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".

Origins

Since around the turn of the millennium,

supply chain risk management 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" ...

has attempted to transfer traditional risk management approaches from the "company" system to the "supply chain" system. However, the scalability of the traditional steps of risk management (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.Wieland, A., & Durach, C. F. (2021). Two perspectives on supply chain resilience. Journal of Business Logistics. https://doi.org/10.1111/jbl.12271 It is a popular concept in contemporary

supply chain management In commerce, supply chain management (SCM) is the management of the flow of goods and services including all processes that transform raw materials into final products between businesses and locations. This can include the movement and stor ...

. It has therefore been argued that the complexity of supply chains requires complementary measures such as supply chain resilience. 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.

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 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 communit ...

prevailed in supply chain management. It is implied here that a supply chain is a

closed system A closed system is a natural physical system that does not allow transfer of matter in or out of the system, although — in contexts such as physics, chemistry or engineering — the transfer of energy (''e.g.'' as work or heat) is allowed. In ...

that can be controlled, similar to a system designed and planned by engineers (e.g. subway network). 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. 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. Acting like an engineer by redesigning the supply chain like on the drawing board, often by creating redundancies (e.g.

multiple sourcing Multiple may refer to: Economics *Multiple finance, a method used to analyze stock prices *Multiples of the price-to-earnings ratio *Chain stores, are also referred to as 'Multiples' * Box office multiple, the ratio of a film's total gross to th ...

), 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 its limits in the mid to long term.

Resilience in the sense of ''socio-ecological'' resilience

Social-ecological resilience goes back to

ecological resilience 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 ...

, adding to it human decision-makers and their social interactions.Folke, C. (2006). Resilience: The emergence of a perspective for social–ecological systems analyses. Global Environmental Change, 16(3), 253-267. A supply chain is thus interpreted as a

social-ecological system 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 ecosyst ...

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.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 This leads to a panarchical interpretation of a supply chain, embedding it into a

system of systems System of systems is a collection of task-oriented or dedicated systems that pool their resources and capabilities together to create a new, more complex system which offers more functionality and performance than simply the sum of the constituent s ...

, allowing to analyze the interactions of the supply chain with systems that operate at other levels (e.g. society, political economy, planet Earth). 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 ''Climate crisis'' is a term describing global warming and climate change, and their impacts. The term and the alternative term ''climate emergency'' have been used to describe the threat of global warming to humanity (and their planet), and to u ...

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).

Literature

* Sheffi, Y. (2007). The resilient enterprise: overcoming vulnerability for competitive advantage. Zone Books. * Kummer, S. et al. (2022). Supply Chain Resilience: Insights from Theory and Practice (Springer Series in Supply Chain Management)

References

Supply chain management Risk management