The Role of Collaboration in Supply Chain Resilience

In the new complicated business settings that require global and lean yet adaptable operations, organizations are increasingly vulnerable or at risk to supply chain disturbances. According to Business Continuity Institute (2013), three quarters of businesses suffered a disruption, and 21 percent of these organizations have incurred losses of more than one million euro in cost as a result of a single disruption incident that ranges from natural hazards, equipment malfunctions, disasters and breakdowns in information technology (Scholten and Schilder 2015, p. 479). Therefore, there is raising interest for businesses to adopt a concept of supply chain resilience in order to identify proactive strategies that will assist in minimizing the impact of disturbances through allowing the supply chain to react on its recovery to a better or original functional state. Organizations are required to look deeply into the network capabilities to grow, survive and adapt when faced with uncertainty and change.

             Collaboration plays a significant role in building a resilient supply chain because it acts as a bonding factor that holds organizations together in a supply chain when faced with a crisis. In order to examine how collaboration influences supply chain resilience and the role of collaboration in supply chain management, an article the role of collaboration in supply chain resilience by Sanne Schilder and Kirstin Scholten (2015) is selected. This article focuses on the collaborative activities such as collaborative communication, mutual relationship efforts and information sharing in increasing supply chain resilience through increased flexibility visibility and velocity. This article assists in understanding comprehensively the role of collaboration in creating a resilient supply chain as well as help to answer the question of how to overcome disruptions in the supply chain in a global context by creating resilience through collaboration.

Review of Selected Literature

             In the recent turbulent business environment, disruptions have been identified as inevitable events, and this has forced firms to engage in collaboration as a formative element of a resilient supply chain; nevertheless, there is little knowledge on specific partnership impacts on supply chain resilience (Scholten et al. 2014, p. 215). .Moreover, through collaboration two or more autonomous companies have been able to work efficiently united by planning and executing supply chain operations toward a common objective.

            Collaboration is defined through collaborative activities of joint decision-making, information sharing, joint knowledge creation, goal congruence, incentive alignment and collaborative communication among independent supply chain partners (Fredendall and Hill 2016, p. 15). Many organizations have strived to develop a holistic and proactive approach to building a resilient supply chain in order to deal with unforeseen disruption (Heckmann, Comes and Nickel 2015, p. 125). These assist companies in strengthening their ability to recover quickly from events of disruption and helps in maintaining continuity of operations at the desired level of control and connectedness over functions and structure. Further, creating and maintaining resilience is a process in itself and not a one-time event. Therefore, there is a need for formative resilience elements to be based on coordinating and integrating resources manifested in a supply chain process. It is through supply chain collaboration that business partners develop synergies, which encourage real-time information exchange and facilitates joint planning that is required to recover from, respond to and prepare for supply chain disruptions while minimizing their impacts. This is achieved through supply chain collaboration that involves information sharing, incentive alignment, and decision synchronization.

Critical analysis

            Studies have shown that the role of collaboration has been considered as a significant element in creating a resilient supply chain. Moreover, incentive alignment and decision synchronization have been essential elements for effective system-level disturbance response and efficient communication for supply chain resilience. However, there is little knowledge of the underlying activities of supply chain collaboration because there is no empirical insight that indicates on a single firm perspective. Majority of supply chain disturbances occur at first-tier suppliers, and this has created more worries because suppliers are at a high chance of risks sources (Ibishukcu and Datar 2016, p. 55). In addition, it is evident that mutual dependence between two companies within a chain also has an indirect positive impact on the supply chain resilient. This is the case since most businesses that depend on each other freely share information, work together to overcome an obstacle and make their success interdependently. Moreover, interdependent firms are at a high chance of engaging in dedicated investments that in the end maximizes mutual dependency.

            The literature in this article also offers useful knowledge on how to utilize collaboration in order to improve velocity, flexibility, and visibility. The information can be very helpful to managers as it shows the importance of sharing information promptly to ensure response to disturbances is dealt with in time. Furthermore, it has been proved that the longer the working relationships are between organizations, the more resilient the organizations.

            Despite the findings of the study being reliable and valid, the research had several limitations. For instance, the researchers considered redundant network resources including physical, human and organizational networks resources and their tradeoffs with efficiency in order to be able to explore the underlying supply chain processes, which contribute to resilience through visibility, flexibility, collaboration and velocity (Christopher 2016, p.45). However, they did not examine redundant resources required for supply chain resilience since they facilitate the supply chain processes explored in the study (Scholten and Fynes 2017, p .423). Additionally, the balance of such redundancies was not investigated with efficiency to determine the amount of efficiency a resilient supply chain can take.

Limitations

            Further, in the research, cases from diverse sourcing categories such as the supply of key products and financial spend which are very useful to focal companies were studied, but the underlying risks were not examined. These risks include the existing market conditions, power imbalance, and availability of alternative suppliers (Stadtler 2015, p. 250). The use of kraljic’s matrix would be essential while selecting cases in order to account for the underlying level of risks but it was not utilized in the study (Scholten and Schilder 2015, p. 481). Also, in the research, the influence of power on mutual dependence was not studied in the research despite being found to increase supply chain resilience. Further, the same matter was not studied about legal agreements despite being found to effect incentive alignment, which would have given additional insights to how the level of resilience among supply chains differs and why it differs (Tukamuhabwa et al. 2015, p. 5598). The research has also not been tested empirically to test the researchers’ propositions with quantitative data, which would increase the generalizability and validity of the findings. All these areas of limitations make it imperative for future research to be carried out taking into consideration all these areas hence ensuring a more reliable, valid and accurate study.

Conclusion

            Collaboration has a significant impact on supply chain resilience as it acts as a formative element of a supply chain resilience. It is vital for organizations to collaborate through activities such as information sharing, incentive alignment, and decision synchronization in order to be able to prevent disruptions by creating a resilient supply chain. Also, it is through collaboration that firm can be able to work together and increase velocity, flexibility, and visibility. It is essential for companies to ensure they employ proactive and holistic measure in order to enable them to prevent disruption in the supply chain and this can only be achieved through collaborative activities that will help create a resilient supply chain.

References

Scholten, K. and Fynes, B., 2017. Risk and uncertainty management for sustainable supply chains. In Sustainable supply chains (pp. 413-436). Springer, Cham.

Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Tukamuhabwa, B.R., Stevenson, M., Busby, J. and Zorzini, M., 2015. Supply chain resilience: definition, review and theoretical foundations for further study. International Journal of Production Research, 53(18), pp.5592-5623.

Kamalahmadi, M. and Parast, M.M., 2016. Review of literature on the principles of enterprise and supply chain resilience: Major findings and directions for future research. International Journal of Production Economics, 171, pp.116-133.

Scholten, K., Sharkey Scott, P. and Fynes, B., 2014. Mitigation processes–antecedents for building supply chain resilience. Supply Chain Management: An International Journal, 19(2), pp.211-228.

Heckmann, I., Comes, T. and Nickel, S., 2015. A critical review of supply chain risk–Definition, measure, and modeling. Omega, 52, pp.119-132.

Scholten, K. and Schilder, S., 2015. The role of collaboration in supply chain resilience. Supply Chain Management: An International Journal, 20(4), pp.471-484.

Business Continuity Institute (2013), “Supply chain resilience 2013”, 5th Annual Survey, available at www.bcifiles.com/131029SupplyChainSurveyReportfinallowres.pdf

Fredendall, L.D., and Hill, E., 2016. Basics of supply chain management. CRC Press.

Ibishukcu, O. and Datar, A., 2016. Maintaining Power Relations in Supply Chain.