Model to assess supply chain resilience

Abstract

The uncertainty in the current business environment is driven by events such as economic crises, climate change, global terrorism, shortage of resources and so on. This causes traditional supply chain operations models to become obsolete and not able to ensure the sustainability and competitiveness of the organizations. In this context, resilience is defined as the ability of a company/community/environment/people to recover after it has been exposed to an important disturbing event, for instance, a natural disaster as a hurricane hitting the main suppliers, thus creating lack of raw materials in production lines. This article tackles how the assessment of the supply chain resilience, considering this capacity, enables one to be better prepared for an unstable risky environment and the post disaster consequences. We propose a model based on three categories of indicators; the first one is related to achieving an organizational resilience (to assess by results of responsiveness, flexibility and effectiveness), the second one is related to attaining business resilience (to assess by cash-to-cash, days of inventory, days of receivables and days of payables), and the third one is related to having a labour resilience (to assess by labour capabilities to overcome vulnerable living conditions). Two Peruvian supply chain companies (which belong to the food and pharmaceutical sectors) have been studied by using the model; the main results allow concluding that they have a low resilience level, because of their current three-category indicator results.