Abstract
The COVID-19 pandemic has created a devastating impact on supply chains. Especially, transportation disruptions, the slowdown in manufacturing, supply-demand imbalances, operational inefficiency in last-mile, and deficiencies in dealing with the crisis can be seen as main headings. This chapter aims to reveal the problems and learn lessons in these areas where significant risks are faced. During the COVID era, the need for resilient supply chains that are not affected by instantaneous changes has come to the fore. Accordingly, the second aim of the chapter is to offer solutions toward the short, medium, and long terms of the first-mile, production, and last-mile processes as enhancing the responsiveness of supply chains by the elements of supply chain resilience. This study is prepared as a review article in an exploratory approach through the supply chain literature and current practical examples. As a result of the study, digital-intensive business models, collaborative network design, and sustainability are highlighted as the main concepts to reach more resilient networks.
TopIntroduction
Modern Supply chains consist of a highly complex ecosystem and play a vital role in regulating operations as a whole at the right time, in the right quantity, and cost-effectively. Competitive pressures in almost all industries and globalization of markets are forcing organizations to strive for comprehensive supply chains that can operate worldwide, making supply chains more vulnerable to risks. The Covid-19 pandemic, as a socio-economic reality affecting the whole world, has created a devastating impact on supply chains. According to the report by Dun and Bradstreet (2020), Wuhan city of China, where the outbreak occurred, has one or more direct suppliers of 51,000 companies worldwide and at least 5 million collaborators indirectly. Mainly, China's significant share in intermediate product supply has caused supply chain disruptions in 94% of Fortune 1000 companies with a low-cost global supply chain structure (Fortune, 2020). Rather than creating a limited risk for companies doing business with China, the epidemic has brought the whole world to face various commercial and logistical risks. In this context, significant disruptions were experienced in maintaining product, information, and money flows from raw material procurement to the delivery of finished products. Due to the Covid-19 pandemic, risk has emerged beyond previous crisis scenarios in almost all areas, especially on food and health supply chains. This process pointed to the most significant deterioration in recent years, with ” simultaneous supply chain disruptions in many global chains.”
There are a wide variety of risks in supply chain processes. For example, market changes, scarcity of resources, financial risk, information sharing failure, demand uncertainty, and pandemic disruption are significant dangers in the supply chain mechanism (Dohale et al., 2021). The risk management approach in the supply chain requires an ecosystem insight with the fact that different layers may pose multiple risks, and all members in the chain may be affected by this situation (Fan and Stevenson, 2018). Juttner et al. (2003) defined supply chain risk management as “implementing appropriate strategies with a coordinated approach among supply chain members to identify potential sources of risk and reduce supply chain vulnerability.” Supply chain risk management links the issue of risk with the probability of disruptive events (Heckmann et al., 2015) and the business impact of disruptions (Brindley, 2004). Implementing effective risk management throughout the chain is critical to risk mitigation, preparedness, better responsiveness, greater flexibility, and reduction in the severity of risks.
Table 1. A review of various supply chain risk management strategies
| Supply Chain Risk Management Strategies | | | Strategy Type |
| Description | Source | Proactive | Reactive |
| Postponement | Reducing incurring cost by delaying the actual commitment of resources (e.g. form postponement and time postponement) |
Um and Han (2020)
| | X |
| Speculation | Enabling the movement of goods to forward inventories to gain economies of scale (e.g. limiting the number of stock outs) | X | |
| Avoidance | Avoiding activities and processes which are considered unacceptable (e.g. avoiding investment in an unstable region) | X | |
| Visibility and Transparency | Enhancing the information flow across the supply chain actors to improve visibility |
Dohale et al. (2021)
| X | X |
| Collaboration | Creating collective processes across supply chain partners having shared vision and commitment | | X |
| Flexibility | Developing the ability to efficient and agile respond or adapt to the occurrence of any disruption | | X |
| Multiple sourcing | Enabling business sustainability by working with alternative suppliers | | X |
| Redundancy | Keeping some resources in reserve to be used in case of a disruption (e.g. having safety stocks toward demand variations) | X | X |
Key Terms in this Chapter
Supply Chain Risk Management Strategies: Strategies to minimize the impact of risks on the supply chain and overcome bottlenecks.
Supply Chain Disruption: A disturbance that interrupts activities and processes in the supply chain network.
Digital-Intensive Business Model: A model that leverages digital technologies to create value in a way of doing business.
Resilient Supply Chain: The capacity of the supply chain to resist or even quickly recover through disruptions.
Corporate Sustainability: An approach aiming to create long-term value through the activities of companies with environmental and social sensitivity as well as economic expectations.
Collaboration: The situation where actors with common interests work together to achieve goals.
Operational Efficiency: Measurement of resource allocation and aiming more output with less input.