Helena Maria Lourenço Carvalho Remigio

Mestre em Engenharia Industrial

Modelling resilience in supply chain

Dissertação para obtenção do Grau de Doutor em

Engenharia Industrial

Orientador: Virgílio António Cruz Machado

Professor Catedrático, Faculdade de Ciências e Tecnologia
da Universidade Nova de Lisboa

Júri:

Presidente: Prof. Doutor Fernado José Pires Santana

Arguente(s): Prof. Doutor Rui Manuel Soucasaux Meneses e Sousa
Prof. Doutor Kannan Godivan

Vogais: Prof. Doutora Susana Maria Palavra Garrido Azevedo

Prof. Doutora Virgínia Helena Arimateia de Campos Machado
Prof. Doutora Ana Paula Ferreira Barroso
Prof. Doutor Luís Miguel Domingues Fernandes Ferreira
Prof. Doutor Virgílio António Cruz Machado

Dezembro 2012
 Modelling resilience in supply chain

© 2012 Helena Maria Lourenço Carvalho Remigio

Faculdade de Ciências e Tecnologia and Universidade Nova de Lisboa

Copyright

A Faculdade de Ciências e Tecnologia e a Universidade Nova de Lisboa têm o direito, perpétuo e

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crédito ao autor e editor.
 Acknowledgments

My sincere gratitude goes to Professor Virgílio Cruz-Machado who was not only my thesis
supervisor but also believed in me and always had motivated me to go further. A special thanks to
Professor Susana Azevedo, who was always willing to give me sound advice and constantly
challenge me to explore new research topics and methodologies.

The support and encouragement provide by Professor Virgínia Machado and Professor Ana Paula
Barroso was essential complete this study. I also desire to express my gratitude to UNIDEMI
researchers, in particular Professor António Grilo, Professor Isabel Nunes, and Professor Alexandra
Tenera for their incentive during the thesis development.

I also want to express my gratefulness to faculty and staff in the DEMI/FCT/UNL department for
being extremely supportive during this journey.

A deeply thank to my PhD colleagues Susana Duarte, Fernado Grilo, Natacha Correia, Rui Pulido
Valente, Sara Figueira, Izunildo Cabral, Pedro Espadinha and Meysam Maleki for all the productive
discussions and motivation.

Thanks to all companies’ managers and collaborators involved in the research for giving their time
and for how much I learned through them.

I also like to express my gratitude to Professor Fátima Raposo and Paulo Ribeiro, from
DF/FCT/UNL, for guiding me through my first steps in research.

A great thank to my family for their never ending support and lovely understanding. Finally to my
parents that always support me and push me to go higher, as higher as I want.

This research was supported by a PhD fellowship from Fundação para a Ciência e Tecnologia
(SFRH/BD/43984/2008). Additional financial support was obtained through research projects
funded by Fundação para a Ciência e Tecnologia (Project PTDC/EME-GIN/68400/2006 and Project
MIT-Pt/EDAM-IASC/0033/2008).

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 Resumo

As cadeias de abastecimento globais são vulneráveis a inúmeras perturbações que podem afetar
negativamente o desempenho operacional e financeiro das empresas. A capacidade das empresas
em responder adequadamente às perturbações da cadeia de abastecimento, isto é, a capacidade de
serem resilientes, é vital para se manter um elevado nível de competitividade, quer das empresas
quer das respetivas cadeias de abastecimento. O propósito desta tese é a modelação da resiliência no
contexto da cadeia de abastecimento. Mais especificamente, o objetivo consiste no desenvolvimento
de um modelo explicativo da resiliência da cadeia de abastecimento e na modelação de índices de
resiliência para avaliar a capacidade das empresas quanto à sua resiliência. Usando uma abordagem
centrada na “construção de teoria”, foi conduzida uma investigação suportada pelo método de
estudo de caso em sete empresas pertencentes ao sector upstream da cadeia de abastecimento da
indústria automóvel Portuguesa. Verificou-se que os gestores não associam as perturbações da
cadeia de abastecimento a eventos específicos, mas sim aos efeitos negativos que estes provocam. O
conjunto de práticas resilientes adotadas pelas empresas depende do tipo de perturbações e
respetivos efeitos negativos, tendo-se constatado que os principais modos de falha que emergem do
estudo de caso são “escassez de capacidade” e “escassez de material”. A partir das evidências do
estudo de caso foram propostas oito proposições, as quais foram utilizadas no desenvolvimento de
um modelo explicativo das relações existentes entre perturbações, modos de falha e práticas
resilientes da cadeia de abastecimento. Para sustentar a avaliação de resiliência das empresas, dois
índices de resiliência foram modelados e desenvolvidos. Estes índices pretendem medir a
capacidade das empresas em manter o seu desempenho em termos de “entrega no prazo” quando
ocorre uma “escassez de capacidade” e/ou uma “escassez de material”. Finalmente, os índices
foram testados nas empresas. A dissertação contribui para a literatura existente ao investigar
empiricamente os principais efeitos das perturbações na cadeia de abastecimento; por outro lado,
abre perspetivas quanto à forma de aumentar a resiliência das empresas e, por conseguinte, das
cadeias de abastecimento em que estão inseridas. Neste sentido, é proposta uma abordagem para
avaliar a resiliência das empresas sendo identificado um conjunto de variáveis de estado da cadeia
de abastecimento, as quais poderão ser monitorizadas com vista à melhoria da resiliência das
empresas e das respectivas cadeia de abastecimento.

Termos-chave: Gestão da cadeia de abastecimento, Resiliência, Perturbação, Cadeia de

abastecimento automóvel, Construção de teoria, Estudo de caso

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 Abstract

Global supply chains are vulnerable to a number of disturbances that may affect negatively
company’s operational and financial performance. The company’s ability to cope with supply chain
disturbances, i.e. the ability to be resilient, is vital to sustain the company and respective supply
chain competitiveness. The aim of this thesis is modelling resilience in a supply chain context. More
specifically, it is intended to develop an explanatory framework of the supply chain resilience
phenomena and to model supply chain resilience indices to be deployed at individual company
level. These indices intend to measure the companies’ ability to be resilient in a supply chain
context. Using a theory building approach, a case study was conducted in seven companies’
belonging to the Portuguese automotive upstream supply chain. It was found that managers do not
associate supply chain disturbances to a particular type of events, but with the negative effects that
events provoke. When companies experience a disturbance, its ability to deliver on-time may be
compromised. The resilient practices, adopted by companies, depend on the type of supply chain
disturbances and their negative effects. The main failure modes arising from the case study are
“capacity shortage” and “material shortage”. Eight propositions were derived from the case study
empirical findings. They were used to develop the supply chain resilience explanatory framework,
to provide additional understanding regarding the relationships between supply chain disturbances,
supply chain failure modes and resilient practices. To support the assessment of companies’
resilience, two resilience indices were modelled and developed. These indices intend to measure the
companies’ ability to sustain its performance in terms of “on-time delivery” when a “capacity
shortage” or “material shortage” occur. Finally, the indices were tested in companies belonging to
the Portuguese automotive upstream supply chain. The dissertation contributes to the existing
literature by empirically investigating the main effects of supply chain disturbances and how
companies can increase supply chain resilience. It suggests an approach to assess companies’
resilience and identifies a set of supply chain state variables that companies may control to improve
supply chain resilience.

Keywords: Supply chain management, Resilience, Disturbance, Automotive supply chain, Theory
building, Case study

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 Contents

1 Introduction........................................................................................................................... 1
1.1 Aim .............................................................................................................................. 1
1.2 Objective and research questions ..................................................................................... 5
1.3 Methodology................................................................................................................... 6
1.4 Contents .......................................................................................................................... 7
1.5 Conclusion ...................................................................................................................... 9
2 Supply Chain Resilience ...................................................................................................... 11
2.1 Supply chain management ............................................................................................. 11
2.1.1 Supply chain....................................................................................................11
2.1.2 Management practices .....................................................................................13
2.2 Supply chain performance ............................................................................................. 22
2.3 Supply chain disturbances ............................................................................................. 24
2.3.1 Uncertainty and risk.........................................................................................24
2.3.2 Vulnerability, disruptions and disturbances ......................................................26
2.4 Supply chain failure modes............................................................................................ 29
2.4.1 Failure modes categories..................................................................................29
2.4.2 Failure mode analysis ......................................................................................33
2.5 Supply chain resilience.................................................................................................. 38
2.5.1 Definition ........................................................................................................38
2.5.2 Resilient practices............................................................................................42
2.6 Resilience triangle ......................................................................................................... 45
2.7 Conclusions................................................................................................................... 48
3 Supply Chain Design for Resilience .................................................................................... 49
3.1 Contribution of lean and agile strategies for supply chain resilience............................... 49
3.1.1 Lean supply chain strategy...............................................................................50
3.1.2 Agile supply chain strategy..............................................................................51
3.1.3 Supply chain attributes.....................................................................................52
3.2 Resilient capabilities...................................................................................................... 52
3.3 Resilience in supply chain design .................................................................................. 57
3.4 Conceptual model for resilience assessment................................................................... 61
3.5 Conclusions................................................................................................................... 65
4 Research Methodology ........................................................................................................ 67
4.1 Selected research methodology...................................................................................... 67
4.1.1 Inductive research approach.............................................................................67
4.1.2 Theory building and case study method ...........................................................68
4.2 Case selection................................................................................................................ 71
4.3 Data collection .............................................................................................................. 73
4.4 Data analysis ................................................................................................................. 76
4.5 Case study quality and limitations ................................................................................. 78
4.6 Conclusion .................................................................................................................... 80

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5 Case Study ........................................................................................................................... 81
5.1 Case study..................................................................................................................... 81
5.1.1 Automotive supply chain .................................................................................81
5.1.2 Automaker.......................................................................................................84
5.1.3 First tier suppliers ............................................................................................85
5.1.4 Logistic providers ............................................................................................86
5.1.5 Supply chain operations ...................................................................................87
5.2 Supply chain management practices deployed by companies ......................................... 88
5.2.1 Implementation level .......................................................................................88
5.2.2 Relationships between practices and performance ............................................92
5.3 Disturbance definition ................................................................................................... 94
5.3.1 Supply chain disturbances examples ................................................................95
5.4 Supply chain failure modes............................................................................................ 97
5.5 Resilient practices deployed by companies .................................................................. 101
5.6 Conclusions................................................................................................................. 104
6 Supply Chain Resilience Modelling................................................................................... 107
6.1 Framework for resilience modelling in supply chain .................................................... 107
6.2 Resilience assessment.................................................................................................. 111
6.2.1 Resilience metric ...........................................................................................111
6.2.2 Resilience indices ..........................................................................................111
6.3 Resilience indices modelling ....................................................................................... 112
6.3.1 Aggregation...................................................................................................114
6.3.2 Index development ........................................................................................114
6.3.3 State variables ...............................................................................................116
6.3.4 Indices formulation........................................................................................120
6.4 Resilience indices application: a case study in the automotive supply chain ................. 121
6.4.1 Capacity shortage: state variables scores ........................................................121
6.4.2 Material shortage: state variables scores.........................................................124
6.4.3 Capacity shortage and material shortage: shared state variables score.............127
6.4.4 Resilience indices scores................................................................................129
6.4.5 Results discussion..........................................................................................130
6.5 Conclusions................................................................................................................. 131
7 Conclusions ........................................................................................................................ 133
7.1 Thesis overview .......................................................................................................... 133
7.2 Main results ................................................................................................................ 134
7.3 Theoretical and managerial implications ...................................................................... 137
7.4 Recommendation for future research ........................................................................... 138
8 References .......................................................................................................................... 141
Appendix A - Interview protocol on lean, agile and resilient supply chain management practices155
Appendix B - Interview protocol on supply chain disturbances and failure modes ...................... 161
Appendix C - Interview protocol on supply chain resilience index.............................................. 165
Appendix D - Technical report................................................................................................... 169

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 List of figures

Figure 1-1 Research methodology overview....................................................................................6

Figure 1-2 Organization of the thesis...............................................................................................8

Figure 2-1 Effect of disturbances in the supply chain performance ................................................29

Figure 2-2 Supply chain failure modes ..........................................................................................32

Figure 2-3 Cause-effect diagram for product not delivered on-time ...............................................32
Figure 2-4 “Resilience triangle” ....................................................................................................46

Figure 2-5 “Resilience triangle” pattern in simulation results.........................................................46

Figure 2-6 Example where the supply chain final state is different from the initial state.................47
Figure 2-7 Disturbance effect in different supply chain performance measures (example)..............47

Figure 3-1 Supply chain resilience as a property............................................................................62

Figure 3-2 Supply chain resilience as a strategy.............................................................................63
Figure 3-3 Conceptual model for supply chain resilience assessment .............................................64
Figure 4-1 Inductive and deductive research approaches ...............................................................67

Figure 4-2 Case design in supply chain context .............................................................................71

Figure 4-3 Methodology overview ................................................................................................73
Figure 5-1 Supply chain under study .............................................................................................83

Figure 5-2 Supply chain disturbances ............................................................................................95

Figure 5-3 Disturbances sources along the supply chain ................................................................97
Figure 5-4 Resilient practices used by companies ........................................................................101

Figure 6-1 Framework for resilience modelling in supply chain...................................................110

Figure 6-2 State variables proposed for modelling the supply chain resilience indices .................113
Figure 7-1 Thesis main outputs ...................................................................................................134

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 List of tables

Table 2-1 Supply chain state variables...........................................................................................13

Table 2-2 Dimensions of supply chain management practices........................................................14

Table 2-3 Supply chain management practices ..............................................................................16

Table 2-4 Supply chain measures and indicators............................................................................22

Table 2-5 Disturbance categories ..................................................................................................28
Table 2-6 Failure mode categories.................................................................................................31

Table 2-7 Failure mode analysis for finished product not delivered ...............................................35
Table 2-8 Failure mode analysis for labour and capacity shortage..................................................35
Table 2-9 Failure mode analysis for raw material shortage ............................................................36

Table 2-10 Failure mode analysis for scrap and rework .................................................................37
Table 2-11 Supply chain resilient practices....................................................................................44
Table 3-1 Lean, agile and resilient supply chain attributes .............................................................53
Table 3-2 Supply chain resilient capabilities..................................................................................56

Table 3-3 Relationship between supply chain resilient capabilities and state variables ...................59
Table 4-1 Sample main characteristics ..........................................................................................73
Table 4-2 Case study data sources .................................................................................................75

Table 4-3 Data analysis techniques................................................................................................78

Table 4-4 Case study research design ............................................................................................80
Table 5-1 Companies profile .........................................................................................................84

Table 5-2 Implementation level of supply chain management practices .........................................89

Table 5-3 Relationships among supply chain management practices and performance ...................93
Table 5-4 Empirical evidences supporting the identification of failure modes ................................99

Table 5-5 Resilient practices, disturbance severity and recovery time: empirical evidences..........102
Table 6-1 Variables for assess the supply chain resilience index ..................................................117
Table 6-2 Capacity shortage severity and recovery time: state variables score .............................122

Table 6-3 Material shortage severity and recovery time: state variables score ..............................125
Table 6-4 Capacity and material shortage: shared state variables score ........................................128
Table 6-5 Supply chain resilience indices scores .........................................................................129

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 List of abbreviations and symbols

b - Length of the triangle

b1 - Damping time

b2 - Recovery time

EDI - Electronic data interchange

FGI - Finish goods inventory

h - Depth of the triangle

IT - Information technology

JIT - Just-in-time

JIT suppliers - Just-in-time suppliers

Nzs - Number of state variables contributing to minimize severity of failure mode z

Nzr - Number of state variables contributing to minimize the recovery time for failure mode z

OEM - Original equipments manufacture

RCn - State variable n that contributes to minimize the “capacity shortage” as well as “material
shortage” recovery time

RCSl - State variable l that contributes to minimize the “capacity shortage” recovery time

RMSm - State variable m that contributes to minimize the “material shortage” recovery time

Resilience Index CS - Company resilience “on-time delivery” to “capacity shortage”

Resilience Index MS - Company resilience “on-time delivery” to “material shortage”

Resilience Index z - Resilience index for a failure mode z

SCk - State variable k that contributes to minimize the “capacity shortage” as well as “material
shortage” severity

SCSi - State variable i that contributes to minimize the “capacity shortage” severity

SMSj - State variable j that contributes to minimize the “material shortage” severity

WIP - Work in process

Xzs - State variable s that contribute to minimize the severity of failure mode z

Yzr - State variable r that contribute to minimize the recovery time for failure mode z

z - Failure mode type (“material shortage” or “capacity shortage”)

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1 Introduction

This chapter serves as an introduction to the dissertation. It covers the research aim,
describing the motivation, objectives and research questions. It contains a brief
description of the research methodology used in the research and it concludes with an
outline of the dissertation structure.

1.1 Aim

In a global economy companies are no longer competing simply against each others but throughout
the whole network of companies that are responsible to transform raw materials in final product and
deliver it to the end users (Mills, Schmitz, and Frizelle, 2004). This network of entities responsible
for different process, from materials production, components and products assembly, storage,
transportation to delivery, is known as supply chain. The supply chain entities can be located in
different geographic locations, e.g. a manufacturing plant located in South Europe can receive
materials from local suppliers, but may receive materials coming from suppliers located in nearby
countries or even different continents like Asia and America. Companies can supply products to
customers that are spread around the globe and have to guarantee, at the same time, short lead
times, high quality levels and low-cost. Therefore, it is critical to assure a smooth flow of materials
between all the network entities. The management of the complex flow of materials and information
between companies involve as well the coordination of the individual companies’ processes, which
is the heart of supply chain management (Mentzer et al., 2001). Supply chain management is crucial
for increasing companies’ effectiveness as well as for enhancing competitiveness, customer service
and profitability. Diverse supply chain management strategies like lean and agile are intended to
reduce cost, through process improvements to reduce and eventually eliminate all “wastes”
(non-value adding operations) and increase flexibility, i.e., developing the supply chain ability to
rapid responding to changes in customer’s demand (Christopher and Towill, 2000).

With supply chains crossing several countries and continents, transporting a multi-diversity of
materials, from raw material to final product, events that create interruption of material flow, even if
they happen in a remote place, can create large-scale disruptions. These disruptions may be
propagated throughout the supply chain, causing severe negative effects in supply chains

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Chapter 1 - Introduction

compromising the ability to meet previously made commitments. Several companies, when
subjected to disturbances occurrences, can not sustain the productivity level losing their
competitiveness; therefore, the financial losses due to disturbances are growing significantly
(Sheffi, 2005). The Japan earthquake in March 2011 is an illustrative example of how an
unexpected event can affect global supply chains. We come across numerous media news
describing this event negative outcome in companies and respective supply chains (Carvalho,
Azevedo, and Cruz-Machado, 2012a). The automotive sector is referred to as one of the more
affected by this event. The following quotations provide elucidative descriptions about the negative
effects of this event:

 “With some 500 parts firms affected in the quake and tsunami-devastated northeast,
cutting off supply of electronic parts, resin-based products and more, Japan’s auto
industry is especially vulnerable to a ruptured supply chains”1

 “About 13% of worldwide auto output has been lost due to parts shortages and IHS
Automotive has estimated it may cut output by as much as 30% within six weeks in a
worst-case scenario.”2

 “(...) there are 30,000 parts to build a car. We might see an impact on practically every
production line in North America and most of Europe because of this supply interrupt,
this black swan for the global auto industry in Japan”3

The tendencies of many companies to seek out low-cost solutions, because of pressure on margins,
may have led to leaner but more vulnerable supply chains (Azevedo et al., 2008; Peck, 2005). As a
result, supply chains are exposed to disruption and, in consequence, the risk to business continuity
has increased. In a preceding research related to agile and resilient supply chains we argue that
companies and supply chain competitiveness depend not only on the lowest-cost, higher quality,
reduced lead time and higher service level; they should have the ability to avoid and overcome
several disturbances that may jeopardize their performance, i.e., they should be resilient (Carvalho,
Azevedo, and Cruz-Machado, 2012b).

The resilience seems to be, apparently, in conflict with an efficient use of resources in supply chain:
the redundancies in resources and processes allow an increase in the system resiliency, but
redundancies should be minimized to reduce operational cost systems. It seems that what can be

1
“Analysis - Japan car recovery may take months”. Available at:
http://www.reuters.com/article/2011/03/25/uk-japan-quake-autos-idUKTRE72O1HZ20110328
2
“Japan carmakers take steps in North America to fight disruption”. Available at:
http://www.reuters.com/article/2011/03/30/business-us-japan-automaker-output-idUKTRE72T0M320110333
3
“Japan could cause auto supply chain rethink: Expert”. Available at:
http://www.moneycontrol.com/news/world-news/japan-could-cause-auto-supply-chain-rethink-expert_532800.html

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 Chapter 1 - Introduction

good from the competitive point of view, can cause a disaster on crisis situations; it may be worst if
the companies can not be resilient and robust enough to recover the loosed competitiveness. The
ability to react appropriately to disruptions, whether natural or man-made, is a strategic necessity
for business survival; this becomes more relevant when the company is a member of an
interdependent network of entities (Hanna, Skipper, and Hall, 2010; Ponomarov and Holcomb,
2009; Sheffi and Rice, 2005). The creation of resilience attributes in companies, and therefore in
supply chain, will contribute to enhance the supply chain performance and competitiveness.

Interest in supply chain disruptions and respective negative consequences has been growing in last
years and the topic is become a main stream (Stock, Boyer, and Harmon, 2009). Whereas in the past
the principal objective of supply chain design was cost minimization or service optimization, the
emphasis today has to be upon resilience (Blackhurst, Dunn, and Craighead, 2011; Pettit, Fiksel,
and Croxton, 2010; Ponomarov and Holcomb, 2009; Tang, 2006a). Resilient supply chains may not
be the lowest-cost supply chains but they are more capable of coping with the uncertain business
environment. The automotive supply chain is a typical example of high vulnerability levels to
disturbances (Svensson, 2000). According to Thun and Hoenig (2011) the trends in globalization
and the necessity to offer many products variants are the key drives to increase the vulnerability of
this industry. Therefore, in the automotive supply chains the management focus should consider as
well resilience and not only cost minimization.

The present thesis intends to study the supply chain resilience thematic. The research was integrated
in two comprehensive research projects:

 “Lean, agile, resilient and green supply chain management” (funded by Fundação para
a Ciência e Tecnologia - Project MIT-Pt/EDAM-IASC/0033/2008). The main objective
of this project is to develop a deep understanding of the relationships required for the
compatibility of lean, agile, resilient and green (manufacturing) in order to contribute to
better production systems and supply chains.

 “Supply Chain Management: design for resilient systems” (funded by Fundação para a
Ciência e Tecnologia - Project PTDC/EME-GIN/68400/2006). The main objective is to
develop a management support system prototype to help managers to react quickly and
efficiently to the effects of disruptions that can occur in a supply chain, sustaining a
high service level to customers and to merge the necessary information to mitigate
plans if the disruption became repetitive.

As a result of the participation in these projects we developed several research works within the
supply chain resilience thematic. In particular, a number of papers were published and contributed

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Chapter 1 - Introduction

to the development of the resilience thematic in supply chain context (Azevedo et al., 2012;
Carvalho, Azevedo, and Cruz-Machado, 2012a; Carvalho, Azevedo, and Cruz-Machado, 2012b;
Carvalho et al., 2012; Carvalho, Maleki, and Cruz-Machado, 2012; Carvalho, Tavares, and Cruz-
Machado, 2012; Carvalho et al., 2011; Carvalho, Duarte, and Cruz-Machado, 2011). These works
disclose the relevance of supply chain resilience thematic in academics, but also in managerial
domains. However, it was found that there are still some research gaps that need to be addressed.

First, much of the existing research is focused on the question on “why the companies are
vulnerable to supply chain disruptions” (Peck, 2005; Svensson, 2000; Wagner and Neshat, 2010).
However, it is increasingly clear that companies need to deal with supply chain disruptions no
matter if they are more or less vulnerable. The Japan earthquake in March 2011 is an example of
how an unexpected event can affect global supply chain. Second, the development of the field tends
to focus on anecdotal studies and there is a lack of empirical evidences on how companies can
improve the resilience of the network where they are inserted. Blackhurst et al. (2005) state that
there is a limited amount of information on how to deal with supply chain disturbances from a
practical point of view, in both the short and the long term.

A high level of analysis of disruptions in supply chain, generally focused in uncertainty, risk
perceptions and hazards, might prevent the “drilling down” of key variable and relationships among
them and prevent the development of new methodologies to manage these issues (Blackhurst et al.,
2005). As state by Hintsa et al. (2009), in the supply chain security context, the academic research
community has a clear mission to bridge the gap between theoretical supply chain security studies,
emerging security standards and practical managerial actions. One way of doing it is to proceed
with pragmatic case studies on supply chain models in the context of real world supply chains.

Recent studies have highlighted the importance to quantify the supply chain ability to overcome the
negative effects of disturbances. In this line, Ponomarov and Holcomb (2009) argue that
measurement of supply chain resilience represents a future potential research stream; such
measurement would assist companies and their respective supply chain’s to determine the extent to
which elements and components of supply chain resilience should be developed. Pettit, Fiksel and
Croxton (2010) also propose a conceptual supply chain resilience framework to define resilience in
terms of measurable capabilities factors. According to them, the best level of resilience will be
achieved only when a balance is maintained between capabilities and vulnerabilities. However, they
do not specify how to assess the companies’ ability to avoid or to minimize the negative effects of
supply chain disturbances, i.e., how to assess companies’ resilience in a supply chain context. In a
previous research we propose a hierarchical index to measure automotive companies’ and supply
chain level of greenness and resilience (Azevedo et al., 2012). It was considered that the supply

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 Chapter 1 - Introduction

chain resilience level depends on a set of seven resilient practices that reflects the company ability
to cope with unexpected disturbances. The resilient practices were selected using evidences from
literature and experts knowledge, but no explanatory framework was developed. In parallel with the
development of resilience measures, Wagner and Neshat (2010) propose a novel approach based on
graph theory to quantify and mitigate supply chain vulnerability. Recently, the same authors
perform an empirical study to compare supply chain vulnerability indices of different firms
(Wagner and Neshat, 2012). Moreover, these authors stress out the need to address measurement
and implementation issues in supply chain resilience context.

1.2 Objective and research questions

While the existing research is valuable, models to support supply chain resilience management are
needed. In particular, the issue on “how to assess the supply chain resilience” still has no answer.
Therefore, this dissertation purpose is modelling resilience in a supply chain context. Namely, the
objective is to develop theory that can be used to support the assessment of supply chain resilience
of a company. To attain this objective it is necessary to develop an explanatory framework that
capture all the relevant variables describing the supply chain resilience phenomena and clarifying
the pathways by which supply chain resilience should be addressed. More specifically, the
objectives are:

 To propose a supply chain resilience assessment model.

 To propose an framework for supply chain resilience modelling.

 To model indices to assess company’s supply chain resilience.

In a first step, it is necessary to understand how companies manage their processes within a supply
chain context and characterize the main supply chain management practices deployed by
companies. In particular, the identification of resilient practices used to avoid or minimize the
disturbance negative effects is crucial for a better understanding of the resilience phenomena.
The following research questions are addressed:

1. Which practices companies deploy to manage their supply chain? What are the
consequences of those practices on supply chain performance?

2. What is a supply chain disturbance? How managers perceive the effects of a supply
chain disturbance?

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Chapter 1 - Introduction

3. How the supply chain disturbances affect the company’s performance? And why
companies do not sustain their performance level when a disturbance occurs?

4. Which resilient practices companies deploy to avoid or minimize the negative effects of
the supply chain disturbances?

1.3 Methodology

The research methodology comprises two main research phases as illustrated in Figure 1-1.
Since there are few theoretical developments in the supply chain resilience field, the research adopts
an explorative character. A theory building methodology based on case studies was selected. In a
first research phase, a case study is developed to understand the effect of disturbances on supply
chains and how companies overcome its negative effects.

The field work was focused in the automotive supply chain, namely in the upstream supply chain
taking into consideration the dyad manufacture – 1st tier suppliers and logistic service providers.
From this case study an empirical data platform emerged to identify the critical components
describing supply chain resilience phenomena.

Phase I Phase II

Case study Supply chain resilience

Which practices companies’ deploy to Critical variables to asses explanatory framework
manage their supply chain? What is supply chain resilience
Resilience indices
those practices consequence on supply
chain performance
What is a supply chain disturbance?
How managers perceive the effects of a
supply chain disturbance?
How the supply chain disturbances Case study
affect the company’s performance? And Indices testing
why companies do not sustain their
performance level when a disturbance
occurs?
Which resilient practices companies
deploy to avoid or minimize the
negative effects of the supply chain
disturbances?

Figure 1-1 Research methodology overview

To obtain more theoretical insights, a second descriptive phase was designed: an explanatory
framework with the identification of supply chain resilience variables and respective relationships
was developed. Therefore in this dissertation the proposed framework is data driven and not pure

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 Chapter 1 - Introduction

theory driven, i.e., the main variables describing the resilience phenomena emerge from empirical
data. Using this framework, two supply chain resilience indices are modelled. Finally the indices
were tested using a case study approach.

Since the supply chain resilience thematic covers a large scope of research topics including
vulnerability, supply chain risk, organizational structure, among others, in this dissertation the focus
will be on the companies’ behaviour and how they overcome the negative effects of supply chain
disturbances keeping the focus on company’s supply chain. Another delimitation of this dissertation
is related to the type of supply chain under study: the empirical work will be focus on a Portuguese
automotive upstream supply chain.

1.4 Contents

The thesis results from theoretical and methodological explorations within the scope of supply chain
resilience. In Figure 1-2 the organization of the thesis is presented, highlighting the theoretical,
methodological and empirical steps used to reach the thesis results.

This thesis consists of seven chapters. The first one introduces the thesis underling motivation and
main objectives. In the second and third chapter, the relevant literature on supply chain resilience is
enfolded to provide clarifications regarding the research thematic. In Chapter 2, the topics related to
supply chain management, supply chain performance, disturbances, failures modes and resilience
are discussed. This chapter contains a review of main supply chain management practices and
performance measures found in the literature. In addition, it provides an overview on supply chain
disturbances and failure modes and the identification of supply chain resilient practices. The chapter
is concluded with the characterization of supply chain resilience using the “resilience triangle”. In
Chapter 3 the lean, agile and resilient practices are studied in detail, their attributes are identified
and related to these management strategies. Moreover, a relevant set of supply chain resilient
capabilities are identified. The design for supply chain resilience is also explored. The chapter
concludes with a conceptual model for supply chain resilience assessment.

Chapter 4 introduces the research methodology used in this thesis and the main research options are
discussed and justified. The utilization of a theory building approach using a case study method to
attain the research objectives is justified. The criterion for case selection is discussed. The chapter
contains data collection and analysis procedures, along with the design criteria used to assure the
case study quality. This chapter supports the case study findings described in Chapters 5 and 6.

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Chapter 1 - Introduction

Figure 1-2 Organization of the thesis

In Chapter 5, the data collected in research Phase I of the case study will be presented.
The chapter begins with a detailed description of the studied sample; the main supply chain
management practices used by companies in the sample are identified. Supply chain disturbances
and failure modes are identified using empirical evidences collected in the case study. The chapter
terminates with the identification of main practices used by companies to overcome the disturbances
negative effects.

Chapter 6 presents the theory derived from the case study findings. A framework for supply chain
resilience modelling and respective propositions is proposed using results from research Phase I and
literature enfolding. Using this explanatory framework, two supply chain resilience indices are
modelled; their application is illustrated in a case study setting.

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 Chapter 1 - Introduction

Finally, Chapter 7 provides a general discussion in theoretical, methodological and empirical issues
relevant to supply chain resilience thematic. The chapter finishes with the main conclusions of the
thesis and future work proposals.

The thesis includes relevant references about supply chain resilience and others supporting topics,
e.g. supply chain management, supply chain vulnerability, security and disruption, along with lean
and agile supply chain strategies. The literature reviewed follows a purposive sample of articles,
i.e., the literature included in this thesis was based on central and pivotal articles published in the
top journals in the field. In addition, four annexes, containing the interview protocols, and one
example of a technical report, to support the case study development, are included.

1.5 Conclusion

This chapter provides an overview of the dissertation. The justifications of the research topic as well
as the objectives were discussed. The dissertation presents a research on supply chain resilience: it
explores how companies overcome the negative effects of disturbances and how they can improve
their resilience. The methodology comprising two research phases is brief described. With all the
important areas of the research briefly introduced in this chapter, the following six chapters of this
dissertation will present a detailed description and findings of the research topic.