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Reflections after COVID-19: How can EU companies reshape their supply chains?
The COVID-19 pandemic has had a profound impact on the global economy and supply chains, especially on EU companies. As multiple, almost unforeseen challenges unfold, companies are forced to reassess the resilience of their supply chains to prepare for future contingencies. Supply chain resilience is defined as "the ability of a supply chain to continue, adapt or transform in the face of change." This concept has become particularly important after the epidemic.
The development of supply chain resilience
In the early 21st century, supply chain risk management began to attempt to transfer traditional risk management methods from the "company" system to the "supply chain" system. However, the traditional risk management steps (risk identification, assessment, treatment and monitoring) are rapidly reaching their limits in supply chain applications. Because supply chains often consist of thousands of companies, identifying all visible risks becomes extremely complex. To cope with this complexity, more and more people are paying attention to supply chain resilience, as it is not only about the identification of specific risks, but more importantly, the characteristics of the system.
Different interpretations of supply chain resilience
Engineering elasticity perspective
In the field of supply chain management, engineered resilience has long dominated the concept. It implies that the supply chain is a closed system that can be controlled, similar to systems designed and planned by engineers (e.g., subway networks). This places expectations on managers similar to those of engineers, requiring them to react quickly when disturbances occur in order to restore the system to its desired and original state as quickly as possible.
Supply chain resilience can be viewed as a relatively rigid system in the short term.
While this approach to engineering resilience works in the short term, it has limitations in the medium and long term. Indeed, whereas traditional approaches to engineering resilience focus on the ideal state of rapidly restoring supply chains, emerging perspectives emphasize adaptability and flexibility, enabling supply chains to continue to operate and be resilient in the face of perturbations.
The perspective of social-ecological resilience
Social-ecological resilience introduces the concept of human decision-makers and their social interactions, arguing that supply chains, like ecosystems, can continuously adapt to external environmental conditions. Such a perspective also allows the supply chain to be viewed as a “system of systems”, enabling analysis of its interactions with other levels of systems, such as society, the political economy, and even the earth itself.
The transformation of supply chains mirrors the transition from internal combustion engines to electric motors, highlighting the human subject’s ability to foresee long-term change in the face of the climate crisis.
Challenges and responses of EU supply chain
Recent research data shows that EU businesses have responded to major supply chain disruptions caused by the COVID-19 pandemic, maritime transport issues and geopolitical conflicts. These events reveal the fragility of the EU’s supply chains, especially its reliance on external imports. According to statistics, 44% of EU companies encountered transportation and logistics challenges when importing from China in 2023, while only 22% of companies reported similar data when importing only within the EU.
Trade patterns have changed to reduce risks and increase supply chain resilience.
For example, the EU's share of exports to the United States increased to 21% in 2023, compared with just 14% in 2010. These adjustments are not only a response to the current situation, but also a strategic adaptation in future planning.
ConclusionAs supply chain management has received more and more attention, how to maintain the flexibility and adaptability of the supply chain during a crisis has become the focus of the industry. Whether in short-term emergency measures or long-term strategic planning, social-ecological resilience provides a new way of thinking. Looking to the future, are companies ready to meet any unexpected events and redefine the resilience of the supply chain in the process?
