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The supply chain crisis and disaster pyramid

A theoretical framework for understanding preparedness and recovery
R. Glenn Richey Jr
Department of Management and Marketing, Manderson Graduate School of Business, Culverhouse College of Commerce and Business Administration, The University of Alabama, Tuscaloosa, Alabama, USA
Abstract
Purpose The research on supply chains concerning disaster and crisis situations is in its infancy, but rapidly expanding on the backs of top researchers in the eld. As with most young research streams there is very little theoretical grounding in extant studies. The purpose of this research is to integrate four prominent existing theoretical perspectives to provide a concise yet holistic framework for grounding future research. Design/methodology/approach The development of the disaster recovery pyramid is completed following an extensive review of the resource, risk and crisis/disaster recovery, and preparedness literature. Additionally, literature from the resource-based view (RBV) of the rm, communication theory, competing values theory, and relationship management theory are canvassed. Business professional and academics are also interviewed to validate the pyramid. Findings The proposed framework is a call for future studies in the supply chain management and logistics disaster, and crisis management arena. The ndings suggest that much of the work in supply chain disaster and crisis preparedness and recovery can be theoretically supported in combination of four mature theoretical perspectives: the RBV of the rm, communication theory, competing values theory, and relationship management theory. Originality/value This is the rst attempt to theoretically support the areas of supply chain disaster and crisis preparedness and recovery. The motivation of this paper is to both develop a framework and support a drive for growing multiple research streams in the area. Avenues of future research and theoretical grounding are suggested in a graphic representation. Keywords Supply chain management, Disasters, Contingency planning, Research Paper type Conceptual paper

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Introduction It is September 10, 1993, and Dick Rogers drives frantically to the local Shalimar Florida hospital. The hospital is rated to handle the force of a Category 3 hurricane. Unfortunately, Hurricane Opal has just been upgraded to a Category 4 and the municipalities in the strike zone are being completely evacuated. As an MD Intern at the hospital, Dick expects that he will be one of the key people relied upon to evacuate the hospital. He arrives and searches frantically for his superior. Dick nds his boss and tells him, I am here to help with the evacuation of the patients. His boss laughs and says:
We arent moving anyone. The only way to move these patients out of the hospital is using EMS (emergency medical services) and we cant tie EMS down to an evacuation procedure when we need them to bring patients here.

International Journal of Physical Distribution & Logistics Management Vol. 39 No. 7, 2009 pp. 619-628 q Emerald Group Publishing Limited 0960-0035 DOI 10.1108/09600030910996288

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This is just one example of the situation dependent complexities that managers experience when supply chain crisis situations arise. A similar situation that many US citizens remember occurred in New Orleans, Louisiana. You may remember images on Fox, CNN, and the BBC of a parking lot full of yellow school busses that were not being used to evacuate the Katrina ood victims. As water deluged into the 9th Ward, talking heads on the networks chided federal, state, and local ofcials for not having those busses in operation. Why did the busses not move to save the distressed? The truth is that the busses remained out of service because the drivers had evacuated from the municipality with their families as was recommended to all those in the New Orleans area. Supply chain management research is increasingly focusing on supply chains in times of crisis. The depth of related research is impressive for such a young area. Recent key topics in supply chain disaster and crisis management-related supply chain strategy and logistics operations include: agility (Oloruntoba and Gray, 2006), risk management/insurance issues (Kleidt et al., 2009), humanitarian issues (Gibbons and Samaddar, 2009; Kovacs and Spens, 2007), inventory management (Beamon and Kotleba, 2006), facility location (Balcik and Beamon, 2008), collaboration/networks (Gibbons and Samaddar, 2009), and multi-level partner/non-partner integration (Perry, 2007; Rathbun, 2007). These studies have initiated a building of ideas and propositions that need to be explored for the betterment of business and mankind alike. Yet, extant research has no common string or grounding framework from which to draw in order to dene the parameters of future studies. This research looks to begin the development of a framework for dening those boundaries. I title this framework the supply chain disaster and crisis pyramid (DCP). Supply chain disaster and crisis situations can arise in nearly any area of the world in multiple forms. Hurricanes in the Gulf of Mexico and Atlantic Ocean; tornados in Oklahoma and Texas; forest res in California, Mongolia, and Central Africa; tsunamis in India and Indonesia; terrorism in London and Cairo; war in Iraq and Cashmere; swine u in Mexico and Australia; AIDS in Africa and the USA; pirates in Somalia and on the internet; and the list goes on and on. The common thread with all these events is that we as supply chain managers and researchers must develop plans to get people out of harms way and get aid into the impacted areas. I cannot think of a more important area of research in our eld. Thus, there needs to be an ongoing call for the development of research streams focusing on the supply chain disaster and crisis domain. This study integrates a multiple theoretic perspective with the hope of grounding, uniting, and in some ways structuring the complexity that has become supply chain disaster and crisis research. This research will begin by discussing the capstone of the pyramid and then relate the capstone to the base. After the pyramid is conceptually developed, I will address some approaches to grounding research and addressing acceptable outcome variables. I will conclude by discussing a few avenues of research that are vital to improving supply chain management in times of disaster and crisis. Theoretical foundations Every good research domain needs a solid theoretical base. In the development of the three Supply chains in times of crisis, special issues of International Journal of Physical Distribution & Logistics Management, I required myself to canvass the

literature. My early expectations were that the task would not be all that difcult. As the manuscript submissions increased, I found myself reading across multiple disciplines and techniques. The literature was quite broad. Unfortunately, it was also quite theoretically shallow. Much of this can be attributed to two things: (1) the immediacy of ground level operational need related to the topic; and (2) the broad dispersion across multiple elds. Still, I was able to dene three specic cornerstones of the discipline to date: collaboration, communication, and contingency planning. Ultimately, the interconnection is one of stakeholders: (1) nding ways to effectively partner and develop improving collaborative relationships built of long-term commitment; (2) fostering information development and exchange for facilitating strategic planning based in limited safeguarding; and (3) developing contingency programs that incorporate the exibility for responding to the inevitable changes in expected events while pursuing sometimes inconsistent goals. Figure 1 is a graphic representation of the DCP. The DCP is built on a foundation of the three Cs discussed above. This base can be theoretically explained by relationship management theories (collaboration), communications theory (communication), and competing values theory (contingency). Additionally, the top of the pyramid is related directly to the resource-based view (RBV) of the rm. In the following section, I will very quickly explain each of these theoretical pillars and then make some suggestions as to how they might be employed in future studies. The capstone of the pyramid resource management It is almost impossible to nd a quality piece of research in supply chain disaster and crisis planning and recovery that is not tied to resources. Stakeholders involved in this type of resource management are both public and private. They also managerially bridge from CEOs and federal agency heads to front line employees and unit supervisors. Regardless of level, these managers all have a task related to moving and leveraging human, nancial, informational, technological, and physical resources. So theoretically, one would expect that empirical models would include a tie to how resources are employed, how resources are impacted, or how they interact with other issues. This opens the door for research on both linear process models and moderating and mediating interactions effects. Resources play a vital role in supply chain partnerships. It is no surprise that service-oriented supply chains research is often rmly grounded in the RBV of the rm (Barney, 2001, 1991; Olavarrieta and Ellinger, 1997; Penrose, 1955, 1959; Wernerfelt, 1984) and more recently the offshoot marketing prospective called service-dominant logic (Richey et al., 2010; Vargo and Lusch, 2004). Resources like people and technology are often dened as drivers of rm capabilities particularly relative to supply chain management functions (Christenson et al., 2003). When resources are matched to strategic initiatives in disaster and crisis situations, they may become rm and supply

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Resource management view of the firm

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1 3

Competing values theory

Figure 1. The supply chain DCP

Communication theory

Collaborative view of the firm

chain specic, and key to initiative performance. Conceptualizations of the RBV assume rms develop differential competitive advantage through: asset/resource heterogeneity (rms possess resources that differ from other rms), imperfect mobility of assets (rm assets are not easily transferred between rms), and ex post and ex ante limits on competition (environmental temporal limitations exist on competitive resource valuation; Helfat and Peteraf, 2003; Peteraf, 1993). These assumptions allow for the comparison of resource bundles valued on the basis of convertibility, rarity, imitability, and substitutability (Srivastava et al., 1998). Supply chains dealing with disaster and crisis situations will need to correctly manage valuable, rare, inimitable, and organizationally specic resources to accomplish goals. According to RBV, in a business-to-business context, service-related value is formed as the offering moves down the supply chain (Morash and Lynch, 2002; Olavarrieta and Ellinger, 1997). Thus, under conditions of effective resource deployment (e.g. collaboratively across a supply chain) rms operating under crisis conditions should generate superior value for their stakeholders (Priem and Butler, 2001). Similar to traditional operating conditions, assets employed under crisis conditions should become aid driving capabilities in combination with matched organizational processes (Day, 1994). These supply chain/logistics utility bundles include skills and knowledge that

create rm (and/or relationship) specic resource combinations (Amit and Schoemaker, 1993). The RBV managerial goal is the development of core competencies or practically strategic weapons for use in ghting problems that might occur. Core competencies are dened as the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies (Prahalad and Hamel, 1990, p. 79). As rms across the supply chain focus on their core competencies, they are often forced to become more dependent on their business partners. Hence, one would expect that the dynamics of disaster recovery and crisis management in supply chains to require multiple theoretical lenses beyond the RBV to fully embrace situational dynamics. Still, given the prominence of resource management in the literature, and rightfully so, it seems logical that the DCP would point to resource management. Human resources must be moved from crisis locations to safe locations or from traditional operations to crisis locations. Physical and technological resources must be allocated, moved, opened, cleared, and customized. Informational resources must be collected, cleaned, warehoused, and redistributed. Financial resources must be acquired, allocated, distributed, and governed. The activity component in DCP research is huge and seems to thus be the consistent undercurrent in the literature. In short, all the literature has and should have a resource component. Next, I will briey cover three additional perspectives that could bolster research in combination with RBV.

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Collaboration: relationship management theory Because there are always multiple players in supply chain disaster and crisis situations it should be no surprise that collaboration is an important issue. Collaboration is dened as two or more companies sharing the responsibility of exchanging common planning, management, execution, and performance measurement information (Min et al., 2005, p. 237). As such, collaboration ts neatly into relationship management theory. There is debate as to whether there actually is a theory of relationship management. There may also be disagreement as to whether collaboration is relationship management or relationship management is collaboration. This debate is beyond the scope of this discussion. My point is that relationship management is vital to managing supply chain disaster and crisis situations. It is my view that relationship management is in many ways synonymous to collaboration as that many of the key constructs are discussed. These include commitment, trust, loyalty (Daugherty et al., 2001), opportunism, (Heide, 1994) long-term orientation (Ganesan, 1994), relationship magnitude (Golicic, 2006), etc. In crisis situations, collaboration will likely be the glue that holds organizations together. Additionally, Stewart et al. (2009) point out the broadness of the web that forms the extended supply chain in disaster and crisis situations. There is little doubt that such a tangled web will provide a huge opportunity for not only new research, but also to challenging the existing assumptions of relationship management logic. For instance, it is largely held that rms do not collaborate with partners who exhibit opportunistic behavior. Well what if they have no choice? Imagine an interconnection between Homeland Security, Wal-Mart, a state government, a city government, and a shing eet. The situation is not hypothetical it has occurred.

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Communication: communication theory Supply chain disaster and crisis situations demand effective communication. Local television, the national weather service, and public media are heavily used. Many people overlook that in the private arena, company specic technology also facilitates communications. Intranet and extranets, electronic data interchange, video conferencing, global positioning system, and even private ham radio all provide assistance while likely creating a network of immense confusion (Richey et al., 2010). A grim reality is that during Katrina, radio-frequency identication was actually used to tag dead bodies. With all of the technological communication options combining with the classic approaches, the point is clear that we need to know who is managing these networks. There are a number of different approaches that researchers would take in studying communication. Examining the logistics literature reveals that with a very few exceptions (Large, 2005), most of the literature focuses on information exchange/support (Daugherty et al., 2002) and communications technology (Skipper et al., 2008) rather than the full range of strategic communications issues. Perhaps, researchers examining supply chain disaster and crisis situations would consider returning to the Mohr and Nevin (1990) and Mohr and Sohi (1995) classics on communication theory in marketing channels. Examining issues such as bi-directionality, formality, modality, and frequency could be of serious importance as public and private entities attempt to understand what, when, and how much to communicate. Questions of climate, control, and structure should also be developed. Additionally, we need to have an understanding of norms of communication exchange and the quality produced by those norms. Contingency planning: competing values theory Contingency theory is based on the premise that things change. This argument is so basic that most supply chain/logistics researchers tend to avoid it for fear of their work being seen as passe. Thus, contingency theory has given way to contingency models that are grounded in other theories. One of the strongest supporting theories that could ground supply chain disaster and crisis research is known as competing values theory. Competing values theory is rooted in organizational behavior theory but is growing in use in business, to, business research. A business to business context emphasizes the simultaneous inclusion of multiple (often conicting) rm strategies, leadership approaches, and cultural positions (Cameron and Quinn, 1999) into the supply chain. Despite being underutilized in logistics and supply chain research, the competing values framework provides a strong theoretical perspective detailing two major dimensions of effectiveness: (1) the extent to which adaptation is valued over stability; and (2) internal orientation that emphasizes integration versus external orientation that focuses on rivalry. Competing values theory provides grounding for future supply chain disaster and crisis research by suggesting that rms simultaneously pursue various different and often conicting strategic goals regardless of the situation (e.g. Cameron and Quinn, 1999; Quinn and Rohrbaugh, 1983). It is important to note that conicting strategic goals dene a rms strategic position in the supply chain (Porter, 1979). With such

wide network of organizations and a broad spectrum of goals, the competing values approach provides a rich theoretical foundation for the analysis of both joint and conicting strategic goals. Research planes of the DCP for grounding future research In this section, I will make just a few suggestions about how the discussed theories could be combined to both improve and expand future research in the area of supply chain disaster and crisis recovery. This is not to suggest that these are the only theories or the only combinations available. My goal is to open research and provide basic suggestions. I should also note that the discussion below is not research I have started. The ideas are fully open for other researchers to embrace and grow. Each section below is displayed as a plane on the DCP. Section 1 the reactive independents perspective Plane 1 of the DCP suggests an interconnection between RBV, competing values theory, and communication theory. Here, supply chain members are reacting to information received as independent organizations in pursuit of likely disconnected parties. This is the early reality experienced by researchers (Stewart et al., 2009). These rms look to acquire access to resources based on their own needs. Communication is likely disrupted and focused only on civil defense. Firms generate an ability to play the options in the market but opportunistic actions may reduce the entire supply chains exibility. Section 2 the proactive partnership perspective Plane 2 of the DCP suggests an interconnection between RBV, communication theory, and relationship management theories. My expectation is that this view is very positivist, but I am hopeful that we are on a shift to it being normative. If supply chains working in disaster and crisis situations can improve communication and become effective collaborators, what resource needs can assist in improving safety, public health, sanitation failure, and food defense? To develop collaborative strategy based theoretically on resources and communications, levels of formalization and process simplication should be addressed. This fact drives questions of strategic readiness and risk management. When it comes to technology, rms must examine the importance of communications frequency and modality, technological support, and data aggregation. Section 3 the co-opetition resource perspective Co-opetition is a concept that professes the ability of rms to cooperate and compete at the same time (Brandenburger and Nalebuff, 1996; Kotzab and Teller, 2003). Combining competing values theory and collaborative theory opens the door for an understanding of a mixed approach to acquiring and balancing resources. When supply chain partners are both competing and collaborating, they must grow their strategic situational awareness, balance knowledge sharing and protective safeguarding, and develop the agility to grow partnerships and/or shift to other options. I would like to say more here, but this concept has largely been ignored by most supply chain, marketing, and logistics researchers with a few exceptions. Much more research is needed in this area.

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In search of an outcome variable Traditional outcome variables only sometimes t disaster and crisis-related research. For instance, effectiveness is always important when dealing with people and their lives. Efciency is another story. When it comes to even one human life, cost efciency goes out the window and it should. Additionally, research needs to address appropriate disaster and crisis-related performance outcome variables. One appropriate avenue could be Mentzer et al.s (2001) logistics service quality scale. Yet, their scale provides several two item dimensions that are problematic to future publication. Another approach would be to examine service quality in disaster and crisis-related situations, but marketing researchers have discounted its value in favor of general customer satisfaction scales. Can customers/victims of crisis situations be measured via a customer satisfaction scale? As a former (and possibly a future) victim I can tell you No! We need research to develop a scale that grounds an outcome for our research (Beamon and Balcik, 2008). Conclusion This paper was written to encourage authors to: . continue their disaster and crisis-related research; . consider including more theory in their work and likewise impacting theory itself; and . grow their research on the support of multiple theories. The eld is open and of the utmost importance of all in the area of supply chain and logistics management. It would be a shame if more in our area do not choose to add this area to their research agenda. I applaud those who have embraced the area and especially those who have published in these supply chain disaster and crisis-related special issues. It is also important to note that this topic area is extremely relevant to international business. As such, data may be available in secondary form from any number of public sources.
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