Responding to epidemic-driven demand: the role of supply channels

ABSTRACT

Matching the supply of medical equipment with soaring demand caused by an epidemic event is a daunting challenge. Focusing on medical equipment manufacturers, this study empirically examines how supply chain management impacts manufacturers’ responses to epidemic-driven demand. This study employs novel supply chain data from South Korea collected before and after the MERS (Middle East Respiratory Syndrome) epidemic event. In the results, we show that such an epidemic positively influences the sales performance of medical equipment manufacturers (i.e. a 10.2 percentage-point increase). To identify the mechanism behind this result, we provide evidence that increasing the supply base (i.e. the number of supply channels) enables medical equipment manufacturers to better respond to epidemic-driven demand and ultimately improves their sales performance. More interestingly, we find that medical equipment manufacturers with lower market status (i.e. lower market shares and lower supplier shares) expand their supply bases more extensively than other medical equipment manufacturers with higher market status do. Interpreting these results, we offer managerial insights into how medical equipment manufacturers can effectively manage their supply chains and improve their performance when responding to epidemic-driven demand.

KEYWORDS:

• Supply base
• supply channel
• epidemic and pandemic
• epidemic-driven demand
• empirical study

Data availability statement

The data supporting the findings of this study are available from eCredible. Restrictions apply to the availability of these data, which were used under license for this study. Data are available from the corresponding author with the permission of eCredible. (Basic, Share upon Request)

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 See http://kssc.kostat.go.kr/ksscNew_web/ekssc/main/main.do for all categories and corresponding descriptions.

Additional information

Funding

This work was supported by Business School, University of Auckland: [Grant Number FRDF-3720090].

Notes on contributors

Jaeseok Lee

Jaeseok Lee is a Senior Lecturer of Information Systems and Operations Management at the University of Auckland Business School. He obtained his Ph.D. and M.S. in Operations Management in the Scheller College of Business at the Georgia Institute of Technology. He holds M.S. in Industrial Engineering at Seoul National University. His research interests include management of technology, sustainable operations management, supply chain management, service operations, and marketing/operations interface. Prior to his PhD study, he worked in the field of innovation and technology management at Samsung and a governmental agency (DTaQ) for around 10 years.

Min Kyung Lee

Min Kyung Lee is an Assistant Professor of Supply Chain and Operations Management at the Hankamer School of Business at Baylor University. Her research broadly explores the notion of customer value creation through the introduction and deployment of new service innovations. Her primary research area pertains to the service science aspects of service operations strategy and design for customer experience. She obtained her PhD degree in Supply Chain and Operations Management from Clemson University. She spent two years in an automotive industry as a logistic coordinator prior to working on her PhD.

Seongkyoon Jeong

Seongkyoon Jeong is an Assistant Professor of Supply Chain Management at University of Tennessee, Knoxville. His research focuses on contemporary issues in supply chain management such as digital supply chain, cybersecurity, and sustainable operations. Seongkyoon Jeong has earned his Ph.D. degree from Arizona State University. Prior to earning his Ph.D., he worked at the Korea Institute of Machinery and Materials, a government-funded research institute, specialising in inter-organisational relationships and R&D strategy.

Brandon Lee

Brandon Lee is an Assistant Professor of Operations Management and Business Analytics at the University of Dayton. His research focuses on the areas of healthcare operations management, quality and process improvement, and supply chain management. He obtained his PhD degree in Supply Chain and Operations Management from Clemson University. Prior to his PhD study, he had a 12-year career in multinational corporations including Siemens and Aisin (a Toyota Group company), where he primarily worked in the field of quality management and Six Sigma process improvement.

Minseok Park

Minseok Park earned the Ph.D. degree in Production and Operations Management from the University of South Carolina, Columbia, SC, USA. He received the B.E. degree in Industrial Systems & Information Engineering and the M.S. degree in Logistics, Service & Operations Management from Korea University, Seoul, South Korea. He is currently working as an Assistant Professor of Information and Decision Sciences in the Franklin P. Perdue School of Business, Salisbury University, MD, USA. His current research interest includes behavioural operations management, buyer-supplier relationships, marketing/operations interface, strategy/operations interface, and technology & innovation.