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Journal ArticleDOI

Building the Resilient Supply Chain

01 Jul 2004-The International Journal of Logistics Management (Emerald Group Publishing Limited)-Vol. 15, Iss: 2, pp 1-14

Abstract: In today's uncertain and turbulent markets, supply chain vulnerability has become an issue of significance for many companies. As supply chains become more complex as a result of global sourcing and the continued trend to “leaning‐down”, supply chain risk increases. The challenge to business today is to manage and mitigate that risk through creating more resilient supply chains.
Topics: Supply chain risk management (74%), Supply chain (67%), Service management (63%), Supply chain management (61%), Demand chain (59%)

Summary (3 min read)


  • International Journal of Logistics Management, Vol. 15, No. 2, pp1-13, 2004.

Cranfield School of Management

  • In today’s uncertain and turbulent markets, supply chain vulnerability has become an issue of significance for many companies.
  • The challenge to business today is to manage and mitigate that risk through creating more resilient supply chains.
  • Better management and control of internal processes together with more open information flows within and between organisations can do much to help.
  • All are dependent on efficient and reliable transportation and communication systems, an obvious point, but one that is often overlooked [4].
  • This paper reports on some of the findings and recommendations of the second stage of that programme.

Supply Chain Resilience

  • When working effectively and efficiently modern supply chains allow goods to be produced and delivered in the right quantities, to the right places, at the right time in a cost effective manner.
  • Until recently the term ‘supply chain’ was not widely used beyond the confines of academia, specialist sectors of industry and the professional management community.
  • It amounted to a redefinition and amalgamation of established business activities, notably ‘logistics’ (integrated transport, warehousing, and distribution) and manufacturing-based ‘operations management’.
  • In defining other key terms in this paper the authors have veered away from hotly disputed academic definitions and sought where possible to align ourselves with appropriate and widely accepted dictionary definitions [8].
  • The injunction allowed Land Rover to arrange for another supplier to acquire the failing business, averting the lay-off of 1400 Land Rover workers and many more amongst the car maker’s network of suppliers.

Previous Research

  • Supply chain resilience is a new and still largely unexplored area of management research, though one that is currently in the ascendancy.
  • The work was already well underway by the time of the terrorist attacks on the USA on 11th September 2001, though these events demonstrated the timeliness and relevance of the work.
  • In the months between the commissioning of the first study, its publication and the subsequent research programme, public sector Emergency Planning received renewed impetus in the UK and elsewhere around the world.
  • During the course of this research programme it became increasingly evident that modern supply chains are probably at greater risk than many of those who manage them recognise.
  • Whilst the existence of the many disturbances to the business environment (e.g. wars, epidemics, earthquakes) are readily acknowledged as sources of risk, it is less clear that the risks from within the supply/demand network are always apparent.

Categorising Risk

  • Supply chain risks can be categorised in many different ways and from different perspectives, e.g. from a corporate governance or financial risk agenda, or even in terms of a multi-level complex system [14].
  • Internal to the firm o Process o Control External to the firm but internal to the supply chain network o Demand o Supply External to the network o Environmental 10 Figure 1 summarises the linkages between these risk categories:- Each of these five categories are briefly described below:- Processes are the sequences of value-adding and managerial activities undertaken by the firm.
  • They may be the result of sociopolitical, economic or technological events many miles or organisations removed from the focal firm’s own supply chains, but may have carry-over effects through 12 linkages to other industry networks.
  • But either failed to do so.

The Way Ahead: Creating the Resilient Supply Chain

  • Emerging from their research programme are a number of discernible general principles that underpin resilience in supply chains.
  • Most echo rather than contradict the widely accepted principles of good supply chain management.
  • In other words there are certain features that, if engineered into a supply chain, can improve its resilience.
  • The second general principle is that because by definition supply chains will normally extend across different corporate entities there will need to be a high level of collaborative working if risk is to be identified and managed.
  • The message that needs to be understood and acted upon is that the biggest risk to business continuity may well come from the wider supply chain rather than from within the 14 business.

1. Supply Chain (re) Engineering

  • Conventionally supply chains have often been designed to optimise for cost and/or customer service, rarely was resilience the ‘objective function’ for the optimisation process.
  • A number of recommendations are suggested to provide the basis for the design of supply chains with risk reduction in mind.
  • Mapping tools can help in the identification of ‘pinch points’ and ‘critical paths’.
  • The strategic disposition of additional capacity and/or inventory at potential ‘pinch points’ can be extremely beneficial in the creation of resilience within the supply chain.
  • The trade-offs inevitably involve the judgemental balancing of the cost handicap involved in maintaining slack ‘just-in-case’, against the probability and likely impact of a negative event.

2. Supply Chain Collaboration

  • A high level of collaborative working across supply chains can significantly help mitigate risk.
  • There has not been a history of sharing information either with suppliers or customers.
  • The underlying principle of collaborative working in the supply chain is that the exchange of information can reduce uncertainty.
  • The type of knowledge that can aid the creation of supply chain resilience pertains to the identification of sources of risk and uncertainty at each node and link in the supply chain.
  • This type of 18 knowledge can be generated through formal ‘P.E.S.T.’ type analysis (Political, Economic, Social and Technological).

3. Agility

  • Many organisations are at risk because their response times to demand changes or supply disruption are too long.
  • These intervening inventories are usually created independently of each other as a result of decision rules, the basis of which may not be readily apparent.
  • A significant barrier to supply chain visibility is often encountered within the focal firm’s internal organization structure.
  • The second ingredient of supply chain agility is velocity.
  • Streamlined processes are simplified processes in that they have been engineered to reduce the number of stages or activities involved, they are designed to perform these activities in parallel rather than in series and they are e-based rather than paper-based.

4. Creating a Supply Chain Risk Management Culture

  • In the same way that many organizations recognized that the only way to make Total Quality Management (TQM) a reality was to engender a culture that made quality the concern of everyone, so too today is there a requirement to create a risk management culture within the business.
  • The authors would argue that this culture of risk management should extend beyond the boundaries of corporate risk and business continuity management to become ‘supply chain continuity management’.
  • Thus for example when new products are at the design stage, issues of supply chain vulnerability such as component availability and lead times should be considered.
  • 22 A supply chain risk management team should be created within the business and charged with regularly updating the supply chain risk register and to report to the main Board through the supply chain director on a least a quarterly basis.
  • The team will need to be cross-functional and to be able to audit risk using the frameworks and tools the authors have put forward in this report.


  • The authors research has highlighted the risks to business continuity that lie in the wider supply chain.
  • The trends towards the creation of increasingly complex networks of inter-dependent organisations – through strategies of out-sourcing and globalisation in particular – have heightened some of these risks.
  • The authors have argued that a new priority has emerged for business planning.
  • This priority has to be the search for supply chain strategies that embody a significantly higher degree of resilience.
  • Its implications extend beyond process redesign to fundamental decisions on sourcing and the establishment of more collaborative supply chain relationships based on far greater transparency of information.

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