Identification and analysis of traditional and non-traditional measures to strengthen the risk resilience of supply chains in the Corona Pandemic 2020
Windel, Tobias (2020)
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2020102321573
https://urn.fi/URN:NBN:fi:amk-2020102321573
Tiivistelmä
The starting point of this thesis is based upon the most recent epidemic crisis, caused by the coronavirus SARS-CoV-2 (COVID-19) in the beginning of 2020. Companies worldwide are under enormous pressure and existential threat. The global pandemic has largely reached all parts of the world and poses an unprecedented challenge for internationally operating companies. The complete shutdown of normal operations, production stops, supply shortages, disruptions in distribution, for example, through border closures or export restrictions, fluctuations in demand and supply - these are all exemplary consequences caused during the corona crisis (Ivanov and Das, 2020). All the examples mentioned have at least one thing in common: they all represent a disruption of the supply chain (SC) of a company. They impede material flows and affect the coordination and cooperation between suppliers, manufacturers, distributors and customers. Such disruptive events can be very disastrous for companies. For example, after the earthquake in Japan in 2011, companies in the disaster area suffered declines in annual sales of 4.8% on average in the following year (Carvalho et al., 2016).
Companies can usually only recover from such events if they have taken adequate risk prevention measures in advance, are flexible and act in a structured way during the crisis to stabilise the situation (Ivanov et al., 2019, pp. 466-469), and have sufficient financial reserves and resources to survive the crisis and prevent insolvency (Harbour, 2020).
Since SC disturbances can have such serious effects on companies, risk management of SCs has received increasing attention over the last decades. In the academic literature, two categories of disturbances are distinguished. The first category includes the frequently occurring operational disturbances, for example, daily/weekly fluctuations in demand that are referred to as the bullwhip effect. These disturbances tend to have minor impacts on SCs. The second category includes the extraordinary, random and rarely occurring disruptions, for example, natural disasters, fires in production halls, etc., which have more serious impacts (Ivanov et al., 2019, pp. 462-464). Such events represent examples of causes of the so-called ripple effect, which describes the downstream propagation of a disruption within the SC (Ivanov 2018, pp. 34-35). The pandemic is also among the triggers of the ripple effect, although some characteristics are very specific (Ivanov 2020).
Epidemic outbreaks are considered special cases of SC disruptions for three reasons. First, because of the long-lasting existence and the unpredictable extent of the SC disturbance. Second, because of the simultaneous propagation of the disruption along the global SC and the spread of the virus in the population. Third, because of the simultaneous effect of the disorder on supply, demand and transport (Ivanov 2020). Therefore, it seems necessary to review traditional risk management methods for their suitability during the pandemic, to adapt them to the requirements of the pandemic and to identify possible new measures for risk mitigation and crisis management.
The aim of this work was to investigate which methods were applied by companies in Germany during the COVID-19 pandemic to mitigate SC risks, compensate for the negative effects of the crisis and ultimately ensure the survival of the company. It should be investigated whether the SC risk mitigation methods applied are consistent with the ideal forms from the literature (traditional measures) and whether new, previously undiscussed methods (non-traditional measures) have been applied during the current crisis. On the one hand, this serves the purpose of drawing conclusions on the application and suitability of traditional methods in the case of pandemics and possibly expanding the state of research by identifying potential non-traditional methods. On the other hand, the evaluation of the findings should provide practice-relevant information that companies can consider in the event of pandemics in the future.
Therefore, the research question of this thesis is:
"Which traditional and non-traditional, supply chain risk mitigation measures were applied by companies during the corona pandemic in Germany?”
The scope of the work is thus limited to a specific scenario (corona pandemic from early 2020 to August 2020), a specific political and geographical environment (Germany), a variety of decision-makers (companies), an organisational field (supply chain management), a specific area (risk management) and specific factors within this area (traditional and non-traditional measures).
The structure of the study is based on a literature review that provides the relevant theoretical foundations, identifies and explains the methods of SC risk management discussed in the literature, and thus creates a framework for a later comparison between theory and practice. This is followed by a description of the COVID-19 pandemic to introduce the reader to the context and framework of the study. The next part explains the method used to answer the research question and why it was considered appropriate for this study. In this respect, qualitative research was carried out in the form of multiple case studies in order to gain in-depth insights into practice. For this purpose, four expert interviews were conducted with suitable candidates from different German companies in order to collect data for the evaluation. After a presentation of the interviewees and companies, the analysis starts with the single-case descriptions. The results are then compared and evaluated using a cross-case analysis. This serves the objective of showing which methods have been used in practice and in which form, how successfully they have been applied in different situations and companies, and which practical conclusions have been drawn with regard to the risk management of SCs in the face of pandemics. Ultimately, the findings are summarised and presented in the conclusion, providing the reader with the key findings of this study and potential future research avenues.
Companies can usually only recover from such events if they have taken adequate risk prevention measures in advance, are flexible and act in a structured way during the crisis to stabilise the situation (Ivanov et al., 2019, pp. 466-469), and have sufficient financial reserves and resources to survive the crisis and prevent insolvency (Harbour, 2020).
Since SC disturbances can have such serious effects on companies, risk management of SCs has received increasing attention over the last decades. In the academic literature, two categories of disturbances are distinguished. The first category includes the frequently occurring operational disturbances, for example, daily/weekly fluctuations in demand that are referred to as the bullwhip effect. These disturbances tend to have minor impacts on SCs. The second category includes the extraordinary, random and rarely occurring disruptions, for example, natural disasters, fires in production halls, etc., which have more serious impacts (Ivanov et al., 2019, pp. 462-464). Such events represent examples of causes of the so-called ripple effect, which describes the downstream propagation of a disruption within the SC (Ivanov 2018, pp. 34-35). The pandemic is also among the triggers of the ripple effect, although some characteristics are very specific (Ivanov 2020).
Epidemic outbreaks are considered special cases of SC disruptions for three reasons. First, because of the long-lasting existence and the unpredictable extent of the SC disturbance. Second, because of the simultaneous propagation of the disruption along the global SC and the spread of the virus in the population. Third, because of the simultaneous effect of the disorder on supply, demand and transport (Ivanov 2020). Therefore, it seems necessary to review traditional risk management methods for their suitability during the pandemic, to adapt them to the requirements of the pandemic and to identify possible new measures for risk mitigation and crisis management.
The aim of this work was to investigate which methods were applied by companies in Germany during the COVID-19 pandemic to mitigate SC risks, compensate for the negative effects of the crisis and ultimately ensure the survival of the company. It should be investigated whether the SC risk mitigation methods applied are consistent with the ideal forms from the literature (traditional measures) and whether new, previously undiscussed methods (non-traditional measures) have been applied during the current crisis. On the one hand, this serves the purpose of drawing conclusions on the application and suitability of traditional methods in the case of pandemics and possibly expanding the state of research by identifying potential non-traditional methods. On the other hand, the evaluation of the findings should provide practice-relevant information that companies can consider in the event of pandemics in the future.
Therefore, the research question of this thesis is:
"Which traditional and non-traditional, supply chain risk mitigation measures were applied by companies during the corona pandemic in Germany?”
The scope of the work is thus limited to a specific scenario (corona pandemic from early 2020 to August 2020), a specific political and geographical environment (Germany), a variety of decision-makers (companies), an organisational field (supply chain management), a specific area (risk management) and specific factors within this area (traditional and non-traditional measures).
The structure of the study is based on a literature review that provides the relevant theoretical foundations, identifies and explains the methods of SC risk management discussed in the literature, and thus creates a framework for a later comparison between theory and practice. This is followed by a description of the COVID-19 pandemic to introduce the reader to the context and framework of the study. The next part explains the method used to answer the research question and why it was considered appropriate for this study. In this respect, qualitative research was carried out in the form of multiple case studies in order to gain in-depth insights into practice. For this purpose, four expert interviews were conducted with suitable candidates from different German companies in order to collect data for the evaluation. After a presentation of the interviewees and companies, the analysis starts with the single-case descriptions. The results are then compared and evaluated using a cross-case analysis. This serves the objective of showing which methods have been used in practice and in which form, how successfully they have been applied in different situations and companies, and which practical conclusions have been drawn with regard to the risk management of SCs in the face of pandemics. Ultimately, the findings are summarised and presented in the conclusion, providing the reader with the key findings of this study and potential future research avenues.