Resilience supply chain process

Between 2000 and 2010, there were many market shifts, and companies found that without the ability to sense and adapt to market conditions, the reliable supply chain was not sufficient. In 2000, Cisco Systems was caught in the downturn of the e-commerce bubble. As a result of not sensing demand changes, the company was forced to write off 2.25 billion in inventory in 2001. This loss taught the company an important lesson. The redefinition of supply chain processes to be more resilient enabled the company to sense and withstand the downturn of the Great Recession of 2008. 

Resilient supply chains may not be the lowest-cost supply chains but they are more capable of coping with the uncertain business environment. Resilient supply chains have a number of characteristics, of which the most important is a business-wide recognition of where the supply chain is at its most vulnerable. Managing the critical nodes and links of a supply chain, to be discussed further in Chapter 10, becomes a key priority. Sometimes these critical paths may be where there is dependence on a single supplier, or a supplier with long replenishment lead times, or a bottleneck in a process. 

Rice and Caniato (2003) discussed the emerging expectations with respect to supply chain security when they described the need for creating both secure supply chains (e.g., supply chains that maintain advanced security processes/procedures) and resilient supply chains (e.g., supply chains that are able to react quickly and restore operations when unexpected sruptions occur). Given the widespread nature of the food supply chain, creating both a secure supply chain as well as a resilient supply chain is of utmost importance. 

While companies attempted to implement best practices over the last 30 years, they are now grappling with the fact that many Y2K projects built an efficient supply chain without resiliency. These investments made the supply chain strong, but not agile. Today, most companies have processes that can respond, but cannot adapt. They are too rigid. They cannot sense and adapt to market shifts. This is the basis of the drive to create market-driven value networks. 

Both situations caused massive losses for the companies. These were not only financial losses, but also immeasurable losses such as loss of reputation and customer trust. The decision to move the branch proved to be wrong, as it was ill considered from the point of view of the size and diversity of associated threats. On the other hand, the oil spill in the Gulf of Mexico was the direct consequence of the operational risk. The explosion of the drilling rig was a random event and difficult to predict, with a scenario that turned out to be dramatic. The preparation of corrective measures in the event of adverse effects is a very important element in assuring process continuity in the relationships between the supplier and purchaser. It provides for resistance (resilience, robustness), i.e. a company s capacity to respond to unexpected disruptions and therefore to assure the proper level of operational process in the supply chain (Rice 2003, p. 4). 

Dalziell EP, McManus ST (2004) Resilience, vulnerability, and adaptive capacity implications for system performance. University of Canterbury, Christchurch Deimel M, Frentrup L, Theuvsen L (2008) Transparency in food supply chains empirical results from German pig and dairy production. J Chain Network Sci 8(l) 21-32 Dhami K, Sharma S (2008) Food processing in India opportunities and constraints. The ICFAI Univ J Agri Econ 5(3) 30-38... 

The unified model of systems dependability and process resilience proposed in this paper is a universal, shell type tool, that can be applied to verifying and validating the vulnerability of complex systems, especially for complex supply chains. 

In this chapter, an approach to analysing vulnerabihty in a supply chain system is presented as a means to reduce risk, to become better prepared to manage the system s vulnerabihties and to improve the system s resilience. The analysis establishes the relationship between relevant threats and risks, and the potential scenarios and consequences that determine the vulnerabihty of the supply chain system. This is designed to generate a deliberate and conscious management process, seeking to establish an acceptable degree of vulnerability and risk within the supply chain system. 

We believe that through this approach, vulnerability and resilience management may become a practical part of SCM, establishing a formal and conscious process of understanding, analysing and handling risks and vulnerabilities in supply chains. 

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