Formulating Effective Resilience Strategies Post-COVID-19 and their Impact on Supply Chains
Author: Brian Chikwava, PhD Researcher in Supply chain management (MCIPS)
Since the COVID-19 crisis struck in 2020, organizations in vulnerable sectors, particularly retail, have seen their revenues drop substantially within weeks — in some cases, dwindling to almost nothing. Many companies have taken reactive steps to mitigate major losses, such as establishing remote work arrangements, securing supply chains, reducing employee workloads, cutting costs, adopting digital technologies to enhance both visibility and flexibility and applying for government support.
After a period of frenetic activity, some organizations finally have time to consider capturing opportunities. But where to start? After four years of dealing with the fallout from COVID-19, many Australian businesses, particularly in the retail sector, are still not proactively addressing the threat of future pandemics to their supply chains. Despite the extensive disruptions experienced and the lessons learned from how our supply chains were exposed as vulnerable, fragile, and inefficient, recent research indicates that only 39 percent of companies are investing in tools to monitor risks and disruptions (Australian Retail 2023). Preparing for potential force majeure events, which are unforeseeable circumstances that prevent someone from fulfilling a contract, is crucial to maintaining the operational integrity of supply chains. The key factor is whether a company adopts a proactive or reactive approach to the various threats that could affect its supply chain.
Proactive strategies, with their systematic approach to scanning for potential disruptions, offer a beacon of hope in these uncertain times. They are designed to either prevent or mitigate the effects of such events, providing a sense of control and preparedness. At the same time, innovation is a prerequisite for resilience, as innovative firms tend to continuously anticipate and adapt to a wide range of crises (Hamel and Valikangas, 2003; Linnenluecke, 2017). Depending on the perceived threat level, managers can make necessary adjustments to operational processes, inform clients of potential dis- ruptions, and update employees on changes to work schedules and processes, fostering a sense of security and stability.
Reactive strategies, on the other hand, involve waiting for an event to occur before responding. This approach is not only risky but also puts the company’s reputation, profitability, and viability at stake. Customers, too, bear some of the risk. While a reactive approach might seem unavoidable due to the unpredictability of business, relying solely on it is a mistake. Proactive strategies, though they may seem complex, are akin to checking for smoke rather than waiting to put out a fire, offering a clear path to risk mitigation and business continuity.
The Impact of Disruption
A reactive management plan means that when a critical incident occurs, companies may experience significant pressure across various departments and their supply chain. Recent years have shown that manufacturing and delivery operations bear the brunt of serious disruptions, affecting everyone involved once a reactive strategy is activated.
Information Technology (IT) departments must ensure the company’s information infrastructure remains operational and secure. This includes supporting remote work and maintaining onsite support for those who cannot work from home. Business continuity teams must handle the interruption of normal operations, ad- dress executive concerns, and decide whether to implement the business continuity plan. Human Resources (HR) departments will manage employee quarantines, hiring, and training new staff, as well as addressing employee-related concerns, including mental health issues stemming from the pandemic’s stress.
Supply chains will operate at reduced capacity under a reactive pandemic strategy, with employees in manufacturing and delivery facing increased stress. This disruption effects on-time delivery and service quality, impacting all stages of the supply chain, including customers, suppliers, and partners.
Proactive Strategy Implementation
To achieve better outcomes, companies should consider the following proactive strategies:
- Effective Leadership and Top Management Commitment
It is time to appoint the right people to the right positions. Calamities such as pandemic readiness should be a primary responsibility at the board level, with C-suite executives actively engaged in the planning process. The involvement of top management is essential. Supply chain professionals are in high demand to fill these positions, and the lessons learned from the recent COVID-19 pandemic have triggered professionals to strategically implement appropriate strategies. This aligns with the suggestions of Michael Wade and Bjerkan (2020), who noted that organizational responsiveness to COVID-19 has been largely reactive out of short-term necessity. They proposed a decision tree to help executives more proactively and strategically consider their potential responses to the COVID-19 crisis as shown below. - Holistic View
Recent experiences highlight the necessity of having a comprehensive view of operations. Business leaders must track disease risks and potential supply chain disruptions, estimating their impact on the company and its employees. Monitoring employee health developments is crucial and should be conducted systematically, using actionable data while ensuring security and ethical considerations. - A commingled Integrated Approach
A commingled and integrated approach, involving key departments such as HR, finance, IT, risk management, and manufacturing working together, is essential in proactive strategies. Their goal is to build resilience and agility by identifying risks, developing integrated plans, and activating unified responses to threats. An integrated pandemic approach should be part of the company’s business continuity plan. -
Strengthening Supplier Relationships
Ensuring third-party preparedness is essential for maintaining productivity and meeting service level agreements. Companies must confirm that their partners and suppliers have their own pandemic response strategies. A lack of preparedness among partners can hinder a company’s ability to deliver goods and services. A study by Deloitte and the Manufacturers Alliance found that 83% of surveyed supply chain executives plan to strengthen supplier relationships to avoid disruptions. - Implementation of Contingency and Tactical Plans
The execution of pre-approved response systems to trace employee contacts and maintain pandemic toolkits with personal protective equipment ready for immediate use is crucial. These plans should be ready to be activated quickly when a pandemic surpasses the company’s risk tolerance. - Prioritize Technology Investment
Recent research about the appropriate actions and strategies that could help firms overcome crises has highlighted the key role of digital technologies in ensuring business continuity (Yin et al., 2020; Bettiol, 2022). Investing in proactive pandemic management strategies enhances business viability and supply chain resilience. These strategies improve operational capabilities and reassure employees that their leadership prioritizes their well-being. Studies on Industry 4.0 technologies have emphasized the predictive potential of data analytics for marketing (Davenport et al., 2020). Technologies such as 3D printing, big data, artificial intelligence (AI), and the Internet of Things (IoT), all included under the umbrella of Industry 4.0 (Frank et al., 2019b), have opened new scenarios for value creation (Sauter et al., 2015). These technologies allow firms to increase data gathering and analyse customer needs and behaviours, through active interactions and passive data collection. From this perspective, proactive organizations cannot afford to ignore the importance of organizational ambidexterity in relation to digital transformation.
