A structured overview of insights and opportunities for enhancing supply chain resilience

Abstract

Widespread product shortages during the COVID-19 pandemic and other emergencies have prompted several large studies of how to make supply chains more resilient. In this article we leverage these studies, as well as the academic literature, to provide a review of our state of knowledge about supply chain resilience. To do this, we (i) classify the failure modes of a supply chain, (ii) quantitatively evaluate the level of resilience needed in a supply chain to achieve desired business or societal outcomes, (iii) describe a structured framework of actions to enhance supply chain resilience, and (iv) use the resulting conceptual paradigm to review the academic literature on supply chain risk and resilience. In each step, we summarize key insights from our current state of understanding, as well as gaps that present opportunities for research and practice.

Keywords:

• Supply chains
• disruption
• emergencies
• disasters
• resilience

Notes

1 We acknowledge that including cost effectiveness in the definition of resilience is controversial when talking about supplies of critical products during emergencies. It arises in every multi-disciplinary study. But the argument to ignore cost in emergencies is a version of the “value of human life is priceless” argument. Just as we cannot justify unlimited spending to make automobiles 100% safe, we cannot justify unlimited spending to ensure the supply of a product under all possible scenarios. In both cases, excessive spending on one option to protect human life will use up funds that could have achieved greater protection if spent on another option. When resources are finite, cost effectiveness always matters.

2 The convention of measuring inventory in “days of supply” is useful in this context because it provides a direct indication of the duration of protection provided by each inventory stock in the supply chain.

3 We use the word “customer” broadly, to refer to the customers who purchase goods, typically from retailers, in private sector supply chains as well as beneficiaries who receive goods or services in public sector supply chains.

4 Service level is only one performance metric used in inventory management. Another is fill rate, which is defined as the fraction of demand met without delay during a specified time interval. Still another is backorder level, which is defined as the average number of orders waiting to be filled at any given time. Supply chain resilience could be measured with analogues to these or other inventory performance metrics. But, since this discussion is only a conceptual illustration of how to think about supply chain resilience targets, we limit our treatment to supply chain resilience defined in service level terms for the sake of simplicity.

5 We acknowledge that perspective introduces a degree of semantics in these classifications. For example, from a supply chain standpoint, steps that reduce the likelihood a plant’s output is disrupted by a power outage are Hardening measures. But from the plant perspective, installing a backup generator looks like a Diversification measure. The generator represents a parallel process at the plant level, but not at the supply chain level. We trust that this semantic distinction does not present a problem because both managers and scholars define the granularity of their system before analyzing it.

Additional information

Notes on contributors

Ozlem Ergun

Ozlem Ergun is COE Distinguished Professor in Mechanical and Industrial Engineering at Northeastern University. Her research focuses on design and management of large-scale and decentralized networks. She has applied her work on network design, management, and resilience to problems arising in many critical systems including transportation, pharmaceuticals, and healthcare. She has worked with organizations that respond to emergencies and humanitarian crises around the world, including USAID, UN WFP, UNHCR, IFRC, FEMA, and USACE. Ergun’s decade long collaboration with UN World Food Program, the largest humanitarian organization in the world, to develop and implement supply chain optimization and analytics capabilities was awarded the INFORMS Franz Edelman Prize in 2021. She currently serves as the Area Editor at the Operations Research journal for Policy Modeling and the Public Sector Area and the Department Editor at MSOM journal for Environment, Health and Society Department.

Wallace J. Hopp

Wallace J. Hopp is Distinguished University Professor of Business and Engineering at the University of Michigan. He studies the design, control and management of operations systems, with emphasis on manufacturing and supply chain systems, innovation processes, and health care systems. Hopp is an elected member of the National Academy of Engineering, and a Fellow of IIE, INFORMS, MSOM, POMS and SME. He has served as President of the Production and Operations Management Society (POMS) and as Editor-in-Chief of the journal Management Science and is an active industry consultant, whose clients have included many Fortune 500 firms.

Pinar Keskinocak

Pinar Keskinocak is the William W. George Chair and Professor in the School of Industrial and Systems Engineering at Georgia Tech. She is the co-founder and director of the Center for Health and Humanitarian Systems. Her research and project focus areas include disease modeling and resource allocation, process improvement in health systems, disaster preparedness and response, and supply chain management. She has collaborated with numerous organizations including CDC, GA Department of Public Health, Carter Center, Task Force for Global Health, and several health systems. She is a fellow of INFORMS and served in various leadership roles at INFORMS, including president, secretary, and vice president of membership and professional recognition