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Supply Chain Resilience: How to Thrive in Change?
In today's rapidly changing business environment, supply chain resilience has become a critical element to business success. It refers to the supply chain's ability to sustain, adapt and transform in the face of change. In recent years, supply chain risk management has gradually emphasized this concept because traditional risk management methods have become inadequate in dealing with increasingly complex supply chain systems.
Supply chain resilience is the ability of a supply chain to persist, adapt or transform in the face of change.
As we entered the 21st century, companies found that relying solely on traditional risk management steps, such as risk identification, assessment, treatment and monitoring, could no longer effectively cope with the complexity of supply chains spanning multiple companies. With supply chains often involving thousands of companies, trying to identify all possible risks becomes challenging, if not impossible. Therefore, supply chain resilience began to attract attention and became a new management concept.
Interpretation of supply chain resilience
Engineering toughness perspective
For a long time, the interpretation of resilience in supply chain management has mainly come from an engineering perspective, viewing the supply chain as a closed system. This view implies that the supply chain is controllable, just like the system designed by engineers, and that the role of managers is close to that of engineers, who should respond quickly and quickly restore the system to its ideal state.
Supply chain resilience is understood as the ability to quickly recover to a desired state.
To achieve this goal, many companies identify system weaknesses by measuring survival time and recovery time, and design redundant systems (such as multi-source supply) to enhance resilience. Although this approach is effective in the short term, it shows its limitations in the medium and long term.
The perspective of social ecological resilience
Over time, the concept of social-ecological resilience has gradually emerged. This perspective views the supply chain as a social-ecological system, which not only includes ecological adaptability but also takes into account human decision makers and their social interactions. In this framework, the supply chain is viewed as a system that can continuously adapt to changes in the external environment.
The supply chain should be viewed as a fluid system that interacts with the rest of the world.
For example, Tesla’s supply chain embodies the resilience of the transition from internal combustion engines to electric motors, which stems from the ability of human decision-makers to foresee long-term changes in the climate crisis. At the same time, research shows that in the face of supply chain disruptions caused by the COVID-19 pandemic, shipping issues and geopolitical conflicts, many EU companies have adopted adaptive changes to reduce risks and enhance supply chain resilience.
Current Challenges and Responses
For example, data from 2023 showed that 44% of EU companies encountered transportation and logistics challenges when importing goods from China, while only 22% encountered similar problems with imports limited to within the EU. To meet these challenges, trade patterns are changing. In 2023, the EU's exports to the United States increased from 14% in 2010 to 21%.
This change aims to reduce risks and enhance the resilience of the supply chain, demonstrating the company's flexible response capabilities in the face of external shocks. In this way, companies will not only be able to restore supply chain operations in the short term, but will also be able to fundamentally transform to adapt to new market environments and challenges. This is why supply chain resilience is even more important in the current business environment.
As various challenges continue to emerge, companies need to rethink their supply chain strategies, shifting from passive crisis response to active adaptation and transformation. How to maintain the resilience of the supply chain in an ever-changing environment will be the key to future corporate competitive success?
