Mitigating Supply Chain Risks Using Flexibility Theory

Without a clear understanding of the benefit associated with different levels of flexibility, companies are reluctant to invest in flexibility, especially when reliable data, accurate cost and benefit analysis are difficult to obtain. In this paper, the flexibility theory and models are elaborated, then the five risk sources exist in the supply chain were pointed out, in the end measures using elasticity theory that can mitigating these risks were discussed. Our findings highlight the power of flexibility, and provide convincing arguments for deploying flexibility to mitigate supply chain risks.