Defining supply chain resilience An increasing amount of research has been written on this subject over the past two decades. We explore three papers that examine what it is and how you can achieve it
Closs, Understanding Supply Chain Resilience 1 , listed natural and man-made disasters among the events that could prompt problems. It highlighted equipment failures, fires, labour disputes, supplier defaults, political instability, and terrorist attacks; and we know we can add warring conflict, a pandemic and a struggling transport network to that docket. Each can impact operations, finances and reputation. The paper said that while boosting supply chain resilience would help to manage many, and overcome some of these challenges, understanding the basis of this resilience was ill- defined and open to confusion. It said two critical capacities are required: the capacity for resistance and the capacity for recovery. The first defines the supply chain’s ability to delay a disruption and reduce its impact; the second defines the ability to recover from it. 1 Understanding Supply Chain Resilience by Steven A Melnyk, David J Closs, Stanley E Griffis, Christopher W Zobel, and John R Macdonald
‘Resistance capacity’, it said, is the ability of a system to minimise the impact of a disruption by evading it entirely (avoidance), or by minimising the time between its onset and the start of recovery (containment). Meanwhile, ‘recovery capacity’ is the ability of a system to return to functionality once a disruption has occurred. The process of system recovery is characterised by a (hopefully brief) stabilisation phase after which a return to a steady state of performance can be pursued. These things happen not by accident but through purposeful design. The paper warns that there will likely be trade-offs between the two capacities as companies decide where to invest their time, money, and attention since “resilience is a capability that must fit the specific needs of each firm”. It examined examples from across industry sectors, including automotive, retail, FMCG and aerospace - and the varying responses and success they have achieved. It points out that regardless of effort, there may be limited resources to invest in the capabilities of resistance and recovery and the companies might also have “limited control over the environment in which a supply chain operates”. →
Events of the past few years have demonstrated the importance of resilience. The ability to recover quickly from difficulties, to demonstrate toughness and to be able to spring back into shape, is a quality as important to the health of business as it is in people. Yet supply chains and human endurance have been severely tested in recent times – and continue to be so. Those who are able to quickly respond to and recover from shocks and disruptions, are still standing – some through planning, preparedness and investment, others in part through luck. Our own research into resilience (see page 30) shows that the vast majority of Leaders (88%) are confident that their supplier management programmes will enable them to overcome future disruption, compared to an overall confidence level of 58%. Yet, nothing can be taken for granted – supply chains continue to face long term challenges and unforeseen
shocks will still occur. For businesses and individuals to continue to navigate and survive these challenges requires thought and support. First, we take a look at the business side of things. Much has been discussed and explored on this topic over the past 20 years. One researcher noted an “exponential growth in literature” in the past decade alone. Many have useful ideas and applications that both seek to explain what supply chain resilience is and how you can work to achieve it. Here, we consider a few of those papers. Resistance and recovery A 2014 academic paper noted that we operate in an “increasingly dynamic and turbulent world” where the supply chain plays an increasingly important role. Yet numerous events occur each day that threaten to disrupt operations and jeopardise that chain’s ability to perform effectively and efficiently. The paper by Melnyk, Griffis, Zobel, Macdonald and
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