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Overview on Supply Chain Resilience

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 SUPPLY CHAIN RESILIENCE
LHOUSSAINE OUABOUCH, RESEARCHER IN SUPPLY CHAIN
RISK MANAGEMENT AND SUPPLY CHAIN RESILIENCE ANALYSIS
l.ouabouch@uiz.ac.ma
Overview on Supply Chain Resilience
From the strategic context to the need for Resilience
I
n the last few years, supply chains are integrating a
more and more tightly connected global economy
where traditional management practices are
challenged by external disturbances and turbulent
changes.
As noted by Tang & Tomlin (2008): «long and complex
global supply chains are usually slow to respond to
changes, and hence, they are more vulnerable to business
disruptions».
On the other hand, many of newly developed practices
in sphere of supply chain management such as lean
manufacturing reduced product lifecycle and
outsourcing, have aided supply chain managers to create
highly efficient supply chains. Moreover, these new ways
of managing reduced the slack available to deal with
uncertain events (Soni et al. 2014). The same practices
have then increased complexity of the extended
networks, which amplifies the adverse impact of
problems that can arise. In addition, the interconnection
and interdependence among companies in global supply
chains makes them more vulnerable to a range of
disruptive events (Christopher & Peck 2004).
In this context, supply chains are subjected to more risks
than ever, which are numerous and constantly evolving,
and derive both from within and outside of the company
(Barroso et al. 2015). Avoiding such risks or reducing their
negative effects is a challenge for today management.
Indeed, along any supply chain, a multitude of more or
less critical incidents may prevent a company from
obtaining the expected level of logistical performance
(Ouabouch & Paché 2014).
This possible disruption, for example, a rupture in the
functioning of production facilities, generates an
important risk, the fact of being unable to satisfy a
customer in time.
From an empirical point of view (Ouabouch & Amri
2013), a quality problem in supplier delivered products/
raw materials is considered by companies as very grave.
This severity may also originate company’s dependence
on global suppliers, which many authors consider as a
supply chain vulnerability driver (Wagner & Bode 2008).
Also, a supplier failure, for example because of a weak
logistical performance, or even a bankruptcy, has been
regarded as a critical risk.
According to Supply Chain Risk Management specialists,
one way to deal with supply chain risk is to confer to the
supply chain the ability to be resilient.
16 July 2015
Defining “Resilience”
Supply Chain Resilience is currently considered a critical
component of Supply Chain Risk Management
(Ponomarov & Holcomb 2009), and a relatively new and
yet underexplored research area of management as a
whole as mentioned by Ponis & Koronis (2012).
From an organizational point of view, resilience refers to
“the capacity for continuous reconstruction” (Hollnagel
et al. 2009).
In the area of SCM, resilience is a new concept that has
emerged in this field in recent years. Multiple definitions
of supply chain resilience already exist in the literature
and three of these are presented in the following:
Christopher & Peck (2004) : “the ability of a system to
return to its original state or move to a new, more
desirable state after being disturbed”;
Sheffi (2005): “resilience represents the ability of a
material to recover its original shape following a
deformation”;
Ponomarov & Holcomb (2009) : “Supply chain resilience
is the adaptive capability of the supply chain to prepare
for unexpected events, respond to disruptions, and
recover from them by maintaining continuity of
operations at the desired level of connectedness and
control over structure and function”.
From the these definitions, the related idea of resilience
shows how quickly a supply chain can return to normal
working after it is hit by a risky event. In practice,
resilience is more proactive than this, as it recognizes
that the chain might not have been working in the best
possible way before the event.
The link between vulnerability and resilience is well
explained by Waters (2011). This author mentioned that:
“We can phrase this aim in terms of decreasing the
vulnerability of a supply chain, increasing its ability to
withstand unexpected events, improving sustainability
or increasing resilience. Vulnerability describes how likely
a supply chain is to be affected by risky events”.
The challenge of minimizing the recovery time
Note that one of the challenges of the risk manager is to
minimize the return time to the normal level of
operational performance. The idea of resilience suggests
the speed with which a chain can return to normal
working after some kind of damage.
Sheffi (2005) is also clear when affirming that: “resilience
represents the ability of a material to recover its original
shape following a deformation. In the corporate world,
resilience refers to the ability of a company to bounce
Materials Management Review
back from a large disruption -this includes, for instance,
the speed with which it returns to normal performance
levels (production, services, fill rate, etc.)”.
To diagram this requirement, Barroso et al. (2015)
suggests a “resilience triangle” where two parameters
are shown : the disruption severity (severity or
magnitude of loss damage) and the recovery time (the
damping time).
The “resilience triangle”
Source : (Barroso et al. 2015, p.20)
According to the author, the smaller the triangle is, the
more resilient the company or supply chain is.
Now that managing the risk of an uncertain future is a
challenge that requires resilience, the question is then:
how to build resilient supply chains in face to destructive
situations?
Building Resilience to gain in business performance
A resilient supply chain must develop resilience
capabilities to react to the negative consequences of
unexpected events and to return quickly to its original
state (Barroso et al. 2015). Evidently, without a clear
understanding of the performance outcomes associated
with resilience, supply chain managers have little
guidance on what results to expect from the
implementation of resilience-focused strategies.
Asbjørnslett (2009) highlight the relation between a
disruptive event and business indicators. In that sense,
the disturbance of physical and/or information flows
between the supply chain members can create
undesirable effects, such as the unavailability problems
of products, delays in deliveries or lack of reactivity of
the supply chain. As supported in particular by Wagner
& Bode (2008) and Ouabouch & Paché (2014), the
companies that are the most affected by the failures of
the supply chain can be the least likely to produce
logistical performance with their partners.
When deciding which supply chain performance should
be analyzed, some researchers propose to especially
consider the supply chain’s objective, which is satisfying
customers.
The main characteristics of a resilient Supply Chain
Note that the above definitions of organizational
resilience share a common perspective which exceeds
the recovery boundary and implies a certain level of
flexibility, improvisation and ability to adapt to both
positive and negative influences of the environment
(Ponis & Koronis 2012).
Materials Management Review
Resilience means that a supply chain can quickly return
to a previous state or move to an alternative, more
desirable one (Waters 2011). Thus, it describes the ability
to return to a stable state after a disturbance. Also, this
concept appears as a relevant concept to analyze the
continuity of flow after a rupture in a supply chain.
To achieve this, some factors are proposed to guide a
resilience improvement process. Indeed, with the fact
that there is a correlation between increased resilience
and improved supply chain performance, good logistics
management would include both efficiency and
resilience in its analyses.
According to Sheffi (2005), companies can develop
resilience in three main ways:
Developing a resilient supply chain

Creating and increasing redundancies throughout
the supply chain;

Building flexibility: A flexible Supply Chain allows a
company to withstand disruptions and better
respond to demand fluctuations.

And changing the corporate culture: corporate
culture aids companies to recover quickly, and even
profitably after a flow disruption. Several cultural
traits were pointed out, like continuous
communication among informed employees,
distributed power (so that teams and individuals are
empowered to take necessary actions), and the
passion for work.
Also, from the existing literature, one may select several
Supply Chain Resilience Enablers. For the moment, Soni
et al. (2014) summarized them in ten factors. Particularly,
five of the enablers identified for supply chain resilience
are explained bellow:
Supply chain visibility. The visibility concerns the
manager’s perception of current changes. To achieve
agility, a firm needs visibility for a better identification
of changes and speed for a faster response to changes
(Christopher & Peck 2004). Visibility enables managers
to know about changes and it is, therefore, the
prerequisite to responding to those changes. Wieland &
Wallenburg (2013) stated that visibility is an outcome
of investment in information sharing.
Information sharing. The unavailability of material or
human resources and/or the absence of the information
necessary to the decision making can harm the efficiency
of the company (Ouabouch & Paché 2014); as Hollstein
July 2015 17
 & Himpel (2013, p. 22) noted “in order to increase
resilience of a supply chain, it is essential that all supply
chain partners have access to relevant information”.
According to Soni et al. (2014), visibility ensures
confidence into the supply chain and prevents over-
reactions, unnecessary interventions and ineffective
decisions in a risk event situation.
Supply chain agility. Being responsive is an increasingly
important skill for firms in today’s global economy; thus
firms must be agile (Swafford et al. 2008). Defined as
the firm’s ability to quickly adjust its supply chain tactics
and operations, agility is also an attribute closely tied to
the effectiveness of strategic supply chain management
(Wieland & Wallenburg 2013). Agility has also been
defined as “the ability to cope with unexpected
challenges, to survive unprecedented threats of business
environment, and to take advantage of changes as
opportunities” (Swafford et al. 2008).
Collaboration among players through transparent
communication, cooperation (witch let suppliers and
manufacturers act in concert), and integration in a
relational perspective. Industrial complexity generated
by a large number of actors (suppliers, logistics service
providers, etc.); the multiple interactions between these
generate a strong need for coordination between the
actors but also for collaborative relationships. Wieland
& Wallenburg (2013) note that relationships between
supply chain members rely on the availability of
information that is visible to the actors along the supply
chain.
Risk and revenue sharing. In inter-organizational
relationships, collaboration is an approach based on
reciprocity of partners who are parts of a win-win
situation. This implies that not only the gains and profits
will be shared as part of a collaborative relationship, but
also the costs and risks (Waters 2011).
Supply chain structure. In fact, the best Supply Chain
design needs a balance between resilience and normal
measures of efficiency (Barroso et al. 2015). As well as
agility, supply chain resilience calls for rapid
reconfiguration and the elimination of waste as much
as possible. Furthermore, supply chain resilience focuses
on the system’s adaptive capability to deal with
disruptive events. Soni et al. (2014) stated that the
dynamic nature of this adaptive capability allows the
supply chain to recover after being disrupted, returning
to its original state or achieving a more desirable state
of supply chain operations.
Conclusion
Supply chains today are complex and global. Also, the
relationships are actually a network where many-to-
many relationships exist in a network between many
customers and many suppliers.
For these reasons, Supply chain risks are increasing in
number and frequency, affecting the normal operation
and stability of the supply chain and hence the ability of
supply chains to fulfill commitments. Therefore, supply
chains must be resilient to risks to overcome their
vulnerabilities and to react effectively to its negative
effects.
18 July 2015
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The resilience of a supply chain company to risks may
be obtained by reducing the probability of occurrence
of the disturbance and/or reducing its negative effects
on the supply chain entity.
Thus, managers must take measures in order to mitigate
the potentially negative effects of risks, whether on the
directly affected company, or on other supply chain
companies that may be affected, due to the relationship
of dependency between supply chain companies. So, the
strategies adopted should mitigate the negative impact
of determined risks, the ones that have high negative
impact and likelihood.
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Asbjørnslett, B.E., 2009. Assessing the Vulnerability of
Supply Chains. In G. A. Zsidisin & B. Ritchie, eds. Supply
Chain Risk: A Handbook of Assessment, Management et
Performance. New York: Springer, pp. 15–33.
Barroso, A.P. et al., 2015. Quantifying the Supply Chain
Resilience. In H. Tozan & A. Erturk, eds. Applications of
Contemporary Management Approaches in Supply Chains.
Christopher, M. & Peck, H., 2004. Building the Resilient
Supply Chain. The International Journal of Logistics
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Hollnagel, E., Journé, B. & Larcohe, H., 2009. La fiabilité et
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