Supply chain resilience

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Supply chain resilience is "the capacity of a supply chain to persist, adapt, or transform in the face of change". [1]

Contents

Origins

Around the turn of the millennium, supply chain risk management has attempted to transfer traditional risk management approaches from the "company" system to the "supply chain" system. [2] However, the scalability of traditional risk management steps (identification, assessment, treatment and monitoring of risks) quickly reaches its limits: It is entirely possible to identify all conceivable risks within a company; However, a supply chain often consists of thousands of companies – the attempt to identify all possible risks in this system is therefore much more complex, if not in vain. [1] It is a popular concept in contemporary supply chain management. It has therefore been argued that the complexity of supply chains requires complementary measures such as supply chain resilience. [3] Resilience is able to cope with all sorts of changes and is thus less about the identification of specific risks but more about the characteristics of the system. [4]

Interpretations of supply chain resilience

Resilience in the sense of engineering resilience

For a long time, the interpretation of resilience in the sense of engineering resilience prevailed in supply chain management. [1] It is implied here that supply chain is a closed system that can be controlled, similar to a system designed and planned by engineers (e.g. subway network). [5] The expectations placed on managers come close to those placed on engineers, who should react quickly in the event of a disturbance in order to restore the system's ideal and original state as quickly as possible. [6] A popular implementation of this idea in supply chain management is given by measuring the time-to-survive and the time-to-recover of the supply chain, allowing to identify weak points in the system. [7] Acting like an engineer by redesigning the supply chain like on the drawing board, often by creating redundancies (e.g. multiple sourcing), strengthens resilience. In the short term, a supply chain can be viewed as a relatively rigid system. The idea of persistence of a supply chain that follows from engineering resilience therefore makes sense in the short term. However, this approach has mid to long-term limits. While the traditional engineering resilience approach in supply chains focuses on a quick response to restore the system to its ideal and original state after a disturbance, emerging perspectives suggest a shift towards a more proactive adaptation approach. This new viewpoint highlights the importance of not just reactive measures, but also proactive strategies like redundancy, flexibility, and adaptability to ensure the supply chain's persistent performance and adaptability in the face of disruptions [8] .

Resilience in the sense of socio-ecological resilience

The resilience of social-ecological systems changes in the four phases of each adaptive cycle. This applies at all levels of a panarchy separately. Panarchy-adaptive-cycles.png
The resilience of social-ecological systems changes in the four phases of each adaptive cycle. This applies at all levels of a panarchy separately.

Social-ecological resilience goes back to ecological resilience, adding to it human decision-makers and their social interactions. [9] A supply chain is thus interpreted as a social-ecological system that – similar to an ecosystem (e.g. forest) – is able to constantly adapt to external environmental conditions and – through the presence of social actors and their ability to foresight – also to transform itself into a fundamentally new system. [5] This leads to a panarchical interpretation of a supply chain, embedding it into a system of systems, allowing to analyze the interactions of the supply chain with systems that operate at other levels (e.g. society, political economy, planet Earth). [5] For example, Tesla's supply chain can be described as resilient because it reflects the transformation from internal combustion engines to electric engines, which is based on the ability of human actors to foresee long-term changes in the planet in the context of the climate crisis and to implement them in a business model. In contrast to engineering resilience, the supply chain is not interpreted as a system that needs to be stabilized in a fixed state (focus: persistence), but as a fluid system or even as a fluid process that interacts with the rest of the world (focus: adaptation or even transformation). [1]

Literature

Related Research Articles

<span class="mw-page-title-main">Supply chain management</span> Management of the flow of goods and services

In commerce, supply chain management (SCM) deals with a system of procurement, operations management, logistics and marketing channels, through which raw materials can be developed into finished products and delivered to their end customers. A more narrow definition of supply chain management is the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronising supply with demand and measuring performance globally". This can include the movement and storage of raw materials, work-in-process inventory, finished goods, and end to end order fulfilment from the point of origin to the point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain.

<span class="mw-page-title-main">Supply chain</span> System involved in supplying a product or service to a consumer

A supply chain, sometimes expressed as a "supply-chain", is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them to end consumers or end customers. Meanwhile, supply chain management deals with the flow of goods within the supply chain in the most efficient manner.

Robustness is the property of being strong and healthy in constitution. When it is transposed into a system, it refers to the ability of tolerating perturbations that might affect the system's functional body. In the same line robustness can be defined as "the ability of a system to resist change without adapting its initial stable configuration". "Robustness in the small" refers to situations wherein perturbations are small in magnitude, which considers that the "small" magnitude hypothesis can be difficult to verify because "small" or "large" depends on the specific problem. Conversely, "Robustness in the large problem" refers to situations wherein no assumptions can be made about the magnitude of perturbations, which can either be small or large. It has been discussed that robustness has two dimensions: resistance and avoidance.

A supply network is a pattern of temporal and spatial processes carried out at facility nodes and over distribution links, which adds value for customers through the manufacturing and delivery of products. It comprises the general state of business affairs in which all kinds of material are transformed and moved between various value-added points to maximize the value added for customers. In the semiconductor industry, for example, work-in-process moves from fabrication to assembly, and then to the test house. The term "supply network" refers to the high-tech phenomenon of contract manufacturing where the brand owner does not touch the product. Instead, she coordinates with contract manufacturers and component suppliers who ship components to the brand owner. This business practice requires the brand owner to stay in touch with multiple parties or "network" at once.

Psychological resilience is the ability to cope mentally and emotionally with a crisis, or to return to pre-crisis status quickly.

<span class="mw-page-title-main">Ecological resilience</span> Capacity of ecosystems to resist and recover from change

In ecology, resilience is the capacity of an ecosystem to respond to a perturbation or disturbance by resisting damage and recovering quickly. Such perturbations and disturbances can include stochastic events such as fires, flooding, windstorms, insect population explosions, and human activities such as deforestation, fracking of the ground for oil extraction, pesticide sprayed in soil, and the introduction of exotic plant or animal species. Disturbances of sufficient magnitude or duration can profoundly affect an ecosystem and may force an ecosystem to reach a threshold beyond which a different regime of processes and structures predominates. When such thresholds are associated with a critical or bifurcation point, these regime shifts may also be referred to as critical transitions.

<span class="mw-page-title-main">Supply chain risk management</span> Preventing failures in logistics

Supply chain risk management (SCRM) is "the implementation of strategies to manage both everyday and exceptional risks along the supply chain based on continuous risk assessment with the objective of reducing vulnerability and ensuring continuity".

<span class="mw-page-title-main">Yossi Sheffi</span>

Yossi Sheffi is the Elisha Gray II Professor of Engineering Systems at the Massachusetts Institute of Technology. He founded or co-founded five companies, has authored numerous scientific publications and nine books.

A social-ecological system consists of 'a bio-geo-physical' unit and its associated social actors and institutions. Social-ecological systems are complex and adaptive and delimited by spatial or functional boundaries surrounding particular ecosystems and their context problems.

<span class="mw-page-title-main">Urban resilience</span> Ability of a city to function after a crisis

Urban resilience has conventionally been defined as the "measurable ability of any urban system, with its inhabitants, to maintain continuity through all shocks and stresses, while positively adapting and transforming towards sustainability".

<span class="mw-page-title-main">LARG SCM</span>

LARG Supply Chain Management attempts to put together lean, agile, resilient, and green approaches in supply chain management. Lean supply chain managements aims are to maintain close to zero inventories and reduce work-in-process; Agile goes for quick responses to customer inquiries and market changes while controlling costs and quality; resilience is about reacting quickly to disruptions impacting supply chain; and green refers to sustainability in supply chain through low emissions to the environment and a recycling strategy for products.

The Journal of Business Logistics is a peer-reviewed academic journal published by Wiley-Blackwell on behalf of the Council of Supply Chain Management Professionals (CSCMP), covering research and best practices in logistics and supply chain management. In October 2020, Robert 'Glenn' Richey, Jr. and Beth Davis-Sramek, both of Auburn University's Harbert College of Business, were appointed as the incoming editors-in-chief, taking over from Thomas J. Goldsby and Walter Zinn, of The University of Tennessee-Knoxville and The Ohio State University Fischer College of Business, respectively. Some notable writers include Dean Matthew Waller of the University of Arkansas Sam M. Walton College of Business, Stanley E. Fawcett, and John T. Mentzer. According to the Journal Citation Reports, its 2020 impact factor is 6.677 and its 5-year impact factor is 7.362, ranking it 48th out of 226 journals in the category "Management".

An important part of the heritage of family resilience is the concept of individual psychological resilience which originates from work with children focusing on what helped them become resilient in the face of adversity. Individual resilience emerged primarily in the field of developmental psychopathology as scholars sought to identify the characteristics of children that allowed them to function "OK" after adversity. Individual resilience gradually moved into understanding the processes associated with overcoming adversity, then into prevention and intervention and now focuses on examining how factors at multiple levels of the system and using interdisciplinary approaches promote resilience. Resilience also has origins to the field of positive psychology. The term resilience gradually changed definitions and meanings, from a personality trait to a dynamic process of families, individuals, and communities.

<span class="mw-page-title-main">Resilience (engineering and construction)</span> Infrastructure design able to absorb damage without suffering complete failure

In the fields of engineering and construction, resilience is the ability to absorb or avoid damage without suffering complete failure and is an objective of design, maintenance and restoration for buildings and infrastructure, as well as communities. A more comprehensive definition is that it is the ability to respond, absorb, and adapt to, as well as recover in a disruptive event. A resilient structure/system/community is expected to be able to resist to an extreme event with minimal damages and functionality disruptions during the event; after the event, it should be able to rapidly recovery its functionality similar to or even better than the pre-event level.

Climate resilience is defined as the "capacity of social, economic and ecosystems to cope with a hazardous event or trend or disturbance". This is done by "responding or reorganising in ways that maintain their essential function, identity and structure while also maintaining the capacity for adaptation, learning and transformation". The key focus of increasing climate resilience is to reduce the climate vulnerability that communities, states, and countries currently have with regards to the many effects of climate change. Efforts to build climate resilience encompass social, economic, technological, and political strategies that are being implemented at all scales of society. From local community action to global treaties, addressing climate resilience is becoming a priority, although it could be argued that a significant amount of the theory has yet to be translated into practice.

Community resilience is the sustained ability of a community to use available resources to respond to, withstand, and recover from adverse situations. This allows for the adaptation and growth of a community after disaster strikes. Communities that are resilient are able to minimize any disaster, making the return to normal life as effortless as possible. By implementing a community resilience plan, a community can come together and overcome any disaster, while rebuilding physically and economically.

<span class="mw-page-title-main">Nature-based solutions</span> Sustainable management and use of nature for tackling socio-environmental challenges

Nature-based solutions (NBS) is the sustainable management and use of natural features and processes to tackle socio-environmental issues. These issues include climate change, water security, water pollution, food security, human health, biodiversity loss, and disaster risk management. The European Commission's definition of NBS states that these solutions are "inspired and supported by nature, which are cost-effective, simultaneously provide environmental, social and economic benefits and help build resilience. Such solutions bring more, and more diverse, nature and natural features and processes into cities, landscapes, and seascapes, through locally adapted, resource-efficient and systemic interventions". In 2020, the EC definition was updated to further emphasise that "Nature-based solutions must benefit biodiversity and support the delivery of a range of ecosystem services." Through the use of NBS healthy, resilient, and diverse ecosystems can provide solutions for the benefit of both societies and overall biodiversity.

<span class="mw-page-title-main">Agrifood systems</span>

Agrifood systems encompass the primary production of food and non-food agricultural products, as well as in food storage, aggregation, post-harvest handling, transportation, processing, distribution, marketing, disposal and consumption. Within agrifood systems, food systems comprise all food products that originate from crop and livestock production, forestry, fisheries and aquaculture, and from other sources such as synthetic biology, and that are intended for human consumption.

Resilience engineering is a subfield of safety science research that focuses on understanding how complex adaptive systems cope when encountering a surprise. The term resilience in this context refers to the capabilities that a system must possess in order to deal effectively with unanticipated events. Resilience engineering examines how systems build, sustain, degrade, and lose these capabilities.

<span class="mw-page-title-main">Resilience (mathematics)</span> Mathematical measure of transient behavior.

In mathematical modeling, resilience refers to the ability of a dynamical system to recover from perturbations and return to its original stable steady state. It is a measure of the stability and robustness of a system in the face of changes or disturbances. If a system is not resilient enough, it is more susceptible to perturbations and can more easily undergo a critical transition. A common analogy used to explain the concept of resilience of an equilibrium is one of a ball in a valley. A resilient steady state corresponds to a ball in a deep valley, so any push or perturbation will very quickly lead the ball to return to the resting point where it started. On the other hand, a less resilient steady state corresponds to a ball in a shallow valley, so the ball will take a much longer time to return to the equilibrium after a perturbation.

References

  1. 1 2 3 4 Wieland, A., & Durach, C. F. (2021). Two perspectives on supply chain resilience. Journal of Business Logistics. https://doi.org/10.1111/jbl.12271
  2. Norrman, A., & Jansson, U. (2004). Ericsson’s proactive supply chain risk management approach after a serious sub‐supplier accident. International Journal of Physical Distribution & Logistics Management, 34(5), 434-456. https://doi.org/10.1108/09600030410545463
  3. see Walker, B. (2020). Resilience: what it is and is not. Ecology and Society, 25(2).
  4. Sheffi, Y. (2007). The resilient enterprise: overcoming vulnerability for competitive advantage. Zone Books.
  5. 1 2 3 Wieland, A. (2021). Dancing the supply chain: Toward transformative supply chain management. Journal of Supply Chain Management, 57(1), 58-73. https://doi.org/10.1111/jscm.12248
  6. see Holling, C. S. (1996). Engineering resilience versus ecological resilience. In: Engineering within ecological constraints, 31(1996), 32.
  7. Simchi‐Levi, D., Wang, H., & Wei, Y. (2018). Increasing supply chain robustness through process flexibility and inventory. Production and Operations Management, 27(8), 1476-1491.
  8. Ivanov, Dmitry (2023-09-04). "Two views of supply chain resilience". International Journal of Production Research: 1–15. doi:10.1080/00207543.2023.2253328. ISSN   0020-7543.
  9. Folke, C. (2006). Resilience: The emergence of a perspective for social–ecological systems analyses. Global Environmental Change, 16(3), 253-267.