When addressing the issue of supply chain risks, a complexity perspective has recently
appeared to provide a more holistic picture. For example, much has been written in the supply chain literature regarding whether a single or multiple sourcing strategy can be used as a risk mitigation strategy. While it in general may reduce administrative and transaction costs, e.g., by concentrating greater purchase volumes with fewer suppliers, a single sourcing strategy leads to the over-dependence on one single supply source, thus exposing great vulnerability to negative events that may occur at the supplier’s plants. Multiple suppliers have thus been viewed as a means of mitigating supply risk, but this implies that more efforts are required to coordinate the supply base (Vachon and Klassen 2002). On the other hand, single sourcing facilitates the building of long-term relationships with suppliers, which in turn facilitates effectively managing supply risk. From a complexity perspective, in addition to the number of elements, the level of coupling among differentiated elements within a system also affects the level of complexity (Dooley 2001). In line with this, Choi and Krause (2006) argue that, as the number of suppliers increases, we should also consider the level of inter-relationships among suppliers in a supply base, another factor contributing to the complexity of a supply chain. With a low level of inter-relationships among suppliers it would be difficult for one supplier to step in for another supplier in case of an unexpected event. That is, the low level of inter-relationships would be associated with a high risk. By contrast, as the inter-relationships increase, the risk mitigation strategies could be implemented more readily and thus the level of risk would decrease.