Understanding the concept of supp...
Understanding the concept of supply chain resilience Serhiy Y. Ponomarov and Mary C. Holcomb Department of Marketing and Logistics, University of Tennessee, Knoxville, Tennessee, USA Abstract Purpose ��� In the emerging disciplines of risk management and supply chain management, resilience is a relatively undefined concept. The purpose of this paper is to present an integrated perspective on resilience through an extensive review of the literature in a number of disciplines including developmental psychology and ecosystems. In addition, the paper identifies and addresses some of the current theoretical gaps in the existing research. Design/methodology/approach ��� Supply chain resilience has been defined by a number of disciplines. An integrative literature review is conducted in an attempt to integrate existing perspectives. This review also serves as the basis for the development of a conceptual model. Findings ��� The key elements of supply chain resilience and the relationships among them, the links between risks and implications for supply chain management, and the methodologies for managing these key issues are poorly understood. Implications for future research advocate testing the proposed model empirically. Practical implications ��� Supply chain disruptions have adverse effect on both revenue and costs. Resilient supply chains incorporate event readiness, are capable of providing an efficient response, and often are capable of recovering to their original state or even better post the disruptive event. Originality/value ��� Supply chain resilience has yet to be researched from the logistics perspective. Even in well-developed disciplines the unified theory of resilience is still under development. This research leverages existing knowledge and advances an interdisciplinary understanding of the concept. Keywords Supply chain management, Risk management, Adaptability Paper type Research paper Introduction Every activity that a supply chain conducts has inherent risk that an unexpected disruption can occur. The global reach of supply chains, shorter product life cycles, and increasing customer requirements have made businesses aware that supply chain disruptions can cause undesirable operational and financial impact. Disruptions such as the loss of a critical supplier, a major fire at a manufacturing plant, or an act of terrorism have the potential to adversely affect both revenue and cost. They can lead to lost sales and even market share as well as increase costs due to premium and expedited logistics services. To reduce this risk, supply chains must be designed to incorporate event readiness, provide an efficient and effective response, and be capable of recovering to their original state or even better post the disruptive event. This is the essence of supply chain resiliency. The concept of resilience is multidimensional and multidisciplinary. On the one hand, resilience was a subject of scientific research for many years in such disciplines as developmental psychology and ecosystems. On the other hand, it is a subject of interest in relatively new emerging disciplines such as risk management and supply The current issue and full text archive of this journal is available at www.emeraldinsight.com/0957-4093.htm IJLM 20,1 124 The International Journal of Logistics Management Vol. 20 No. 1, 2009 pp. 124-143 q Emerald Group Publishing Limited 0957-4093 DOI 10.1108/09574090910954873
chain management. Even in well-developed disciplines, the existing definitions of resilience are often contradictory and confusing, and the unified theory of resilience is still under development. In order to justify the need for resilient supply chains, one needs to have an operational definition of the phenomenon of resilience as well as an understanding of the key elements and capabilities that characterize it. This research attempts to address that knowledge gap through a multidisciplinary integrative review of the different perspectives to identify current gaps in the supply chain resilience literature. This review provides the basis for developing a conceptual framework of the dimensions of supply chain resilience, its antecedents, and its consequences. Supply chain disruptions can arise from many sources, including external sources such as a natural disaster and internal sources such as a failure to integrate all functions in a supply chain. Very often such events happen rapidly and without warning. Disruptions can also result from attempts to create a more efficient, cost-conscious supply chain environment. In many companies logistics activities such as raw materials supply, component assembly, manufacturing, and even product distribution are outsourced to partners that are located across the globe. This structure has created a supply chain-dependent environment in which any disruption can have a much more pronounced effect as it ripples either upstream or downstream in the supply chain. As supply chain risks increase, the need also increases for companies to develop logistics processes and capabilities that can enable them to be ready (capable) of providing an efficient and effective response and continuing with business as planned. Gaining a better understanding of resiliency in supply chains is not possible, therefore, without the consideration of logistics capabilities. The conceptual model presented in this study proposes a link between logistics capabilities and supply chain resilience. Defining resilience and its scope The study of resilience has its origins in development theory of social psychology and is an emerging theory in its own right. The concept of resilience is directly related to important issues such as ecological and social vulnerability, the politics and psychology of disaster recovery, and risk management under increasing threats. While there are commonly used definitions in each all of these areas they are discipline-specific. In many cases the domain covered by the resilience construct lacks clarity. Thus, in order to understand the phenomena of resilience, we need to first consider different perspectives and approaches from the various streams of literature. After an initial literature review, the following perspectives were identified as the most related and appropriate for the understanding of the phenomena of resilience. Resilience from an ecological perspective The Canadian ecologist Holling (1973) was one of the first researchers to note that systems have two distinct properties: resilience and stability. Resilience determines the ability of systems to absorb changes, and stability is the capacity of systems to return to an equilibrium state after a temporary disturbance. The faster a system returns to equilibrium, the greater its stability. There is an implicit assumption of stability in the system without stability there would be no presumed return to the pre-disturbance state, but rather an adjustment to some new equilibrium level that could be better or worse than the previous state (Clapham, 1971). Supply chain resilience 125
The concept of resilience has changed considerably since Holling���s (1973) seminal paper. Several important dimensions of ecosystems resilience have been summarized by Westman (1986). The widely accepted definitions of resilience and its components from the ecological perspective are presented in Table I (Westman, 1986). Gunderson and Holling (2001) defined resilience as the capacity of a system to experience disturbance and maintain it functions and controls. Carpenter et al. (2001) extended the research by examining the magnitude of disturbance that a system could tolerate before it fundamentally changes into a different region with a different set of controls. They expanded the concept of resilience through the introduction of the notion of the adaptive cycle. According to adaptive cycle theory dynamic systems do not tend towards a stable or equilibrium state. Instead they evolve through four states ��� rapid growth and exploitation, conservation, creative destruction, and renewal or reorganization ��� adapting to the disturbance(s). Carpenter et al. (2001) concluded that resilience has three primary properties: (1) The amount of change that a system can undergo while retaining the same controls on structure and function. (2) The degree to which the system is capable of organizing itself without disorganization or force from external factors. (3) The degree to which a system develops the capacity to learn and adapt in response to disturbances. Dovers and Handmer (1992) also stress the importance of this adaptive capacity while describing proactive resilience that accepts the inevitability of change and tries to create a system that is capable of adapting to new conditions and imperatives. The ecological perspective presents a nondeterministic view of human behavior that declares behavior is not considered the outcome of a single cause but the result of multiple, complex person-environment exchanges over time (Gunderson, 2000). Because this point of view affords a holistic picture of life processes, ecological concepts are often used in conjunction with a resilience approach in social sciences. Definition Resilience Degree, manner, and pace of restoration of initial structure and function in an ecosystem after disturbance (Westman, 1978 Clapham, 1971) Components of resilience Elasticity Rapidity of restoration of a stable state following disturbance (Orians, 1975 Westman, 1978) Amplitude The zone of deformation from which the system will return to its initial state (Orians, 1975 Westman, 1978) Hysteresis The extent to which the path of degradation under chronic disturbance, and a recovery when disturbance ceases, are not mirror-images of each other (Westman, 1978, 1986) Malleability Degree to which the steady state established after disturbance differs from the original steady-state (Westman, 1978) Damping The degree and manner by which the path of restoration is altered by any forces that change the normal restoring force (Clapham, 1971) Table I. Components of resilience: ecological perspective IJLM 20,1 126