Summary: Review on Building Resilience in Supply Chains – An Initiative of the Risk Response Network – In collaboration with Accenture – World Economic Forum. The report broadens the view of resilient supply chains away from pure trucking towards taking all available transport modes into account. Additional relevance is given by building partnerships of private companies and creating strategic transport orientation in normal times and to be executed in harsh times. The views given are from large industry and insurers point of view thus serve as hints to SMEs. Demo-WPs concerned with resilience should have the ideas in mind in order to follow the worlds to forum and on the other side identified lacks (of focus on consumers of goods) should be avoided in CORE demonstration layouts. Coding in CORE e-library is CORE1055. Source file at: http://www3.weforum.org/docs/WEF_RRN_MO_BuildingResilienceSupplyChains_Report_2013.pdf
In 2013 the members of the WEF discovered during their annual meeting the increase of natural disasters as a threat to global supply chains. A few major disasters of various types are named and expenses incurred are given. Increased cost of disruptions have effects on premiums and coverage. A list of recommendations towards private and public stakeholders is also given with main focus on risk management priorities. Workshops in US, EU, India and the Far East showed needs for a common risk vocabulary, distinction between credible information and anticipations and finally flexibility of SCs and recovery from disruptions.
A few examples of a changing risk landscape are given with downstream immediate impacts on other systems or long-term effects. Subsequent these natural disasters become popular in mass media and force leaders (business / political) to take action. This already led to some improvements and closer monitoring but further cooperation and research is needed. Also all risks (natural, man-made) must be taken into account by each stakeholder to face the challenges. A survey was driven to unveil the changes within the risk landscape and the show diversity of risks in different parts of the world but also common risks like cyber risks in a hyper connected world.
Next part is firstly about why resilience is needed due to recent changes in today’s economic world. Then it reads about resilience measures. These measures are differentiated according to following classifications:
Key regional differences: While North America and Europe mostly go conform with prioritization of measures (e.g. harmonized legislative and regulatory standards, building a culture of risk management across suppliers), Asia is slightly different (e.g. improved information sharing, alert and warning systems). Other parts of the world are not covered.
Public sector specific priorities: North America and Europe like classification of firms and procedures to allow preferential treatment in case whereas Asian authorities rather accept competition and rapid supplier substitution.
Private sector specific priorities: The private sector covered is in favour of stress-test assumptions and trade resumption plans, protocols and lines of authority to redress major concerns.
Jointly the following 5 measures are top-rated:
- Improved information sharing between governments and businesses;
- Harmonized legislative and regulatory standards;
- Building a culture of risk management across suppliers;
- Common risk assessment frameworks; and
- Improved alert / warning systems
A blueprint for Resilient Supply Chains follows, resilience itself can be measured by reduction of value or recovery time after incident with some discussion on different views and incentives with respect of encouraging or enforcing resilience. Large consumer-brands might be over-focused whereas consumers are under-involved. An overall blueprint for resilient supply chains is suggested with four components: partnerships, policy, strategy and IT, each one with a number of priorities, illustrated by spider-charts.
- Partnership resilience contains long-term, trustful, well established partnerships. These are supposed to work better against many threats. This type could be established by creating common security protocols, engaging in collaborative logistics and participating in mutual learning.
- Policy resilience offers to use regulations to strengthen supply chains by (additional) infrastructure, avoiding bottlenecks and knock-on effects.
- Strategic resilience is planning ahead in stable times in a way to reshape operation for instable times. One idea is to analyze all information available for an immediate response on disruptions, another idea is to keep transport structures adaptable towards quick changes. Good private economy connections might be adopted by governments for public needs to enhance capabilities.
- Information technology resilience is vital and has four main aspects: analytics, information sharing, scenario modeling and pre-programmed responses where the second aspect is highlighted especially for normal operation. Data infrastructure and superstructures must be resilient as well.
The final part of the document lists recommendations for resilient supply chains: common risk vocabulary, better information flow and increased flexibility. Threats should be identified and bypasses anticipated.
SWOT Analysis with reference to CORE:
STRENGTHS: The named differentiation of preferences in different parts of the world and subsequently regions is a good way to present individual habits but the need for an overall blueprint for resilient supply chains is not abandoned. The views of leading companies and governments are well defined and could be used as guidelines for SMEs and Institutes without the budget for such intense research.
WEAKNESSES: Participants in the workshops named were mainly not directly affected companies to install measures. The outcomes show the anticipated needs of governmental agencies, insurers and researchers. The main rationale to install measures for resilience seems to be cost to recover from a natural disaster paid by insurances instead of maintaining daily supply for people and industry.
OPPORTUNITIES: The statement of imbalance of involvement of consumer-brands and consumers in resilience priorities should be used to shift CORE participants and public authorities notion towards consumers. Shown methods of analysis could be used in CORE – WPs.
THREATS: Focus is on Europe, North America and Asia by leaving other parts of the world aside thus the findings might not be applicable worldwide whereas the author is the ‘World Economic Forum’. CORE should avoid taking over this view and let Demo WPs slide away from it.
Cross-references: The three documents CORE WP1.1037 Review of Critical Issues in US Transportation-2013, CORE WP1.1038 Summary-Material Handling Logistics US Roadmap, CORE WP1.1055 Review of
Industry Agenda – Building Resilience in Supply Chains – January 2013 – An Initiative of the Risk Response Network – In collaboration with Accenture
World Economic Forum, 91–93 route de la Capite, CH-1223 Cologny/Geneva, Switzerland, www.weforum.org
Report is available to the general public at:
Accessed: 15 January 2015