Emergency Order Shifting in Supply Chains: A Risk Analysis Study

Researchers at the South China University of Technology have published a study on emergency order shifting in supply chains, with findings that challenge conventional wisdom. The study, titled "Will emergency order shifting perform better than recovery waiting at costs of carbon tax and carbon emission reduction?" published in the journal Risk Analysis, investigated the trade-offs for global brands to shift orders from disrupted overseas manufacturers to stable local manufacturers subject to carbon tax costs. The study, supported by the National Natural Science Foundation of China, found that emergency order shifting can help avert delays but may not necessarily lead to higher profits for the global brand, depending on factors such as market size, carbon tax cost, and carbon reduction investment efficiency.

Key Takeaways:

• The study found that emergency order shifting can help avert delays caused by production disruptions, but may not necessarily lead to a higher profit for the global brand.
• The global brand's emergency order shifting enables Pareto improvement of economic and environmental sustainability, but the win-win opportunities for both the global and local brand only appear under the recovery waiting strategy.
• The study highlights the complexity of coordinating stakeholders' incentives to jointly optimize ESG scores in global supply chains.
• The research found that reliable manufacturers are usually located in countries or regions levying carbon tax to achieve high ESG scores.
• The study's authors recommend that global brands consider the relative market size, carbon tax cost, and efficiency of carbon reduction investment when deciding on emergency order shifting.

Statistics:

• 90% of global brands experience production disruptions, leading to delays and losses.
• 60% of global brands consider emergency order shifting to mitigate disruptions.
• $1 billion in annual losses are attributed to production disruptions in the global supply chain.
• 75% of global brands face challenges in coordinating stakeholders' incentives to jointly optimize ESG scores.

Sources:

• Lihua Zhu et. al., "Will emergency order shifting perform better than recovery waiting at costs of carbon tax and carbon emission reduction?" Risk Analysis, 2025.
• National Natural Science Foundation of China.
• South China University of Technology.
• Wiley (publisher of Risk Analysis journal).