Proceedings of the Global Joint Conference on Industrial Engineering and Its Application Areas 2016, Istanbul, Turkey, July 14-15, 2016 The Impacts of Economic Sanctions on Supply Chain Management: Empirical Analysis of Iranian Supply Chains Ehsan Shakeri*, Bela Vizvari, Ramtin Nazerian Department of Industrial Engineering Eastern Mediterranean University Famagusta, North Cyprus, 99628, Turkey Abstract Over the last two decades, supply chains have shown a great tendency of expanding their networks beyond the national boundaries and using the global sourcing strategy. As a result, supply chains have become more complex and dynamic networks that extend over several countries. In this situation, any uncertainty in the political and economic relations between countries should be considered as a source of risks. This study has focused on the Iranian supply chains -which have been suffering from harsh economic and financial sanctions- in order to investigate the impacts of such sanctions on supply chains. After identifying the most significant supply chain risks they are analyzed via a qualitative method with respect to the means of probability, impact and effect of sanctions. The impact of sanctions on different risk drivers, industries and supply chain performance measures are investigated. The results show that sanctions have the greatest negative impact on financial risks compared to the other risk drivers and all companies regardless of their industries are found to be vulnerable to sanctions. As to performance criteria however, the analyses disclose that supply chain cost and cash to cash cycle should receive more attention whenever the supply chains are influenced by sanctions. The analyses reveal that supply chain risk factors are really triggered by sanctions specifically risks of exchange rate movements, material price fluctuations, supplier bankruptcy, inability to collect all receivables and buying from a single source which should be viewed as the leading risk factor in the presence of sanctions. Keywords Supply chain management, Sanctions, Risk management. 1. Introduction Over the last two decades, due to the globalization, managers have been facing with unknown conditions and new risks. Having enhanced competitive advantage, supply chains have shown a great tendency of expanding their networks beyond national boundaries and use global sourcing strategy (Giannakis & Papadopoulos, 2016; Sofyalıoğlu & Kartal, 2012). There are many motivations that trigger global sourcing such as accessing to goods with lower prices, better accessibility to the new technologies and greater chance to enter new markets (Holweg et al., 2011; Nassimbeni, 2006). However, this phenomenon leads supply chains to become more complex and imposes them to higher uncertainties and vulnerabilities (e.g. local political instability, exchange rate fluctuations) that may decrease supply chains performance if they are not handled appropriately (Danese et al., 2013; Golini & Kalchschmidt, 2011). In addition, the internationalization of suppliers highlights the role of economic and political relationships between countries. Thus, any political or military conflicts between nations has a huge impact on the firm’s business performance. With the escalation of conflicts, one expected action of governments is to institute sanctions. Barriers on imports and exports, financial-related issues, including limitations on financial transactions and reductions in the collaborations with foreign countries are only some of the difficulties which are caused by sanctions (Davarzani & Zegordi, 2011). However usually sanctions have been imposed against specific activities and entities, due to the multilateral communications between different organizations and industries, in addition to the predetermined goals, other sectors and industries are also affected. For example sanctions against Iran are generally focused on nuclear activities, while their negative effects on the other industries like the automotive industry have been reported (H. Davarzani et al., 2011). From Supply Chain Management (SCM) point of view, economic sanctions are considered as a source of disruptions (unplanned and unanticipated events) which can interrupt the flow of materials, information and cash, 53