The Effects of Environmental Risk and Regulatory Pressure on Operational Vulnerability and Disruption Probability in Supply Chains: An Integration of PLS-SEM and Machine Learning
This study employs a hybrid PLS-SEM and machine learning approach on data from Turkish supply chain managers to demonstrate that environmental risk and regulatory pressure increase disruption probability primarily by heightening operational vulnerability, suggesting that managers should prioritize mitigating internal vulnerabilities over merely monitoring external threats.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
Imagine a global supply chain not as a single, solid line, but as a vast, intricate web of connections between factories, trucks, warehouses, and ports. For decades, businesses have worried about what might break this web from the outside: a sudden storm, a shift in global politics, or a new government rule. These external forces are often called risks. But a new study suggests that the real danger to a company's ability to keep moving isn't just the storm itself, but how fragile the web is before the storm even hits. This fragility, known as operational vulnerability, is the internal weakness that allows an outside problem to turn into a major stoppage. While companies have long focused on watching the horizon for trouble, this research asks a different question: how much of the damage is actually caused by the company's own structure, and how much by the outside world?
To answer this, Haldun Turan, a researcher, looked at 384 managers working in manufacturing and logistics companies across Türkiye. These are the people responsible for keeping goods moving, from the factory floor to the final delivery. The study examined two main types of outside pressure: environmental risk, which includes things like unpredictable changes in customer demand, economic swings, and natural disasters; and regulatory pressure, which refers to the growing number of government rules and environmental standards companies must follow. The researcher wanted to see if these outside forces directly caused supply chains to break, or if they first made the chains more vulnerable, which then led to the breakage. To get a clear picture, the study used a two-part approach. First, it used a statistical method to map out the relationships between these ideas, testing a specific theory about how they connect. Then, it fed that same data into computer algorithms designed to predict outcomes, checking if the theory held up when tested against new, unseen information.
The results offered a clear and somewhat surprising shift in perspective. The study found that both environmental risks and regulatory pressures do indeed make supply chains more vulnerable, but they do not directly cause disruptions on their own. Instead, these outside forces act like a stress test that exposes the cracks in the system. When a company faces difficult regulations or a sudden economic shift, its internal weaknesses—such as relying on a single supplier, having too little stock in reserve, or having processes that cannot easily adapt—become the true cause of the disruption. In fact, the data showed that regulatory pressure was actually a stronger driver of this internal weakness than environmental risk. This suggests that the very rules designed to make business safer or greener can sometimes make operations so rigid that they lose the flexibility needed to handle unexpected changes.
Perhaps the most significant finding is that once a company's internal vulnerability is accounted for, the outside risks no longer have a direct link to whether a disruption happens. In other words, a storm or a new law does not automatically stop a supply chain; it only stops it if the chain was already too weak to bend without breaking. The study confirmed that operational vulnerability is the central mechanism that turns external pressure into a real-world failure. When the researchers tested their model using machine learning, the results reinforced this conclusion. The computer models, which included complex algorithms, found that the single most important predictor of a future disruption was the current level of internal vulnerability, not the level of external risk. Interestingly, the most complex computer models did not perform much better than a simple, straightforward calculation, suggesting that the relationship between these factors is direct and linear, without hidden, complicated twists.
For business leaders, this changes the strategy for staying safe. Instead of spending most of their energy and money trying to predict every possible external threat, the study suggests they should focus their resources on fixing their own internal weaknesses. The research proposes that companies should treat their internal fragility as a leading indicator of trouble, much like a doctor checking a patient's vital signs before an illness strikes. By actively managing their internal structure—such as finding backup suppliers, creating flexible processes, and keeping enough buffer stock to absorb shocks—companies can build a system that survives outside pressures. The study also warns that while following regulations is necessary, doing so in a way that makes operations too rigid can backfire, making the company more susceptible to the very disruptions it hopes to avoid. Ultimately, the research argues that resilience is not just about watching the weather; it is about building a ship that can weather any storm.
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