Journal of Supply Chain Management

2018, 54(1), 64–76

© 2017 Wiley Periodicals, Inc.

SUPPLY CHAIN TSUNAMIS: RESEARCH ON

LOW-PROBABILITY, HIGH-IMPACT DISRUPTIONS
HENK AKKERMANS
Tilburg University

LUK N. VAN WASSENHOVE

INSEAD Fontainebleau

This study introduces supply chain tsunamis as a major strategic supply

chain phenomenon. Like their ecological counterparts, supply chain tsu-
namis occur at relatively long intervals and are therefore easily mistaken
for unique events, rather than recurring phenomena. In contrast to ocean
tsunamis, they can in principle be prevented through timely and adequate
managerial action. However, their immediate impact is just as sudden and
disruptive, and their ability to reshape supply chains of companies and
even industries equally long lasting. They are fundamentally different
from phenomena like the bullwhip effect and black swan events. This
study further explores a preliminary typology of supply chain tsunamis by
Akkermans and Van Wassenhove (2013). Each type of tsunami focuses on
a very different part of the supply chain periphery where the first signals
of a developing tsunami can be observed. In this study, we use a detailed
example from the high-tech electronics industry to describe how a supply
chain tsunami unfolds over time. This is done both from an external and
an internal perspective. The external perspective shows the sequence of
events visible to the outside observer. The internal perspective focuses on
the managerial decision-making processes that cause and (sometimes)
resolve supply chain tsunamis. We link the notion of supply chain tsuna-
mis to the broader need to revive strategic operations and supply chain
management research. Supply chain tsunamis affect corporate strategy and
have a profound impact on business and management. Therefore, we
argue that business tsunamis deserve deeper research and suggest avenues
for future research.

Keywords: supply chain disruptions; supply chain strategy; risk management; supply
chain resilience; organizational sense-making

INTRODUCTION
Like black swan events, gray swans can have a mas-
sive impact (Taleb, 2007). Unlike black swans, gray
swan events have happened before, although with a
low frequency. In business, gray swan events typically
provoke organizational crises. When these business
events result from a sudden eruption of tensions that
have been building up for a long time, we call them
business tsunamis (Akkermans & Van Wassenhove,
2013). Many of these business tsunamis originate in
the supply chain which is why we call them supply
chain tsunamis. They are the focus of this study. The
impact of supply chain tsunamis can vary. A focal
firm can be hit the hardest, but the tsunami may
affect the entire supply chain. Supply chain tsunamis
may even hit an entire supply network because within
an industry, supply chains are typically intercon-
nected. As such, supply chain tsunamis can severely
hurt an entire industry. For instance, the high-tech
electronics industry experienced a massive and sudden
downturn in 2001 that sent many companies to the
brink of bankruptcy.
This study picks up where our 2013 paper on gray
swans left off. Until now, supply chain tsunamis were
not seen as recurrent phenomena, but rather as once-
in-a-lifetime events. This is understandable since they

64 Volume 54, Number 1

 Supply Chain Tsunamis
occur at such long intervals that the previous occur-
rence may be forgotten or seen as equally unique. In
the high-tech electronics industry, all but a few veter-
ans had forgotten the lifetime event that happened in
2001, when an even more vicious downturn hit the
industry in 2008. Over the course of their careers,
most managers will experience a supply chain tsunami
more than once. Nevertheless, the long time intervals
between them make it difficult to see their recurrent
pattern and to remain alert. It has been said before
that “this time is different” are the four most expen-
sive words in history (Reinhart & Rogoff, 2009).
In fact, supply chain tsunamis are truly recurrent
phenomena unfolding according to an unchanging
operational logic, with the same key drivers and simi-
lar long-term effects. We define supply chain tsunamis,
explain their anatomy with a detailed example from
the electronics industry, and describe the sequence of
events as they unfolded in this example. We argue that
this sequence occurs in every supply chain tsunami
and proceed to discuss the underlying causal structure,
focusing on managerial sense-making and decision-
making. We also suggest remedies to overcome or even
prevent supply chain tsunamis from occurring.
Understanding supply chain tsunamis is important
for operations and supply chain management (OSCM)
because of their destructive short-term effects, but also
because of their long-term impact. Like its ecological
counterpart, a supply chain tsunami can fundamen-
tally alter the morphology of the business or even the
industry it hits, with structural effects on the supply
chain observable many years after the original event.
Given their disruptive short-term impact and their
game-changing long-term effects, supply chain tsuna-
mis must be better understood so that businesses can
brace themselves—or even prevent them altogether.
Supply chain tsunamis are low-probability, high-
impact events and as such are important to study. As
Hora and Klasssen (2013, p. 53) noted, “Studies in
operations management tend to emphasize high-fre-
quency, relatively low-impact operational losses.” In
our earlier article, we made the claim that manage-
ment must cast its net wider to catch indicators of
low-probability, high-impact events (Akkermans &
Van Wassenhove, 2013). This study contributes to the
broader field of supply chain management on the
topic of supply chain tsunamis. This contribution is
fourfold. First, we introduce the phenomenon to the
OSCM community and argue that individual
instances, while seemingly very different, share the
same underlying process. We show how the phe-
nomenon is structurally different from established
phenomena like the bullwhip effect and black swan
events.
Second, building on our earlier paper, we provide a
deeper description and analysis of supply chain
January 2018
tsunamis. We suggest a basis for an evolving typology,
describing four different types of supply chain tsunamis.
We also unravel the anatomy of supply chain tsunamis;
both the symptoms of how they typically behave when
viewed from an outsider perspective and the root causes
driving their evolution from an internal perspective.
Third, we position supply chain tsunamis as an
example of extended supply chain management,
where our discipline integrates considerations from
the fields of strategy, marketing, and organizational
behavior. We show that supply chain tsunamis fit well
with the current focus on “big data” and the “Internet
of Things,” given the present-day data capture and
analytical capabilities surrounding digital manufactur-
ing. We use the phenomenon to reintroduce the
notion of operations as the “missing link in strategy,”
as Skinner (1969) and Hayes and Wheelwright (1984)
did decades ago, showing that when the core dynam-
ics of this supply chain phenomenon are misunder-
stood, the business strategy may fail dramatically.
Fourth, we craft a preliminary research agenda to
explore this complex phenomenon which may take
several decades of study to fully unravel, not unlike
Lee et al.’s (1997) seminal work on the bullwhip
effect, which still triggers publications on supply chain
research after two decades.
SUPPLY CHAIN TSUNAMIS
Describing Supply Chain Tsunamis
We define a supply chain tsunami as a rarely occur-
ring supply chain phenomenon with a sudden and
devastating impact on a focal firm, its supply network,
or even the entire industry. It is a result of an accumu-
lation of operational issues in the periphery of the
supply network that were either overlooked or ignored
by management for too long. When a tipping point is
reached, a violent response in the external environ-
ment unleashes destructive effects on the firm, its
products and services, and management. To the out-
side observer, what is actually happening below the
surface remains invisible—like an ocean tsunami.
There are many similarities between supply chain tsu-
namis and ocean tsunamis. In this section, we list five,
but we also mention one crucial difference.
1 Low frequency. Some 1,000 ecological tsunamis have
been recorded in history. Supply chain tsunamis are
also relatively rare—hitting every ten or perhaps five
years unlike the bullwhip effect which operates all
the time in supply chains, or a black swan event
occurring only once a century.
2 A long gestation period followed by a sudden release of
forces. Just as tectonic plate pressures build up over
prolonged periods of time, the gestation of a supply
chain tsunami can take years, until the tipping
65
 Journal of Supply Chain Management
point is passed and the forces of destruction are
suddenly unleashed.
3 Point of origin on the periphery. Normally, the point
of origin of these forces is somewhere on the
periphery of the supply chain, far from the point
of impact. Just like an ocean tsunami begins far
out at sea with modest amplitude, these signs are
easily overlooked. Both types are hard to observe
prior to impact. Hence, the need to pay attention
to weak signals and actively “search for the gray
swans” (Akkermans & Van Wassenhove, 2013).
4 Massive immediate impact. The immediate impact of
a supply chain tsunami can be huge. In the cases
described in our 2013 paper (Akkermans & Van
Wassenhove, 2013), the impact ranged from senior
management stepping down to thousands of job
losses; from issuing a public apology to having to
resolve a crisis in buyer–supplier relations; from
massive losses to near bankruptcy.
5 Long-term structural impact. Ocean tsunamis are very
low-probability, high-impact events that influence
the morphology of a coastline (Dawson, 1994; Mas-
tronuzzi, Br€uckner, De Martine & Regnauld, 2013).
Similarly, supply chain tsunamis can reshape supply
chains in a lasting way. This can turn out good or
bad. If a company learns from experience, it will be
better prepared next time. If it can take its competi-
tors by surprise, it can ride the wave to gain a
strategic advantage. The same applies to the supply
network as a whole or even an entire industry. For
example, in the semiconductor industry, huge
inventory build-ups amplified the impact of the
2001 downturn. By 2008, the morphology of the
industry had changed and inventory levels were
kept very low, so when the global financial crisis
hit, orders were canceled much faster. This swift
inventory correction led to faster recovery and
unprecedented growth rates thereafter (Financial
Times 2010).
6 Foreseeable and avoidable. A fundamental difference
between supply chain and ocean tsunamis is that eco-
logical tsunamis remain unforeseen until the initial
shockwaves are released (Grotzinger & Jordan, 2014),
while supply chain tsunamis are predictable—and
even avoidable. Whereas the underlying seismic activ-
ity may be unobservable to humans, in a supply
chain setting, the mounting pressures can be spotted
and even stopped by management. While early warn-
ing systems for earthquakes are limited, big data and
smart sensor tools and techniques can allow for
timely and systematic risk assessments of imminent
gray swan events in supply chains. Yet in all the cases
we studied (Akkermans & Van Wassenhove, 2013),
such systems were either not installed or their signals
were disregarded.
66 Volume 54, Number 1
Positioning Supply Chain Tsunamis in the OSCM
Literature
Some clarification is to position this work in the liter-
ature. First, what unit of analysis are we looking at? As
noted by Natarajarathinam, Capar and Narayanan
(2009), there are different classifications of crises in the
wide-ranging supply chain literature. The source of cri-
sis can be internal or external; it can occur within a
firm, a supply chain or network or even within an
entire industry. Our study takes the firm and its associ-
ated supplier and customer base as the key unit of anal-
ysis. In other words, it focuses on the supply chain. The
vast majority of supply chain crises are not confined to
a single enterprise. A tsunami that hits a supply chain
may hit all the firms in the chain or even the entire
industry—but the challenges for management remain
the same. This is why we take a managerial perspective.
Of course, the antecedents of the organizational
response may be different for inter- and intrafirm dis-
ruptions. Between firms, trust and dependence may be
the key driving forces. Within the firm, as a recent study
suggests, prior experience may be more important
(Bode, Wagner, Petersen & Ellram, 2011).
Second, what capability (to deal with a supply chain
tsunami) are we talking about? The literature on sup-
ply chains’ “adaptive capability to deal with tempo-
rary disruptive events” (Juttner & Maklan, 2011) is
broad. Depending on the magnitude of the events,
the terms “disruption” (Sheffi & Rice, 2005), “crisis,”
or even “disaster” are used (Natarajarathinam et al.,
2009; Richey, 2009). Sources of supply chain disrup-
tions can be external, such as a natural disaster, or
internal, such as a failure to integrate all functions
(Ponomarov & Holcomb, 2009).
The term “supply chain resilience” describes the
ability to cope with the consequences of unavoidable
risk events and resume normal operations or move to
a new, more desirable state after a disruption
(Christopher & Peck, 2004; Peck, 2005). Related con-
cepts are “supply chain robustness and agility.” The
former is defined as “the ability of the supply chain to
maintain its function despite internal or external dis-
ruptions” (Brandon-Jones, Squire, Autry & Petersen,
2014). The latter is defined as the ability of the firm,
both internally and in conjunction with its key suppli-
ers and customers, to adapt or respond swiftly to mar-
ketplace changes, as well as to potential and actual
disruptions (Braunscheidel & Suresh, 2009).
While some authors see the two as mutually exclu-
sive, others regard robustness as a subset of resilience,
alongside agility (Wieland & Wallenburg, 2013), or
see agility as the overall construct (Braunscheidel &
Suresh, 2009). In this semantic debate, we are reluc-
tant to take sides. We acknowledge different supply
chain capabilities—as others have done—and we refer
 Supply Chain Tsunamis
to this capability as supply chain resilience, defined as
“the adaptive capability of the supply chain to prepare
for unexpected events, respond to disruptions, and
recover from them by maintaining continuity of oper-
ations at the desired level of connectedness and con-
trol over structure and function” (Ponomarov &
Holcomb, 2009, p. 131). This definition fits our pur-
pose as it encompasses a warning capability to detect
a pending or realized disruption early on and a recov-
ery capability to return to normal activity (Craighead,
Blackhurst, Rungtusanatham & Handfield, 2007).
Next, what kind of managerial decision-making are
we talking about? It is accepted in the OSCM research
community that managers do not act as classical
rational agents, but more as bounded rational deci-
sion-makers. Behavioral operations management exists
as a field in its own right (Bendoly, Donohue &
Schultz, 2006). It has also made advances in the con-
text of supply disruption risk, where managerial sense-
making has been used as theoretical lens to study and
understand managerial decision-making (Ellis, Shock-
ley & Henry, 2011). In behavioral operations, sense-
making is defined as a socio-psychological process
which describes how individuals resolve equivocality
(Weick, 1995, 2001). Despite incorporating organiza-
tional and individual factors into supply disruption
risk, until recently, this research was considered “only
in its incipient stages; we find few empirical studies
that draw on such variables to explain disruption risk
phenomena” (Ellis et al., 2011). We add to this body
of research by showing that more effective managerial
decision-making could have mitigated and even pre-
vented the destruction caused by supply chain tsuna-
mis.
We explain what supply chain tsunamis are not. Sup-
ply chain tsunamis are not a special variation of the
“bullwhip effect” (Lee et al., 1997), that destabilizing
phenomenon of upstream amplification in supply
chains which operates all the time, like waves rolling
onto the seashore. The drivers are fundamentally dif-
ferent, as we explain below. Supply chain tsunamis
are also not black swan events as meant by Taleb
(2007), as those are by definition unforeseeable and
unique. Supply chain tsunamis have happened in the
past, in the current environment, or a related one
(Hora & Klasssen, 2013) even though those earlier
occurrences may have been forgotten, ignored, or even
shoved under the table by management (Akkermans
& Van Wassenhove, 2013).
Finally, we do not suggest these phenomena are the
direct result of complex adaptive systems behavior.
Obviously, as supply base complexity grows, “the
degree of differentiation of the focal firm’s suppliers,
their overall number, and the degree to which they
interrelate” (Choi & Krause, 2006) explodes, hence
active monitoring of the environment becomes more
January 2018
complex. While there is much to say for the perspec-
tive of supply networks operating as complex adaptive
systems (Bozarth, Warsing, Flynn & Flynn, 2009;
Choi, Dooley & Rungtusanatham, 2001), we do not
imply that supply chain tsunamis occur because the
supply network has become so complex that its
behavior is chaotic (Dooley & Van de Ven, 1999; Hol-
land, 1995; Kauffman, 1993). A system in chaos tends
to be like that constantly; constant chaos cannot be
managed. In a chaotic regime, it is impossible to
monitor every minor event that could turn into a
major catastrophe, as in the well-known butterfly
effect (Lorenz, 1963).
THE ANATOMY OF A SUPPLY CHAIN
TSUNAMI
In 2001, the entire high-tech electronics industry
experienced a massive downturn that sent many com-
panies to the brink of bankruptcy. Back then, Cisco
CEO John Chambers, reflected: “I think the lesson
learned is that you got to anticipate that that can
occur, and just like the philosophy of 100-year flood,
you’ve got to build your house in a different location,
and you know it can happen to you, not just to
others. . . It was a tough message for the high-tech
industry, but we learn quickly in Silicon Valley, and
we’ll adjust” (ABC News, 2001). Was he right? This
reflection was a typical one in at least two ways. First,
because it illustrates how unexpected and disruptive
supply chain tsunamis are perceived to be by man-
agers. Second, because it illustrates how management
typically sees them: As something they could not have
avoided, and therefore should not be held account-
able for. One cannot be blamed for a 100-year flood.
We challenge this perception in this section by argu-
ing that, unlike 100-year floods, supply chain tsuna-
mis can be foreseen and often even prevented by
management. For this, it is essential that management
picks up the early warning signals from the periphery
of the supply chain.
Toward a Typology of Supply Chain Tsunamis
In all cases, we have studied (Akkermans, 2015;
Akkermans & Van Wassenhove, 2013) a supply chain
tsunami originates outside the scope of managerial
attention, in the periphery of the supply chain. The
part of the supply chain periphery where shockwaves
first appear largely determines the type of supply
chain tsunami to expect, as Figure 1 illustrates.
Figure 1 builds upon the case examples in our ear-
lier paper (Akkermans & Van Wassenhove, 2013) and
illustrates a preliminary typology of supply chain tsu-
namis. The horizontal directions are “classics” to sup-
ply chain management researchers. What we call a
demand bubble tsunami originates with the focal firm’s
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 Journal of Supply Chain Management

FIGURE 1
Supply Chain Tsunami Typology in Terms of the Supply Chain Periphery to Monitor for Early Warning Signals
[Color figure can be viewed at wileyonlinelibrary.com]

Relational /
cultural

Relation-
ship spiral
tsunami
Transactional/
contractual Demand
Schedule
pressure bubble
External- Primary Internal tsunami External-
Upstream
tsunami downstream
processes

Quality
cascade
tsunami

Tertiary
processes

customers and even with their customers, that is, far
downstream. Research has indicated industries where it
is essential to monitor the downstream supply chain
(e.g., Anderson, Fine & Parker, 2000). On the other
end of the spectrum, what we call a schedule pressure
tsunami originates in the engineering processes and
component manufacturing, which are often out-
sourced, that is, far upstream. Again, there is abundant
research on how issues in complex new product
design projects can dramatically and unexpectedly
escalate (e.g., Van Oorschot, Akkermans, Sengupta &
Van Wassenhove, 2013).
The vertical directions in Figure 1 are less common
but not unknown in the supply chain literature. For
example, in service supply chains, secondary and even
tertiary processes often create havoc (e.g., Akkermans
& Voss, 2013). Events that resemble what we call a
quality cascade tsunami in service supply chains were
described from an OM perspective some time ago
(e.g., Akkermans & Vos, 2003; Oliva & Sterman,
2001). These originate from down in the “boiler
room” of service supply chains, in their internal sup-
port processes. We also know that external buyer–sup-
plier dyads can degrade into a so-called relationship
spiral (Autry & Golicic, 2010). Here, so-called relation-
ship spiral tsunamis can create major crises in external
buyer–supplier settings (e.g., Van de Vijver, Vos &
Akkermans, 2011).
A Demand Bubble Tsunami: The Cisco 2001 Case
By way of a guiding example, we zoom in on the
2001 Cisco case, a well-known demand bubble tsu-
nami. Back then, like today, Cisco made equipment
that runs the Internet, notably digital information
switches. It also supplied equipment for the world’s
telecommunications infrastructure and for teleconfer-
encing, video, and Wi-Fi networks. Its sales were
$47.1 billion in the 2014 fiscal year, compared to
$1.2 billion in 1994, just before Mr. Chambers
stepped in as CEO. For a brief period, during the dot-
com bubble in the late 1990s, Cisco was the world’s
most valued company. The demand bubble tsunami
we describe starts around that period. To the outside
observer, the story unfolds in five distinct steps (a–e),
as illustrated in Figure 2.
(a) All appears well. Around the start of the new mil-
lennium, the high-tech sector was in a permanent
state of euphoria. The combined rise of high-speed
Internet and mobile communication led to wonderful
prospects for companies active in these innovation-
driven industries. In 1999, 80 percent of the routers
connected to the Internet were Cisco products. From

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 Supply Chain Tsunamis
FIGURE 2
External and Internal Process Sequences of a Supply Chain Tsunami [Color figure can be viewed at wileyonlineli-
brary.com]
A B C Violent
EXTERNAL All is well Bad news reactions
Decision-
INTERNAL Sense-making
making
1995 onward, Cisco had been growing fast, beating
expectations of the financial analysts (NYT 1999,
2000). Q2 of 2000 was its 42nd consecutive quarter
of revenue growth (NYT 2000). What could explain
this spending spree by Cisco’s customers? According
to CEO John Chambers, the world had changed for
good: “Globally, business and government leaders are
beginning to dramatically transform their traditional
business models into Internet economy business mod-
els. Business leaders are beginning to get it, and as
they get it they begin to bring the applications up and
spend at an accelerated rate” (NYT 2000).
(b) Bad news comes out. That not all was well became
apparent to the outside world in February 2001, when
Cisco announced for the first time in eleven years that
it expected revenues to decline (NYT 2001a). The
company said that for accounting purposes, it would
reduce the value of inventory by $2.5 billion that
quarter, $500 million in partly completed equipment,
and $2 billion in raw materials like computer chips
(NYT 2001b). Net income dropped by $0.8 billion in
Q1 of 2001 and $2.7 billion in Q3 of that year as
Cisco fired 8,500 workers (Byrne & Elign, 2002).
(c) Violent external reactions. This unexpected news
led to a massive drop in the market value of Cisco
Systems from $430 billion in March 2000 to
$180 billion in March 2001. This drop was one of the
deepest losses of shareholder wealth in history. It took
Cisco several years to recover and it survived, but
never regained its reputation of “Internet titan” (NYT
2001c) from before the demand bubble burst.
(d) Long-existing internal operational issues. How
could this have happened? How could a company
that was supposed to have hardly any inventory at all,
be exposed to such huge inventory risk? After all, only
some 40% of what Cisco sold at the time was actually
made by the company. Instead, the bulk of what
Cisco delivered was manufactured by a network of
suppliers and contract manufacturers. This outsourced
supply chain business model was supposed to keep
fixed costs to a minimum and eliminate the need for
January 2018
D E
Long existed Long ignored
Time
Implemen-
Learning
tation
inventory. In this way, “Cisco was supposedly using
the Internet to bind together its suppliers and contract
manufacturers into a seamless whole, pointing the
way to the corporation of the future. In fact, Cisco’s
network organization did little to soften the impact of
the downturn or save Cisco from the disastrous inven-
tory buildup” (Byrne & Elign, 2002).
What happened is that Cisco’s customers, in a rush
to meet the challenges from the Internet economy,
had ordered equipment aggressively, often ordering
ahead and even placing double or triple orders (Byrne
& Elign, 2002; Armory & Plambeck, 2005), in
response to anticipated shortages and delivery delays.
Cisco itself, in order to secure timely delivery, had
decided to place fixed orders with its supply base.
“We made a conscious decision when our leadtimes
were 12 to 13 weeks to build inventory, because we
were leaving a sizable amount of revenues on the
table every quarter,” conceded Cisco’s CFO in a 2002
interview. Soon inventories were growing faster than
sales, and the supply chain collapsed. It went from
zero inventories to a tsunami wave of seemingly
unstoppable supplies rolling in.
(e) Bad news ignored/suppressed by management. Before
the bubble burst, Cisco management made a gamble,
or a “strategic choice,” to prefer potentially unused
inventory to the possibility of stock outs (Thurm,
2001). They abandoned their own supply chain–
based business model. In retrospect that gamble
turned out to be a mistake. When the bubble burst,
Cisco management first remained in denial. As men-
tioned above, Mr. Chambers put what happened out-
side of his own responsibility, stating that the
economic challenges confronting the network equip-
ment industry were “a 100 year flood.” But was what
happened really so utterly unpredictable? One year
later in 2001, many in the industry agreed that “Cisco
executives ignored or misread crucial warning signs
that their sales forecasts were too ambitious” (Thurm,
2001). Even Cisco’s suppliers saw that sales forecasts
were too good to be true and told their customer so,
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 Journal of Supply Chain Management
according to the same article: “As long ago as last
summer, executives at Solectron, one of Cisco’s biggest
contract manufacturers, had warned Cisco and other
telecom-gear makers that they appeared to be ordering
more parts than needed” (Thurm, 2001).
Some years later, in their 2005 Management
Science article on this case, Armory and Plambeck
(2005, p. 1505) would concur: “Our results suggest
that Cisco’s write-off was caused by estimation errors
and cannot be blamed entirely on the economic
downturn.” Supply chain phenomena heavily inter-
act with behavioral issues, both in operations and at
managerial levels where they provoke disastrous
strategic impact.
The Anatomy of a Supply Chain Tsunami
In summary, the following sequence of events can
be observed from the outside when a business tsu-
nami “hits” a company and its supply chain:
a For a long time, all seems to be well.
b Suddenly and unexpectedly, bad news breaks.
c This leads to a violent reaction in the market, with
severe internal consequences.
d It then becomes clear that supply chain and opera-
tional problems have long existed.
e Finally, it becomes apparent that these problems
were missed or systematically ignored, underesti-
mated, or even denied by management.
This sequence not only holds for a demand bubble
tsunami. In our earlier article, we described this
sequence for each of the supply chain tsunami types
in Figure 1.
Meanwhile, the processes that unfold internally in
the supply chain are very different from what is
observed from the outside. This is illustrated in
Figure 2. Again, this sequence was observed in all
types of supply chain tsunamis we studied.
Internally, while operational problems continue to
grow, management takes a long time to make sense of
their magnitude and severity. Early warning signals
are sent from the periphery of the supply chain and
remain weak for a long time, especially for the man-
ager who sees them as very unwelcome news. Subse-
quently, decision-making is slow, leading to delayed
implementation of necessary counter-measures.
In the years after the crisis, supply chains may well
learn the lessons from the tsunami and change their
structure and policies. Unfortunately, over time, this
higher understanding and awareness may decrease
again, potentially facilitating another occurrence of a
supply chain tsunami a decade later. This four-stage
sequence (Figure 2) is not unlike the three distinct
disruption phases of supply chain “readiness,” “re-
sponsiveness” and “recovery” for adaptive resilience
(Juttner & Maklan, 2011; Sheffi & Rice, 2005).
70 Volume 54, Number 1
However, our terminology zooms in on fallible man-
agerial decision-making, which appears to be the core
issue for supply chain tsunamis.
The majority of the OSCM literature on crisis man-
agement, supply chain risk, or supply chain disrup-
tions looks at crises that have their origins outside the
company. In most organizational crises caused by sup-
ply chain tsunamis, the root problems are internal.
Certain organizational routines allow these problems
to grow, unknown at first, and then disregarded or
even denied by management, until they trigger a
major strategic impact. We contend, therefore, that
supply chain tsunamis can be seen as a special case of
managerial decision traps (Russo & Schoemaker,
1989; Van Oorschot et al., 2013). The management
trap is that the four-stage managerial cycle shown in
Figure 2 is too slow to allow for a timely reaction that
could have avoided the tsunami. How to conduct
research that will help prevent supply chain tsunamis
is the topic of the next section.
IMPLICATIONS FOR SUPPLY CHAIN
STRATEGY: TOWARD A RESEARCH AGENDA
It has been noted before that the focus of supply
chain managers (and research) is largely on ongoing
operational failures, on events that occur with high
frequency and in the short term (Hora & Klasssen,
2013). In contrast, supply chain tsunamis are the
result of a longer-term strategic failure to recognize
more subtle effects that rarely occur and lead to major
organizational problems and even crises. When some-
thing happens every decade, how many managers still
have knowledge of the previous occurrence, and how
many companies will have developed systems, proce-
dures, and routines to anticipate such rare events and
deal with them effectively? This is where the study of
supply chain tsunamis could enrich the risk manage-
ment and supply chain resilience research streams. In
general, a long-term strategic failure to recognize rare
events in the supply chain is a missing link in the
recognition that operations and supply chain manage-
ment has a key impact on business strategy (Skinner,
1969).
While the supply chain tsunami phenomenon may
be new to OSCM research, the research fields to study
it properly and to provide guidelines are not. What is
new is the way in which insights from these fields
have to be combined. For instance, there is active use
of behavioral decision-making and sense-making in
OSCM, and a wide array of research on supply chain
disruptions. What is needed to understand supply
chain tsunamis is to integrate both. This is true of
other fields as well, such as information management
and data analytics. We highlight these as we follow
the managerial decision sequence from Figure 2 stage
 Supply Chain Tsunamis
by stage. It is this decision sequence that highlights
the root causes of the supply chain tsunami
phenomenon.
Sense-Making
A key remedy to avoid supply chain tsunamis is to
develop a skill in watching out for gray swans, espe-
cially in the outskirts of the extended supply chains of
an organization. Managing supply chain tsunamis is
fundamentally about looking for early signs of disrup-
tions or crises building up. Although supply chain vis-
ibility is commonly regarded as “a key capability in
reducing supply chain risk (Christopher & Lee, 2004),
surprisingly, broad empirical evidence for its effects
appears largely absent from the literature” (Brandon-
Jones et al., 2014). We know that effective informa-
tion sharing significantly enhances supply chain prac-
tice and that this effect grows when the supply chain
becomes more dynamic (Zhou & Benton, 2007).
In recent years, there have been renewed calls for
information technology as an enabler for superior
supply chain performance, in particular supply chain
collaboration. Could superior use of IT help? It is dif-
ficult to say. It is commonly assumed that when “ade-
quate information systems exist with suppliers and
customers,” a willingness to share information among
supply chain members is promoted (Fawcett, Wallin,
Allred, Fawcett & Magnan, 2011). The example of Cis-
co’s supply chain tsunami certainly suggests that the
absence of visibility can create what Christopher and
Lee (2004) term a “risk spiral.” But would IT
improvements have prevented the build-up of the cri-
sis? For instance, would better visibility of the total
volume of upstream pipeline stocks have made the
total value at risk clearer to Cisco’s management? It
would not have shown that the real orders placed by
customers were heavily inflated—that would require
visibility on developments in the downstream market
of Cisco’s customers’ customers. Very few vendors
boast that they have installed such systems, and few
OEMs admit publicly they have such visibility, even
today.
In summary, without visibility on downstream or
upstream supply chain developments, management is
partially blind and accidents will happen. With mod-
erate supply chain visibility, management may not see
far or deep enough to spot a tsunami in the making.
Even with full visibility, that extends to more than
one echelon upstream or downstream, only a mindset
that is actively on the lookout for rare events running
counter to conventional wisdom will catch such sig-
nals in time (Ellis et al., 2011; Weick, 1995; Weick,
2001). This resonates with many examples of good
practice. For instance, in May 2017, Facebook
announced it would hire 3,000 additional staff to
constantly scan Facebook pages for emerging “Google
January 2018
Bombs” (Wickre, 2017) of extremist and distressing
content (Sillars, 2017). This is a business-to-consumer
(B2C) example. In the business-to-business setting of
high-tech electronics, De Kok et al. (2005) describe a
successful collaborative planning effort for a three-
echelon supply chain of optical storage devices. Here,
data collection was driven by an integral mathemati-
cal model, spanning half a dozen companies and doz-
ens of factories and warehouses.
In the OSCM literature, a distinction is made
between information sharing and visibility. Informa-
tion sharing enabling supply chains to be more trans-
parent (Brandon-Jones et al., 2014) is predominantly
concerned with quality and relevance of information
(Cao & Zhang, 2011), visibility with the information
flow in terms of inventory and demand levels (Braun-
scheidel & Suresh, 2009). In the current context, the
need to look far and wide applies to both aspects.
It is clear that more IT will not necessarily prevent
future supply chain tsunamis. Big data may help but
may not be sufficient. Companies and their supply
chain partners need to develop a deeper understand-
ing of the dynamics that govern the periphery, and
ultimately the center, of their supply networks. This
will make clear what kind of data they should collect
and what key performance indicators to monitor. A
present-day comparison can be made with the field of
predictive maintenance, where data analytics alone are
not sufficient to make sense of the gigabytes of data
spat out by complex equipment on a daily basis. One
also needs good theories on failure modes, degrada-
tion models, and the like, to guide the search (Akker-
mans, Besselink, van Dongen & Scholten, 2017;
Porter & Heppelman, 2014). In short, IT helps and
current technology clearly opens great opportunities,
but a deeper understanding of underlying phenomena
is required for improved sense-making. Theory devel-
opment is therefore necessary to accelerate progress.
Decision-Making
Supply chain tsunamis hurt the entire supply chain.
Dealing with them requires concerted decision-making
between multiple business units and functions, as well
as different hierarchical levels. Such decision-making
is far from easy. As the Cisco case illustrates, long
after some parts of the supply chain realized there
were major problems, there was still no concerted
action to address them. In this respect, OSCM can
borrow from insights on organizational inertia
(Dobrev, Kim & Carroll, 2003; Hannan & Freeman,
1984), information filters (Russo, Carlson, Meloy &
Yong 2008), decision traps (Russo & Schoemaker,
1989), and functional silos (Flynn, Huo & Zhao,
2010; Majchrzak & Wang, 1996). In particular, the
budding literature on Sales and Operations planning
can be leveraged (Doering & Suresh, 2016; Kaipia,
71
 Journal of Supply Chain Management
Holmstr€ om, Sm aros & Rajala, 2017; Oliva & Watson,
2011; Thome, Scavarda, Fernandez & Scavarda, 2012)
to yield insights on how to share data and decisions
faster and better across a supply chain, business func-
tions, and hierarchical levels.
Formal decision models, especially when developed
with and for management, can considerably improve
and speed up the decision-making process. For
instance, at Fluor, an engineering company, a formal
system dynamics model of project dynamics is rou-
tinely used to prevent schedule pressure tsunamis
from occurring (Cooper & Lee, 2009). In general, sys-
tem dynamics seems well-suited for modeling these
types of business processes, since supply chain tsuna-
mis thrive in a nonlinear world with tipping points,
delays, and exponential growth, which is where SD
models excel. Supply chain tsunamis are also rooted
in operational processes. Sterman, Oliva, Bendoly and
Linderman (2015) point out that system dynamics
fosters “the development of process-based theories
that explicitly incorporate the physical and institu-
tional structure of operational systems and the behav-
ioral decision rules of the actors in those systems”
(Sterman et al., 2015, p. 4). Finally, system dynamics
has also developed good practices for developing
models together with management and staff of the
companies involved, to secure ownership and com-
mitment to the policy recommendations following
from the model (Akkermans, Bogerd & Van Dore-
malen, 2004; Akkermans & Van Oorschot, 2016).
Implementation
The trade-offs between robustness and flexibility
constitute an interesting avenue for further research
since ample literature is available in the field of
OSCM. What is the impact of the trade-off between
tight and closely knit supply chain relations with
strategic supply chain partners and a more loosely
coupled collaboration mode on the ability to deal
with supply chain tsunamis? This may go back all the
way to the trade-off between tightly and loosely cou-
pled systems as developed in normal accident theory
(Orton & Weick, 1990; Perrow, 1984). This paper
supports the call of Ellis et al. (2011) to develop more
research that takes a managerial sense-making and
enactment perspective on supply chain disruptions.
Learning
When organizations fail to learn from a tsunami
experience they may well go under with the next one
hitting them. Partly, this is an issue of organizational
inertia (Dobrev et al., 2003) and the need to develop a
systems capability to learn from failures and mistakes
(Madsen & Desai, 2010; Senge, 1990). One problem
with crises resulting in operational losses is that one
needs to learn from failures, while successes are much
72 Volume 54, Number 1
more attractive to document and discuss. As Hora and
Klasssen (2013) point out, “the routines and processes
of a successful firm also can represent a benchmark or
aspirational model. In contrast, for operational losses,
observational learning involves avoidance or anticipa-
tion of triggers initiating such losses.”
What the OSCM community can learn from other
disciplines, or by reverse design, is that airline pilots,
marines, and other professionals, including humani-
tarian logisticians, who have to deal with low-
likelihood high-impact events use simulations. A flight
simulator is cheaper than an actual plane and just as
sophisticated. It allows intensive training in rare
events and how to handle them. Similarly, complex
natural and man-made disasters are increasingly simu-
lated for training purposes of response actors like
humanitarian logisticians or medical teams. These
true-to-real-life exercises are still rare in the business
world. One reason may be the challenge of bringing
together the multiple actors in the supply chain or the
larger ecosystem for these types of trainings. Neverthe-
less, the beer game (Sterman, 1989), a board game
depicting dynamics in a four-echelon supply chain,
was used successfully to train hundreds of thousands
of students and practitioners in complex supply chain
dynamics. System dynamics-based “managerial micro-
worlds” (Senge, 1990) may just be what the OSCM
field needs to better understand and teach the dynam-
ics governing supply chain tsunamis.
While simulated environments are extremely useful
for training purposes, the question is also how to use
them for research. Obviously, the behavior and deci-
sion-making of trainees can be monitored, and natu-
ral experiments can be used to test hypotheses.
Sengupta, Abdel-Hamid and Van Wassenhove (2008)
conducted experiments with highly experienced execu-
tives in simulated project settings and showed that
they performed surprisingly poorly. Van Oorschot
et al. (2013) observed weekly meetings of a manage-
ment team for a major new product development pro-
ject for over a year and documented the decision trap
they fell into when the project failed.
Toward a Research Agenda
Summarizing the above comments, research into
supply chain tsunamis requires a broad external per-
spective to understand complex supply chains or even
networks and pick up weak signals at the periphery.
One needs to analyze how seemingly innocent events
at the periphery can spin to the center of the network
and create havoc. How does that differ by industry or
by the structure and operation of the supply chain?
Research also needs to study nonlinearities to predict
when events reach a tipping point that requires
prompt action in order to prevent the tsunami from
hitting the company or the sector. All of the above
 Supply Chain Tsunamis

strongly suggest an extended perspective of OSCM.
Table 1 contains a set of example questions along the
managerial decision cycle we have laid out and across
our tentative typology of SC tsunami types.
Sources of inspiration are numerous, but they all start
with becoming aware that supply chain tsunamis exist.
They are important strategic supply chain phenomena
in their own right whose study has been neglected. Only
then can we start to analyze, model, and detect them
early on. It is essential to recognize a phenomenon,
unravel its underlying behavior, and identify a basic
typology. This is the essence of our contribution.
CONCLUSIONS
This paper has introduced supply chain tsunamis as
an important OSCM phenomenon. It has shown that
supply chain tsunamis are different from known
dynamic phenomena like the bullwhip or black swan
effects. It has also shown that supply chain tsunamis
are important because they are pervasive across many
sectors, have severe short-term impact on supply
chains, companies, and sometimes entire industries,
as well as long-term formative effects on industry
structure.
We have given a basis for an evolving typology of
business tsunamis containing four different types. We
have described the anatomy of supply chain tsunamis
both in terms of the typical symptoms the outside
world observes and in terms of the internal managerial
processes that form the root causes for the problems.
To an external observer, a five-stage sequence is typical.
First, all is well. Then, the bad news breaks and violent
reactions erupt. Next, it surfaces that the problems were
long-existing and long-standing management ignorance
and even denial is exposed. To an attentive internal
observer, the root cause process steps management goes
through involve sense-making, decision-making, imple-
mentation, and learning. When supply chain tsunamis
occur, subsequent analysis invariably shows that the
managerial decision sequence was way too slow to spot
and address the growing issues before they manifested.

TABLE 1
Example Questions for a Research Agenda on Supply Chain Tsunamis

Decision
Process Stage Promising Research Questions
Sense-making What are good early warning indicators to detect a pending tsunami in
new product development (for a schedule pressure tsunami), in downstream
supply chains (for a demand bubble tsunami), in order rework in service
supply chains (for a quality cascade tsunami), or in buyer–supplier
relationships (for a relationship spiral tsunami)?
What cognitive, behavioral, and organizational decision filters are
complicating detection? What are sound policies to eliminate these
decision filters?
Decision-making How does the number and cohesion of functional managers involved in
dealing with a tsunami affect the speed and quality of the policies devised?
How is the trade-off between a strongly structured, tightly integrated
decision-making process and a more loosely coupled mode of
decision-making impacting supply chain disruptions?
How is the impact of the number of hierarchical levels and organizational
complexity affecting speed and quality of decision-making and the
resulting policies?
What is the impact of organizational culture (e.g., a culture of high-reliability)
on transparency and trust in decision-making teams and hence on decision
speed and quality?
Implementation How is the trade-off between tight and closely knit supply chain relations
with strategic supply chain partners and a more loosely coupled collaboration
mode impacting the ability to deal with business tsunamis?
Learning What determines how much and how quickly an organization/supply
network/industry learns from a business tsunami experience?
What are the long-term effects of a business tsunami on reshaping
organizational culture, information systems, supply chain relationships,
inventory strategy, sourcing strategy, etc.?

January 2018 73
 Journal of Supply Chain Management
We have positioned the supply chain tsunami phe-
nomenon within “Extended SCM,” and have specified
broadly how and where OSCM needs to expand its
perspective, not just to big data, although arguably IT
development takes away the management excuse “they
just couldn’t get us timely data.” We have also
pointed to behavioral studies, to marketing, and to
business strategy, so that OSCM regains its place as
“the missing link” in corporate strategy (Skinner,
1969). Unless OSCM picks up this challenge, the field
is at serious risk of being marginalized, as these phe-
nomena are here to stay and other fields may be
happy to pick up what is essentially an OSCM topic
with a strong extended supply chain component.
Supply chain tsunamis, although interdisciplinary in
nature, are first and foremost supply chain phenom-
ena, and we believe the OSCM community has much
to offer to society by studying them, understanding
their origins and behaviors, and providing guidelines
for containing their harmful effects. We are fully
equipped for this. This paper is a call to researchers to
pick up this challenge and ensure that supply chain
tsunamis will not become an ever-greater plague of
our present-day society. That it will not become our
“new normal” (Wickre, 2017), but rather a phe-
nomenon we know, understand, can manage, and
have under control.
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Henk Akkermans (Ph.D., TU Eindhoven) is Profes-
sor of Supply Chain Management at Tilburg Univer-
sity. Dr. Akkermans’s research addresses the issue of
how interorganizational supply chains and networks,
where no single party exerts full control, can neverthe-
less effectively co-ordinate their behavior. His focus is
on technical, innovation-driven sectors (such as elec-
tronics, aerospace, telecom, process industry, and the
maritime sector), but also on health care and public
infrastructure. Professor Akkermans is fundamentally
interested in the interactions between shop floor oper-
ations and customer demand, and in the roles that
management information and cognitive limitations in
decision-making play in this. His interest stretches all
the way from new product/service development to
maintenance and asset management activities. To
obtain deeper insight into these complex issues, he
develops system dynamics simulation models of real-
world settings.
Luk N. Van Wassenhove (Ph.D., Katholieke Univer-
siteit Leuven) is the Henry Ford Professor of Manufac-
turing at INSEAD Fontainebleau. He is a Fellow of
POMS, EurOMA, M&SOM, and EURO Gold Medalist.
His research interests include closed-loop supply
chains and humanitarian operations.