This section reviews the extant literature on supply chain risk factors raised by the COVID-19 pandemic. It then reviews the potential resilience strategies to overcome the risk factors. Finally, the concept of SCP and the theoretical foundation of this study are provided.
COVID-19 Pandemic and Supply Chain Risk Factors
Researchers have noted many risk factors that have arisen from the COVID-19 pandemic, all of which have moved through supply chains, from sourcing the materials to delivery of the final products to the customers. For example, a recent study by Paul et al. (
2023) documented and analyzed various operational challenges raised by this pandemic in electronic supply chains. Another study by Ghadir et al. (
2022) listed and evaluated supply chain risks under various categories such as demand, supply, logistical, political, manufacturing, financial and information risks caused by this pandemic in the context of the automotive industry in Iran. Similarly, Bastas and Garza-Reyes (
2022) identified the influence of this pandemic on the operations of manufacturing firms across various industries.
In general, the COVID-19 pandemic has disrupted every area of the supply chain (Shafi et al.,
2022). On the sourcing side, there is a substantial shortage of the raw materials required to produce the products (Ghadir et al.,
2022; van Hoek & Dobrzykowski,
2021). This material crisis has been ongoing since the outbreak began in China, as China is the primary source of raw materials for many manufacturing firms in different industries worldwide (Koonin,
2020; Lalon,
2020). This material crisis has forced many apparel firms across the globe to shut their operations in production facilities. For example, a study by Sen (
2020) reported that 20 percent of apparel factories in Myanmar have closed due to the material crisis. Moreover, reductions in manufacturing capacity due to limited hours of operation (Mollenkopf et al.,
2020) and employee shortages due to a need for employees to maintain social distance in the workplace have been reported in prior studies (Mollenkopf et al.,
2020).
Transportation has also been disrupted, including delays/longer lead times and shutdown of one or more modes of transportation. Significant delays in local transportation systems have been reported due to restrictions on vehicle movement (Singh et al.,
2021). On the other hand, cross-border trade has been disrupted due to restrictions on international transportation and the movement of cross-border goods (Nikolopoulos et al.,
2021). Moreover, traditional physical distribution networks have been unable to distribute products in line with government policies (Ketchen & Craighead,
2020). Similar to other supply chain areas, demand has also been severely disrupted. Fluctuations in demand for products are commonly reported in studies on the COVID-19 pandemic (Ketchen & Craighead,
2020; Singh et al.,
2021). Comparing 23 different risk factors, including the pandemic, natural calamities, financial risk and institutional risk in the context of the Indian apparel industry, Dohale et al. (
2023) found that demand uncertainty is the second most critical risk factor. Further, order cancellations from buyers, including big international brands, have been reported for apparel products not deemed critical during the COVID-19 pandemic (Sen,
2020). As a result of fluctuations in demand, prices of products and their associated materials have also changed. For example, the price of high-demand goods and their materials has increased (Gupta et al.,
2020), and that of low-demand goods has decreased (Arezki & Nguyen,
2020). In addition to the functional areas of supply chains, this pandemic has disrupted supply chain relationships and collaborations (Ketchen & Craighead,
2020).
Due to the above-mentioned risk factors, the financial stability of supply chains, especially apparel supply chains, has decreased considerably. Many small- and medium-sized apparel manufacturers have been struggling to manage working capital (Lalon,
2020). Moreover, many apparel producers have been struggling to receive payments from their buyers, as buyers have also been hit hard by the pandemic (Sen,
2020). All such risk factors could lead to a total collapse of supply chain systems (Ivanov & Dolgui,
2020; Mollenkopf et al.,
2020). Due to a lack of preparedness, many supply chains were not equipped with appropriate defenses against such risk factors and could not respond to this extraordinary disruption. Based on the extensive literature review conducted for this study, a summary of risk factors arising from the COVID-19 pandemic is presented in Table
1.
Table 1
supply chain risk factors due to the COVID-19 pandemic
Source: Created by the authors
1 | Supply shortage or delivery delay by suppliers | Anner, ( 2020), Bastas and Garza-Reyes, ( 2022), Ghadir et al., ( 2022), Ivanov and Das, ( 2020), Nikolopoulos et al., ( 2021), Paul et al., ( 2023), Sen, ( 2020), Shafi et al., ( 2022) |
2 | Factory closure of suppliers | Ardolino et al., ( 2022), Ghadir et al., ( 2022), Paul et al., ( 2023), Sen, ( 2020) |
3 | Production shutdown | Choi and Shi, ( 2022), Paul and Chowdhury, ( 2021), Singh et al., ( 2021) |
4 | Production capacity decrease | Ghadir et al., ( 2022), Mollenkopf et al., ( 2020) |
5 | Employee shortage | Bastas and Garza-Reyes, ( 2022), Mollenkopf et al., ( 2020), Singh et al., ( 2021) |
6 | Transportation disruption | Ghadir et al., ( 2022), Nikolopoulos et al., ( 2021), Paul et al., ( 2023), Singh et al., ( 2021), van Hoek and Dobrzykowski, ( 2021) |
7 | Cross-border trade disruption | Nikolopoulos et al., ( 2021) |
8 | Limited operations of physical distribution networks | Ketchen and Craighead, ( 2020), Paul et al., ( 2023) |
9 | Demand fluctuation | Ardolino et al., ( 2022), Ghadir et al., ( 2022), Ketchen and Craighead, ( 2020), Paul et al., ( 2023), Queiroz et al., ( 2022a), ( 2022b), Singh et al., ( 2021) |
10 | Order cancellation | |
11 | Price fluctuation | Arezki and Nguyen, ( 2020), Ghadir et al., ( 2022), Gupta et al., ( 2020) |
12 | supply chain relationship decrease | Bastas and Garza-Reyes, ( 2022), Baveja et al., ( 2020), Ketchen and Craighead, ( 2020) |
13 | Loss of financial stability | Bastas and Garza-Reyes, ( 2022), Ivanov, ( 2020), Lalon, ( 2020), Singh et al., ( 2021) |
14 | Deferred payments | |
15 | supply chain breakdown | Ivanov and Dolgui, ( 2020), Mollenkopf et al., ( 2020) |
Supply chain Resilience Strategies
Supply chain resilience has been defined in various ways (Hosseini et al.,
2016). For example, Kamalahmadi and Parast (
2016) described the concept using the capabilities required in different phases of a disruption, such as anticipation, resistance and the recovery and response phases. On the other hand, Hosseini et al. (
2022) and Hosseini et al. (
2019) conceptualized SCRES using absorptive, adaptive and restorative capacities of a supply chain system. While many other forms of SCRES conceptualization exist in the literature, proactive and reactive measures are commonly used when explaining SCRES capabilities (Bastas & Garza-Reyes,
2022) since Rose (
2004) summarized economic resilience to disaster under mitigation and recovery management strategies. Proactive measures are undertaken in the pre-disruption period to minimize the probability of failure by predicting the potential disruptions and analyzing their reasons (Ozdemir et al.,
2022). On the other hand, reactive measures are taken to respond and recover from a disruption. These measures help to reduce the immediate impacts of disruption and return to the pre-disruption state, or even a better state, quickly (Chowdhury & Quaddus,
2017).
Proactive measures or supply chain readiness (Chowdhury & Quaddus,
2016,
2017) have proven to be indispensable for many global supply chains. The unpredictable nature of global supply chain disruptions necessitates a proactive approach toward achieving supply chain resilience for epidemic or pandemic disruptions (Ivanov & Das,
2020). In this regard, it is critical to have a disruption orientation that acknowledges the fact that disruption can occur at any time and can affect one or more functional areas of supply chains (Queiroz et al.,
2022a,
2022b). As a result, creating supply chain disruption alertness to detect sudden changes in any areas of a supply chain can lead to reconfiguring the supply chain to respond to the changes (Queiroz et al.,
2022a,
2022b).
Many organizations found themselves in a better position during the peak of the COVID-19 outbreak due to early situational assessment and coordinated planning with key stakeholders (Azadegan et al.,
2020). Kilpatrick and Barter (
2020) from Deloitte Consulting suggest organizations should develop a continuity plan to better prepare for disruption. As readiness strategies, reducing the number of suppliers from the same location (van Hoek,
2020) and including risk measures in supplier selection (Gebhardt et al.,
2022) have been found to be effective in the management of product supply. Moreover, a detailed supply chain mapping with both suppliers and customers for greater visibility and transparency has been found effective for building proactive resiliency (Gebhardt et al.,
2022). Such mapping also enables the designing of a robust and optimum supply chain network. Companies are also increasingly integrating advanced technology and data analytics into their building of proactive SCRES capabilities. For example, Spieske and Birkel (
2021) found that Industry 4.0 implementation holistically enables effective proactive risk management.
Many low-cost manufacturers from developing countries have reported that, due to a lack of demand, major international apparel retailers have used “Forced Majeure” to cancel existing orders without any compensation, which has plunged the lives of impoverished factory workers from developing countries into uncertainty (Majumdar et al.,
2020). As a remedy for such uncertain order cancellation, many manufacturers establish a flexible contractual agreement with retailers where both parties’ interests will be protected. Organizations can implement redundancy strategies, such as a backup stock for critical items to maintain operations (Ivaov & Das,
2020). Supply chain decision-makers should consider securing backup cash and finance to maintain operational costs. Finally, to overcome the crisis of employee shortage during a disruption, companies need to concentrate on building the capabilities of the staff and developing a multi-skilled workforce (Majumdar et al.,
2020).
While companies are equipped with various proactive measures, several
reactive strategies have also worked for many supply chains across industries. Many manufacturers focus on a leaner production system for optimum usage of resources (Handfield et al.,
2020). Moreover, companies also realized that the reconfiguration of production systems or even entire logistics and supply chain networks is required to respond to this pandemic. For example, taking the Bangladesh garment industry as a context, Munim et al. (
2022) and Mostafiz et al. (
2022) revealed that a global value chain restructuring is necessary for producers to respond to this pandemic. The importance of developing reconfigurable production systems for supply chain resilience is also highlighted (Linton & Vakil,
2020). This pandemic has exposed incompetence within the physical flow of many global manufacturers’ and retailers’ products (Ketchen & Craighead,
2020). Thus, detecting and eliminating weak links within a supply chain network (Golan et al.,
2020) and maintaining real-time visibility (Ivanov & Dolgui,
2021) are required in response.
Meanwhile, Ozdemir et al. (
2022) found that supply chain innovation and empowerment are the keys to responding to a global crisis. Resilient companies come out of their comfort zone to practice new things and ideas during a disruption. These companies also collaborate and share knowledge and information with supply chain partners to enhance resilient capabilities, thereby minimizing the impacts of the disruption (Juan et al.,
2022). Based on an analysis of sixteen different indicators, Badhotiya et al. (
2022) found that information sharing has the largest driving power to increase resilience. Many researchers have found that global organizations can take advantage during a pandemic by collaborating with their respective governments to establish social-safety policies and maintain liaison within the industry (Bastas & Garza-Reyes,
2022; Majumdar et al.,
2020). Taking a long-term perspective, Gebhardt et al. (
2022) have projected that by 2025, companies will focus more on bridging than buffering strategies for improving SCRES.
Moreover, deployment of the reserve inventory and capacity is suggested to reduce vulnerability (Bastas & Garza-Reyes,
2022). Response measures such as hiring local drivers and local logistics firms are also needed to ensure the continuity of transport and logistics during a global crisis (Bastas & Garza-Reyes,
2022). In addition, effective health and safety measures for workers and regular communication with employees regarding wellbeing should be adopted during a pandemic period (Ivanov,
2020; Majumdar et al.,
2020). Based on the literature outlined above, a summary of resilience strategies to mitigate various risk factors is presented in Table
2.
Table 2
Supply chain resilience strategies
Source: Created by the authors
Proactive | Supply chain disruption and resilience orientation | |
Supply chain disruption alertness | |
Continuity planning | Azadegan et al., ( 2020), Gunessee and Subramanian, ( 2020), Han et al., ( 2020) |
Avoid single-sourcing and critical geographic location | Bastas and Garza-Reyes, ( 2022), Gebhardt et al., ( 2022), Kilpatrick and Barter, ( 2020) |
Internal and external disruption scenario assessment and planning through simulation | |
Inclusion of risk measures in supplier selection | |
Supply chain mapping | Gebhardt et al., ( 2022), Ivanov and Das, ( 2020) |
Supply chain network design and optimization | |
Robust technological integration for visibility and transparency | Badhotiya et al., ( 2022), Belhadi et al., ( 2021), Choi, ( 2020), Ivanov and Dolgui, ( 2020), Munim et al., ( 2022), Spieske and Birkel, ( 2021) |
Mutually beneficial contractual arrangements | |
Resource redundancy | Bastas and Garza-Reyes, ( 2022), Dohale et al., ( 2023), Gebhardt et al., ( 2022), Ivanov and Das, ( 2020) |
Securing finance and backup cash capital | Ivanov and Dolgui, ( 2021) |
Develop a multi-skilled workforce for workplace innovation | |
Reactive | Lean production or made-to-order (MTO) system | |
Redesign/reconfigure the supply chain and logistic network (transportation, supplier and customer base) | Belhadi et al., ( 2021), Mostafiz et al., ( 2022), Munim et al., ( 2022), Veselovska, ( 2020) |
Reconfigurable production system | Ivanov, ( 2020), Linton and Vakil, ( 2020) |
Detect and eliminate any weak link within the network | |
Data-driven, real-time risk monitoring and visibility | Ivanov and Dolgui, ( 2021) |
Waste optimization (including raw materials, water, gas and electricity) | |
Supply chain innovation | |
Supply chain empowerment | |
Supply chain collaboration | Bastas and Garza-Reyes, ( 2022), Belhadi et al., ( 2021), Dohale et al., ( 2023), Gebhardt et al., ( 2022), Juan et al., ( 2022), Sharma et al., ( 2020) |
Knowledge management and information sharing | |
Following government policy and maintaining industry liaison | Bastas and Garza-Reyes, ( 2022), Majumdar et al., ( 2020) |
Reserve inventory and capacity deployment | Bastas and Garza-Reyes, ( 2022) |
Continuity of transport and logistics | Bastas and Garza-Reyes, ( 2022) |
Information support and (pandemic)-related health safety for workers | |
A combination of both
proactive and reactive measures can be more effective in enhancing SCRES (Ozdemir et al.,
2022). For example, Bastas and Garza-Reyes (
2022) reported that several proactive measures (e.g., local and regional sourcing and technological integration) and reactive measures (e.g., supply chain collaboration, utilization of reserve inventory and capacity and continuity of transport and logistics) are effective for manufacturers to overcome the influence of this pandemic. Therefore, the major challenge for supply chain managers has always been to adopt the right set of strategies that can be implemented throughout the supply chain network. There is no doubt the future of the global economy will be highly influenced by the country-specific political policy (e.g., trade wars between countries) that shapes the dynamics of global supply chain risk management (Veselovska,
2020). Therefore, depending on global value chain linkages, companies need to undertake different configurations of context-specific SCRES strategies during a disruption (Shafi et al.,
2022).
In measuring and offering SCRES strategies, quantitative methods are commonly used. For example, a recent review article by Chowdhury et al. (
2021) reported that mathematical modeling is most commonly used in the supply chain disruption literature, including research on epidemic disruption. Hosseini et al. (
2019) reviewed the quantitative methods used in SCRES research and found that mathematical and optimization modeling, Bayesian network modeling, structural equation modeling, Markov chain modeling and multi criterial decision-making approaches have been used thus far in this area. While mathematical modeling is extensively used in the literature, Bayesian networks, which are probabilistic graphical models, have been found to be powerful and effective in studies on risk and resilience (Hosseini & Ivanov,
2020). A substantial number of studies have also used simulation to assess the impact of this disruption and develop SCRES strategies (Ivanov,
2020; Moosavi & Hosseini,
2021; Singh et al.,
2021). Readers are directed to Bier et al. (
2020), Fahimnia et al. (
2015), Hosseini and Ivanov (
2020), Hosseini et al. (
2019) and Snyder et al. (
2016) to further explore the use of methods and models in supply chain disruption and resilience literature.
On the other hand, in general, there is a lack of qualitative research on supply chain risk management (Bier et al.,
2020). Considering this, we first conducted interviews with practitioners in the apparel industry to understand the risk factors caused by the COVID-19 pandemic and how the firms deal with these risks. Moreover, considering the importance of implementing multiple resilience strategies simultaneously (Snyder et al.,
2016), we employed fsQCA to determine the set of SCRES strategies and to understand the combined effects of risk and resilience strategies on SCP.
The term SCP has been conceptualized in various ways in previous studies (Flynn et al.,
2010). Some studies, such as Beamon (
1999) and Chang et al. (
2019), recommend multi-factor measurement to conceptualize and capture SCP. Accordingly, these studies offer a framework for measuring SCP, which includes three main elements: resources, output and flexibility.
Resource indicator refers to a firm’s ability to achieve composite efficiency or do the job with minimum resource requirements, such as inventory, equipment, energy, personnel and cost.
Output refers to a firm’s ability to meet the quality, quantity and time (on-time delivery, responsiveness and response time) requirements of customers to ensure their satisfaction. Finally,
flexibility refers to how well firms accommodate volume and schedule fluctuations or other uncertainties in supply chains to satisfy customers. Additionally, flexibility includes two sub-elements: range flexibility and response flexibility. While
range flexibility refers to the extent to which operations can be changed with uncertainties and disruptions,
response flexibility denotes the ease with which such changes can be implemented (Beamon,
1999).
On the other hand, considering the challenge of capturing multiple factors, many other studies, such as Chowdhury and Quaddus (
2016) and Mani et al. (
2018), conceptualized SCP as a single factor. However, these studies utilized multiple indicators that effectively capture the evaluation of supply chain management in the performance. This conceptualization not only overcomes the challenge of capturing multiple factors but also maintains completeness by addressing various performance dimensions. For instance, in conceptualizing and developing a scale for various factors, Chowdhury and Quaddus (
2017) proposed six indicators to measure SCP: sales, cost, profit, customer satisfaction, on-time delivery and quality. These indicators assess the abilities of supply chains to maintain efficiency (cost and profit performance), meet customer requirements (quality, on-time delivery and customer satisfaction performance) and compete in a competitive environment (sales performance). The current study adopted this conceptualization and uses the measures provided by Chowdhury and Quaddus (
2017) to refer to SCP. A summary of the key SCP indicators is presented in Table
3.
Table 3
Supply chain performance indicators
Source: Created by the authors
Supply chain performance | On-time delivery | Ability to deliver products within the desired lead time | |
Quality of product and service | Ability to meet the expected quality of products and service | Chowdhury and Quaddus, ( 2017) |
Sales and business volume | Ability to maintain satisfactory sales growth | |
Profit/net income | Ability to earn expected profit | |
Cost | Ability to maintain cost efficiency | |
Customer satisfaction | Ability to respond to customer requirements on time | |
Theoretical Foundation
Based on the literature review above, it is evident that developing suitable resilience strategies is essential to minimize or negate supply chain risks and improve performance. These causal associations can be explained through the lens of dynamic capability (Teece,
2007). Dynamic capabilities denote the ability of a firm to integrate, build and reconfigure resources and competencies to navigate the challenges of rapidly changing environments and minimize business environmental risks (Chowdhury & Quaddus,
2017; Teece,
2007). Supply chains must also orchestrate their resources in designing resilience strategies to tackle the impact of disruption. Hence, using the tenets of dynamic capability, this study argues that the ability to design the SCRES strategies is a dynamic capability of a firm and its supply chain, contributing to the mitigation of risk factors caused by severe disruption and improving performance.
Severe disruptions, such as the COVID-19 pandemic, bring substantial challenges and risks to supply chains. During such disruption, rapid responses are essential for the survival of supply chains. Such a quick response requires the dynamic capabilities of firms and their supply chains to orchestrate both internal and external resources efficiently. For example, supply chains must build their ability to sense disruptions and their impacts to develop readiness and response strategies. Similarly, they also need to develop their capabilities to seize opportunities and reconfigure resources and strategies to recover and potentially surpass the pre-disruption state (Teece,
2007). Hence, SCRES has been considered a dynamic capability of firms and their supply chains (Chowdhury & Quaddus,
2017). Prior studies such as Belhadi et al. (
2022) and Chowdhury et al. (
2024) used dynamic capability to argue that supply chains need to build capabilities of sensing, seizing and reconfiguring resources to manage the impacts of disruptions and improve performance effectively. In line with these studies, we also used the dynamic capability view in our study to assert that.
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The ability to formulate and implement appropriate SCRES strategies is a dynamic capability of firms and their supply chains; and
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This dynamic capability (the ability to build SCRES strategies) assists supply chains in addressing risks caused by severe disruptions and improving SCP.