Supply Chain Resilience: a Risk Intelligent Approach to Managing Global Supply Chains

Changes within the supply chain can disrupt the normal flow of goods and services because each change hasn’t been fully scrutinized. A firm can plan and speculate that a change with have a certain effect on the supply chain, but until those processes have been measured it is impossible to know the true cause and effect of any disruption.

Supply Chain Opportunity in an Uncertain Economic Recovery, by Eric G. Olson, discusses the advantages the supply chain has in a struggling economic recovery, when most other companies are dealing with uncertainty. The authors’ intention contained in this article is to discuss opportunities that businesses have to grow their operations despite coming out of a severe recession. The author identifies to take advantage of these opportunity, companies must be willing to be more flexible and that scalability is much easier to implement coming out of a severe recession. The author provides a design, methodology, and approach to implement these changes, highlighting the scalability and flexibility benefits, mitigation if multiple risks, identification supply chain opportunities.

Today’s global supply chain has been shaped by the past decades of focus and strategies based on achieving the lowest operational costs coupled with a push towards market expansion and supplier outsourcing. The expansion of global supply chains combined with the increasing number of joined connections to external business partners has significantly raised the possibility for supply chain disruptions (Poirier, Quinn, & Swink, 2010). In today’s global business environment, the importance of risk management continues to grow daily.

A supply chain is a net work of firms. Thus, each firm in the chain should build its own supply chains to support the competitive priorities of its services or products. Two distinct designs used to competitive advantage are efficient supply chains and responsive supply chains. Efficient supply chains work best in environments where demand is highly predictable. The focus of the supply chain is on efficient flows of services and materials keeping inventories to a minimum. The firm’s competitive priorities are low-cost operations, consistent quality, and on-time delivery. Responsive supply chains designed to react quickly in order to hedge against uncertainties in demand. Work best when firms offer a great variety of services or products and demand predictability is low. Typical competitive priorities are development speed, fast delivery times, customization, variety, volume flexibility, and top quality. Tables below show the environments and design features that best suit each design.

1. The losers in the global distribution and supply chain dynamic are particularly those with:

resource-based perspective of supply chain resilience and robustness. Journal of Supply Chain Management, 50(3), 55-73. Retrieved from Business Source Complete Database.

(Handfield, 2007) Code C should cultivate supply chain strategies that plainly deliberate two parameters that “intensify” the negative influence of interruptions on customer and brand performance: globalization and product/process complexity. Second, Code C should plan strategies with countermeasures that diminish the impact of these things, that is: better visibility to strategic supply chain nodes that can rapidly identify disruptions. They should also have well-positioned resources that allow rapid short-range retrieval plans. They need to have in place long-range cooperative methods to remove disruptions in the future. Research also recommends that companies with a great exposure to global supply chain risk invest more in improved inventory and capacity visibility

Supply chains represent the procurement, production and distribution activities of an organisation. Within a supply chain, these activities are viewed as linked and reliant on one another to produce the final outcome. It is believed that if one component of the chain fails, the whole chain is broken and product/service delivery goals will not be achieved.

Risk Avoidance in Resources: Shielding a business from the threat of resource price shocks and shortages and switching to other less costly and available substitutes is a sustainable competitive advantage in the long-run. A key risk factor in supply chain and production cost control, crude oil is a scarce and costly resource used in manufacturing plastic water bottles. It includes the risk of price fluctuations due to the uncertainty that embraces developed countries that produce oil. As for its environmental risks, its production process, transportation, storage and the unconstrained level of pollution stimulate a major responsibility on the plant infrastructure and safety, employees, and suppliers. In addition, the energy consumption to produce plastic water bottles is extensively greater than the energy required to produce tap water.

Prepare Contingency Plans: Supply chain risks must be identified and planned for. It is important to consider supply chain disruptions such as natural disasters, terrorism, security threats, piracy, supplier’s financial collapse, and infrastructure or process failure and there are other risks that all businesses face such as demand volatility and compliance issues. (book, p.241). Developing back up processes and plans takes considerable time yet preparation can be the difference between business continuity and end.

Executives face an ever-increasing portfolio of risks that is broader and more complex. The world is getting more volatile as it gets more connected, while external and geopolitical "over-the-horizon" risks are becoming both more relevant and tougher to manage with globalization. Due to this all organizations need a unique way of thinking about OTH and emerging risks, and in many cases a dedicated process to manage these risks. It is imperative for organizations to have a structured approach to tracking over-the-horizon events that could negatively impact company performance or potentially bring

Those firms that choose not to will suffer from both late to market costs, as well as increased costs to build their supply chain. Cost, Production, and Quality across the supply chain must be measureable. Maintaining the perspective of a global workforce remains a vital way of doing business, however,. it must continue and grow stronger through innovation to better meet the needs of the customer. Shortening supply chains and making them simpler yet more robust, is something that Ghemawat believes is a critical requirement.

There are all kinds of different risk everywhere and in industry conditions and economic conditions in the economy they may come in to being. I like how Zirra felt about “the greatest risk nowadays is the volatility of prices. In a period when the demand for products and services is dramatically reduced, the investors have no

Studying the practices of the progressive firms helped surface several characteristics that were common among the group and which are worth examining. They nearly all of the progressive firms (all but one firm) had previously experienced the impact of disruptions in their supply networks, and in response they built resilience and security into the current supply network. Also these firms revisited their existing supply network design, and actively redesigned their supply networks for resilience through a combination of flexibility and redundancy initiatives. Often, the firms elected to apply these in a ‘layered’ fashion to create a system comprised of layers of security and resilience. Then in developing plans to respond, the progressive firms often focused on ‘failure modes’ and those limited number of ways that operations can be affected by the

Demand management performance, referring to the extent to which a firm is capable to fulfill its customer’s orders efficiently and effectively, has become one important indicator of a firm’s overall performance (Cachon and Fisher 2000; Heikkila 2002; Xu et al.2003). The demand management process is concerned with balancing the customer’s requirements with the capabilities of the supply chain. This includes forecasting demand and synchronizing it with production, procurement, and distribution capabilities (Croxton et al. 2002). A good demand management process can enable a company to be more proactive to unanticipated demand and more reactive to unanticipated demand. Supply chain risk, vulnerabilities, and uncertainties have become topical issues of interest among academics and practitioners in the last few years (Oke and Gopalakrishnan 2009). Supply chains are vulnerable to risks or disruption that arise from problems in coordinating supply and demand, including both high-likelihood, low-impact and high-impact, low-likelihood risks, both of which affect organizations in a major way (Chopra and Sodhi 2004; Kleindorfer and Saad 2005). Thus, for firms, having the ability to respond effectively to the demand disruption is crucial. Although there is growing interest in exploring ways to manage these disruptions (e.g., Chopra and Sodhi 2014; Yu et al. 2009), little prior research examines the types of organizational capabilities that help a firm manage demand disruptions. Our