Proactive Supply Chain Resilience in a High Uncertainty Engineer-to-Order Environment

Abstract

Today's supply chains operate in increasingly global and interconnected business environments, which could be constantly disruptive. Consequently, in the past two decades, the concept of supply chain resilience has evolved in the research field into a complex and multidimensional concept to prepare for and respond to disruptions. Especially in the aftermath of recent severe global supply chain crises, the concept of supply chain resilience has emerged as a topical development direction and a critical strategic capability for supply chains to gain a competitive advantage by turning disruptive events into opportunities compared to competitors. This master's thesis is a case study that applies the theoretical concept of supply chain resilience into practice by examining its feasibility and developing assessment methods for it. Before conducting the empirical research, a theoretical background facilitates the construction of a resilience framework. Originally, the resilience concept focused solely on reactive approaches to disruptions, but in the 2010s, the importance of proactivity in dealing with disruptions was quickly recognized, thus this thesis focuses on proactive resilience. Based on the most recent literature, proactive resilience could be structured into three phases of disruption anticipation, resistance, and adaptation. Each of these includes two resilience elements, leading to a total of six proactive resilience elements: visibility, awareness, robustness, redundancy, flexibility, and adaptability. The literature review also covers the most prominent measures and practices related to each of these, as well as typical measurement methods including KPIs and other assessment factors. The empirical research focuses on the case company, which is a global high-tech company offering industry-leading solutions and specialized equipment. It operates in a challenging and highly uncertain business environment characterized by cyclical demand, complex engineer-to-order products resulting in high variability and low volumes. Interviews conducted within the cases company were the main research data gathering method, which were complemented by observations and benchmarks. Utilizing the constructed resilience framework refined with empirical findings, the collected data were analyzed to address the first two research questions regarding the current and required states of the case company's resilience. Findings indicate that the weaknesses of the case company's resilience lie in awareness and adaptability, while its strengths are in redundancy and flexibility. When comparing these to the required resilience state, development priorities are especially at awareness, but also on visibility and adaptability. This led to the third research question regarding the relevant actions to improve the identified weaknesses in resilience. In total, ten resilience-enhancing actions were tailored to fit the case company's environment, which related to both operational and structural levels. After all, the key takeaways of the thesis study are structured approach to proactive resilience that has been tested in practice within the case company's environment. This framework was also elaborated into a resilience assessment scorecard to allow define the state of resilience, which could also be generalizable in other environments as well. These also contribute to currently fragmented and excessively theoretical literature. For the case company, the thesis primarily provides knowledge on resilience and serves as a basis for resilience management and development.