Research On Relationship Between Supply Chain Security And Its Costs

The enormous impact of the frequent occurrences of emergency recently on the supply chain has gained many people's concern gradually. As we know, the process of supply chain management is an international entity. If any part of the supply chain was disrupted by the emergency, the whole supply chain will be influenced and can't work as good as usual. With the furious competition day by day,the company must do something ahead in order to response to the disruptions quickly and reduce the lose from the emergency. So they need to take the supply chain security factors into account to improve supply chain resilience when they design their supply chain. Companies need to pay for the process of improving supply chain security. So they need to balance the supply chain security degree and the supply chain security cost. Make decisions about how much money is appropriate for them to achieve supply chain security and to insure natural operations.This paper made some research about the methods of improving supply chain security and resilience, and the relationship between supply chain security and its cost. Firstly,this paper made an affiliation between supply chain security and the cost needed to pay for it. Analyze the importance to pay for the supply chain security. Secondly, make use of the quantitative analysis to improve the vulnerability framework and establish analysis model about the supply chain security factors. Thirdly, establish linear regression model about the severity degree of the emergency based on the quantitative analysis model. Make regression analysis of the severity degree of the emergency by using the linear regression model. Put forward a function have a consideration both about the disruption probability and the consequences. At last, make quantitative analysis about the relationship between the severity degree of the emergency and supply chain security, as well as the relationship between the severity degree of the emergency and its cost, and then make further analysis about the relationship between supply chain security and its cost. Make use of the relationship picture about supply chain security and its cost to put forward quantitative cost analysis method, in order to give gist to the company for their supply chain security decision-making.