The impact of supply chain integration on the snowball effect in the transmission of disruptions: An empirical evaluation of the model

Supply chains are now more than ever exposed to the disruptions which may be propagated and amplified, and thus manifest the phenomenon of the “snowball effect”. One of its major drivers are integrated relationships between supply chain partners. This is a very striking observation, as integration determines the supply chain efficiency, and is often promoted as somewhat of a Silver Bullet of supply chains, the essence or pillar of the concept. Yet, it may lead to an excessive mutual dependence of companies in a supply chain. Consequently, over-dependence may cause the “snowball effect” in the transmission of disruptions in part of or in the whole supply chain. There are two dimensions of supply chain integration considered in the paper. The first one is the intensity while the latter one is the span of supply chain integration. The intensity of supply chain integration reflects the relationship quality between partners and may take a form of non-integrated, through partially, and finally, to fully integrated relationships. The span of supply chain integration refers to the network perspective of supply chains and, regarding the type of supply chain members, one may distinguish between basic, extended and ultimate supply chain structures. 

The purpose of the study is to empirically evaluate a model for the “snowball effect” linking intensity and span of supply chain integration to the amplification of transmitted disruptions.

In order to achieve a research goal of the paper, statistical analysis has been performed. The partial least square (PLS) approach for the “snowball effect” in the transmission of disruptions was employed. The PLS Path Model of this study consists of the inner (structural) model and the outer (measurement) model. First, the reliability and validity of the measurement model was assessed, followed by the assessment of the structural model. In order to evaluate the model a survey data obtained from 117 manufacturing and trading companies being major links in their supply chains was used. The general findings show that the intensity of supply chain integration may contribute the ‘snowball effect’ in the transmission of disruptions in the material and information flow, while the span of integration may weaken the strength of disruptions in both types of flow in supply chains.