Since the COVID-19 pandemic, supply chains have been facing the effects of the occurrence of major disruptive events. The capacity to respond to these impacting effects is paramount, to assure the continuity of businesses and operations. There are some crucial elements that should be considered by decision-makers in order to shape more mature supply chains to better perform amid unexpected situations. This article aims to present these crucial elements in a structured and integrated way.
After the COVID-19 pandemic, supply chains have continuously faced disruptions, causing a huge challenge for those engaged in maintaining operational and business continuity. The Russia-Ukraine and Israel-Palestine wars, drought in the Panamá channel, the Houthis’ attacks in the Red Sea, and geopolitical issues involving China and USA are the major events which have caused severe disturbance for organisations’ supply chains across the world. It is evident that the most mature supply chains were capable of reacting faster to negative effects (e.g., inventory shortage, demand variations) resulting from these disruptive events. This is because they were able to manage more effectively their upstream and downstream supply chain flows, which is allowed by the higher level of maturity of some crucial elements of supply chains. These elements are especially related to strategic positioning, the level of technologies employed, management capabilities, and a skilled workforce.
Strategic Positioning͏
Firstly, organisations must be able to make supply chains the central element of their competitive strategy. Strategic positioning involves making some decisions on the main supply chains’ elements, including their trade-offs (e.g., transportation, facilities, sourcing strategy, inventory).Efficient and effective transportation is paramount to allow velocity and flexibility in supply chain flows. The correct localisation of supply chain facilities (e.g., factories and distribution centres) may allow a faster and more flexible flow of goods moving across the supply chains. In the same sense, the decision regarding the capacity and features of facilities may be crucial to the level of response that the supply chain is going to be able to deliver. Regarding sourcing strategy, this is one of the most important decisions for a more responsive supply chain. This is because the assertive choice of sourcing footprint and suppliers’ bases is a central element to allow an effective and prompt response to the effects of unexpected events.
Level Of Technology
Especially in the era of Supply Chain 4.0, investments in disruptive technologies become relevant in order to streamline the main supply chain processes (planning, sourcing, manufacture, delivery, and return). These technologies are divided into two types: virtual (e.g., Internet of Things, big data analytics, artificial intelligence, cloud computing) and physical (e.g., robotics, 3D-printing, autonomous vehicles). Virtual and physical technologies must be properly interoperable to create a Supply Chain 4.0 environment, which means the main supply chain processes can be self-executed and controlled. This will allow more flexibility, velocity, visibility, and transparency across the supply chains, significantly improving their capacity to respond to unexpected occurrences.
Management Capabilities
Even when supply chains have been strategically positioned, and with a higher level of technology, it is required that supply chain managers be capable of performing better in a situation of disruption. Management capabilities in supply chains involve implementing management philosophies and methods (e.g., lean management, risk management, project management, compliance management, customer relationship management, supplier relationship management, performance management, and collaboration and integration management). Enhancing management capabilities may allow more efficiency, responsiveness, flexibility, and transparency in supply chains, which contributes hugely to a more rapid and assertive response to the vulnerabilities caused by the occurrence of a disturbance phenomenon.
Skilled Workforce
The aforementioned elements can only be successfully implemented and performed if supply chain personnel are adequately skilled. A clear training and development plan must be taken into consideration to prepare supply chains for disturbance events. Decision-makers in supply chains, especially, must be prepared to make correct decisions in terms of strategy positioning. Also, the whole supply chain workforce is required to be skilled to properly operate the technologies emerging from the Supply Chain 4.0 phenomenon. Lastly, they are required to be able to design, implement, and execute new management methods over the supply chain processes and structure.
The evidence from the reality of the world is telling us that uncertainties in global supply chains are to set become more and more frequent. Pursuing a higher level of maturity in an integrated way in terms of strategic positioning, adoption of technologies, management capabilities, and workforce skills may generate more prepared and robust supply chains in order to effectively respond to the effects of disturbance events.
About the Author
Guilherme F. Frederico, PhD is a Professor of Operations, Supply Chain and Project Management at the School of Management, Federal University of Paraná, UFPR, Brazil and Visiting Research Professor of the Centre for Supply Chain Improvement at the University of Derby, UK. He is the author of the book Operations and Supply Chain Strategy in the Industry 4.0 Era and has published articles in international journals (e.g., Supply Chain Management, Benchmarking, the International Journal of Logistics Management, the Business Process Management Journal, Operations Management Research), conferences (e.g., IEOM, POMS), and magazines (Supply Chain Management Review, Logistics Management, Performance Magazine, The World Financial Review). Prof. Frederico is also an area editor of the Operations Management Research Journal, OMR, Springer. His research interests are related to Supply Chain 4.0, Industry 4.0, maturity in supply chains and operations management, performance measurement in supply chains, knowledge and information management, and supply chain and operations strategy. Prof. Frederico has more than 20 years’ experience in supply chain and operations management, having also worked in strategic positions at global companies in the manufacturing and services industries.
