity (Chen and Hua Tan, 2013;Hernandez-Matias et al., 2019). The benefits of JIT
implementation have been fully investigated in the extant literature (Ruiz-Ben
ıtez et al., 2018;
Suleiman et al., 2021). When applying JIT to the supply chain, the central firms are likely to
reap the maximum benefits because JIT simplifies the focal firm’s operational processes and
transfers those costly burdens to supply chain partners (Dowlatshahi and Taham, 2009).
Many firms, such as Dell, emphasize using JIT practices in their supply chains to increase
efficacy. However, we indicate that the adoption of JIT may also disperse disruption risk to
supply chain relationships. Supply chain JIT practices increase firms’dependence on a few
suppliers and customers, so their supply chains are likely to be vulnerable and fragile
(Schmitt and Singh, 2012;Wagner and Neshat, 2010).
We also examine whether the supply chain decision-making structure, indicated by the
level of centralization, would take effect along with the JIT practices. A centralized decision-
making structure is often accompanied by JIT adoption because the focal firm needs the
authority to directly control the supply chain and make decisions for their partners to ensure
the successful implementation of JIT (Giannoccaro, 2018;Koufteros and Vonderembse, 1998).
Based on the sense-making theory, we posit that the essence of the supply chain JIT-SCDR
puzzle lies in firms’decreased capability to resolve equivocality (i.e. the complex and
ambiguous environment) (Ellis et al., 2011). A centralized decision-making structure further
limits firms’information flows and inhibits firms’capability to flexibly alter JIT
arrangements in the face of risk (Ellis et al., 2011). Thus, as decisions are more centralized,
the adoption of JIT is more likely to cause SCDR propagation.
Our study differentiates from existing studies in two aspects. First, we analyze the
structural relationship between supply chain JIT and SCDR. While existing studies have
indicated that JIT makes firms vulnerable to disruptions (Danese et al., 2012;Jadhav et al.,
2015;Suleiman et al., 2021), they have not fully uncovered the comprehensive relationships
between internal, inbound, and outbound disruption risk and different dimensions of supply
chain JIT. This leads to the first research question:
IMDS
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