Building resilient supply chains

By Professor Kieran Fernandes, April 2021

Professor Kieran Fernandes explains how the Business School has been collaborating to offer free support to companies through the pandemic. 

The Covid-19 pandemic has revealed the vulnerabilities and fragilities in global supply chains. This black swan event has shown that, while companies operate through global supply chains, the impact of such an external shock is felt at a local level.

A study, entitled Covid-19 and Supply Chains in the United Kingdom: Impact & Mitigation, that I co-authored with Drs Atanu Chaudhuri and Manish Shukla, alongside other professors from the Business School’s Centre for Innovation and Technology Management (CITM), has shown that the potential effect of Covid-19 on economic and societal costs will be huge. The report, which reviewed over 1.7 million businesses in all UK geographical areas, spread across all industrial sectors, found that 29% of companies were at high risk due to how their supply chains operate. This report also shows around 35% of the firms were either at low or medium risk due to the potential impact of Covid-19.

This study also found that many companies have never experienced such an external shock and therefore were not prepared with mitigation strategies for their complex global supply chains. This was due to several factors like the complexity of supply chains in the region, supply chain configuration, internal and external resilience characteristics of companies, agility in managerial decision-making capability and the adoption and use of technologies. The Durham team used a big data approach to better understand supply chain configurations and develop mitigation strategies that could be adopted by supply chains across a large number of sectors. These mitigation approaches were designed to help companies develop resilience strategies and to provide practical advice on how managers and business owners could navigate their company in the time of the current ongoing crisis.

Robust strategies

Researchers from the CITM partnered with groups such as the Centre for Process Innovation (CPI), Confederation of British Industry (CBI), Federation of Small Businesses (FSB) and the Materials Processing Institute (MPI), to provide free support on how companies can develop robust mitigation and resilience strategies, which can be adopted by them to not only overcome the impact of Covid-19 but successfully compete in a global economy.

Many companies directly benefited from the free support provided by Durham. During the first few weeks of the pandemic, the UK medical industry, like many other sectors, was facing supply shocks. This was primarily due to disruptions in the supply of parts and services from South East Asian countries such as China, which like the UK, have been severely affected by the Covid-19 pandemic. The Durham team worked with a North-East-based company to propose the development of a smart on-demand manufacturing platform that can connect national UK capabilities of both conventional manufacturing and 3D printing to deliver medical devices in compliance with ISO 13485 standards and the UK regulatory framework. Such a system can combine local manufacturing capabilities to form a federation of supply chains, in order to deliver critical medical components which not only meet the UK regulatory framework but can be traced across the entire supply chain.

In the months following the first UK national lockdown, supply chains were facing a new set of challenges due to ‘demand shocks’. One of the unintended consequences of national and regional lockdowns was that consumers were stocking products to comply with restrictions on movements, and in many cases were ‘panic’ buying. During this period, the team in Durham worked with a supply chain specialist company to help develop a solution that would allow supply chains to be dynamic, and meet demand shocks by having responsive, interconnected systems with end-to-end visibility. The supply chain specialist company now offers solutions that allow supply chains to have data in real-time so managers can take decisive actions – particularly to meet ‘demand shocks’.

Inventory bounce

In the current pandemic recovery phase, the main challenge for companies is to avoid ‘inventory bounce’ and seek a different cost/resilience tradeoff to make supply chains robust, sustainable and green. Inventory bounce could happen as a result of Covid-19, as in many areas, demand has reached a new steady-state which is lower than the pre-Covid steady state. This affects both upstream and downstream processes and, if not managed well, could cause huge disruptions in the supply chain.

In addition to this, companies need to analyse the carbon footprint of their supply chain networks to make them sustainable and green. The Durham team is working with a company that specialises in mapping supply chain carbon using a novel methodology that captures carbon data across the entire supply chain. One of the largest multinational energy and services companies is adopting this novel carbon capture methodology to develop a zero-carbon strategy.

The Durham team adopted an agile strategy to support businesses, ranging from a series of free webinars and masterclasses to providing one-to-one support. Working with stakeholders and project partners like CPI, CBI, FSB and the MPI has allowed Durham to work with regional businesses and ecosystems. This knowledge transfer has allowed Durham’s expertise to be transferred to businesses so they can develop both short-term and long-term resilience strategies to help them not only survive but to compete in a post-Covid-19 environment.

More information on Professor Fernandes' research interests.

Information on the Centre of Innovation and Technology Management.