2. Literature Review

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Supply Chain Resilience: The Gateway to Business Opportunities

By

Laurens I.G. Wendt S3527255

l.i.g.wendt@student.rug.nl

Supervisor

Dr. Kirstin Scholten

Second supervisor Prof. Dr. Jan de Vries

University of Groningen Faculty of Economics and Business

MSc Supply Chain Management

July 2020

Word count: 10044

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Abstract

Purpose: Understanding how Supply Chain Resilience builds Opportunities

Method/design: An in-depth exploratory multi-case study was conducted across several industries and companies. Data collection was through 12 semi-structed interviews and analysed through a deductive coding approach.

Findings: Supply chain resilience strategies play an essential role in seizing and building opportunities in disruption. Collaboration being, in many instances, the source of opportunity building, and where by Flexibility, Agility and Redundancy facilitate the tools to seize opportunities.

Value: This is one of the first studies that explores how supply chain resilience creates opportunities during supply chain disruption. The insights build on the existing resilience literature and expands the scope for how resilience strategies can benefit companies.

Keywords: COVID-19, Opportunities, Supply chain resilience

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1. Introduction

The 2019 outbreak of the Coronavirus pandemic (COVID-19) caused global supply chain disruptions such as fluctuations in demand, supply availability issues, transportation difficulties and production restrictions (Wrede, 2020). While some companies suffered losses due to a decrease in demand, other companies were faced with an increase in demand. For example, automotive industry had a significant decrease in demand (Wrede, 2020). At the same time, the demand for medical hygiene products increased significantly (Sridharan, 2020) as COVID-19 created business opportunities for some companies and losses for others. On the other hand, companies can actively seek to create an opportunity from disruptions by trying to improve their market position. Winston Churchill once said: “Never let a good crisis go to waste”. The traditional way of dealing with disruptions is to use supply chain resilience as a strategy to endure or sustain the shock (Bhattacharya, Geraghty, Young, & Byrne, 2012; Rice & Sheffi, 2005) and not use it as an opportunity. In light of the current global disruption caused by COVID-19, it is important to know how supply chain resilience can not only be used to sustain the shock but also how companies can use it as an opportunity.

A company’s capability to respond to disruptions is supply chain resilience where the resilience is the ability to prepare and respond to any disruption with the aim of recovering or trying to achieve a better state (Tukamuhabwa, Stevenson, Busby, & Zorzini, 2015). Having the capability to respond and prepare for disruptions reduces the detrimental implications (Chowdhury & Quaddus, 2017; Serhiy Y. Ponomarov, 2009). An example of supply chain resilience is the Nokia and Ericsson case (2000). A fire at Philips, their joint supplier of silicon chips, caused an inability to deliver products to Nokia and Ericsson. The main risk for Nokia and Ericsson was the failure to continue their production, which would mean a loss in sales.

Nokia quickly reacted and started buying up all the remaining market production capacity which resulted in Nokia outmanoeuvring Ericsson. After Nokia’s actions, Ericsson was not able to continue its production. Due to adjustability to the disruption Nokia was able to continue production and increased its market share (Rice & Sheffi, 2005) compared to Ericsson, which resulted in almost bankrupting Ericsson (Mukherjee, 2008) and the subsequent spin-off of their mobile phone division went into a joint venture with Sony. To achieve resilience, Nokia could have utilised several resilience strategies: Flexibility, Agility, Redundancy and Collaboration (Tukamuhabwa et al., 2015). Each of the strategies has a different aim and perspective that addresses the capability to endure and recover from a disruption.

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6 As previously mentioned, most studies take the perspective of supply chain resilience by Rice

& Sheffi, (2005), where resilient supply chains are ones that can sustain shocks. Though in the Nokia and Ericsson case it can be seen that supply chain resilience is not only crucial in managing the disruption but that it also plays an essential role in building and seizing opportunities. Opportunities are situations where control is enhanced and has a positive effect on the market and leadership position of a company (Chattopadhyay, Glick, & Huber, 2001;

Sheffi & Rice, 2005). What is unclear is how and which mechanisms the supply chain resilience provides in order to build and seize opportunities that enabled Nokia to use the disruption to build and seize an opportunity. Supply resilience as a strategy to seize and build opportunities has not explicitly been researched and described, although, in the literature, Luksha (2008) mentions that opportunities can be created by inducing governed changes into the environment of the organisation. It is mentioned in some supply chain resilience literature that the aim is to achieve a better state than before the disruption (Tukamuhabwa et al., 2015). However, it is unclear how supply chain resilience contributes to the building and seizing opportunities and an improved state.

This research will contribute to the resilience literature by broadening the perspective of supply chain resilience, through analysing how supply chain resilience strategies create different business opportunities. The four main resilience strategies will be used as the variables for categorising the opportunities. Using the literature and the problem definition, the following question will be answered in this research:

How can resilience strategies create business opportunities during supply chain disruptions?

To answer the research question, an exploratory multiple case study is done by analysing and exploring how resilience strategies can create business opportunities. To be able to understand the complexity of the problem, the data collection is performed through semi-structured interviews. This research will provide empirical insights into the role of supply chain resilience strategies in building and seizing opportunities. The research will also contribute to the practice field by helping to understand what the benefits are of supply chain resilience and how it can be used as a tool for creating and seizing business opportunities during disruptions. This paper creates awareness and guidance in how practitioners should view supply chain resilience. The combined contributions will build a framework for both academics and practitioners.

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2. Literature Review

2.1 Supply Chain Disruptions and Opportunities

Supply chain disruptions are unexpected events that hinder or stop the regular flow of materials which can have detrimental implications for the supply chain members (Craighead et al. 2007 IN Scheibe & Blackhurst, 2018). The implications are the effects of the disruption from the initial disrupted location in the supply chain to the endpoint of the supply chain. The implications are necessary to understand to mitigate the potentially of severe negative consequences (Scheibe & Blackhurst, 2018) e.g. the Nokia case where Ericson lost significant market share. It is important to note that even a small initial disruption could transform into a substantial disruption throughout the supply chain (Blackhurst, Dunn, & Craighead, 2011).

Examples are earthquakes, hurricanes, fires, terrorist attacks and virus outbreaks. A pertinent example of the latter is the current COVID-19 pandemic. Disruptions are, in many cases, hard to predict, both when they happen and what the outcome will be. Supply chain disruptions are unavoidable, although by mitigating the effects of the disruption, functional supply chain operations are still possible (Scheibe & Blackhurst, 2018) . To be able to keep functional supply chain operations, an organisation needs and requires a good understanding of the factors that influence the disruption (Chopra and Sodhi 2014 IN Scheibe & Blackhurst, 2018) which, would also influence their ability to use the disruption as an opportunity.

As can be concluded from above, disruptions are negative situations with losses that one has no or little control over. Chattopadhyay et al., (2001) define that as control reducing-threats. On the other hand, there are opportunities in a disruption which generate positive situations where gain is possible through achieving control (control enhancing opportunities) (Chattopadhyay et al., 2001). This aligns itself well with what Luksha, (2008) says, that opportunities are created through deliberate attempts to change the environment (governed changes) of an organisation.

The mechanisms where control can be enhanced can be internally directed or externally directed (Chattopadhyay et al., 2001). Table 1 is an overview of the control mechanisms and where they relate to in a company.

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Table 1 Control enhancing opportunities based on Chattopadhyay et al., (2001)

Control enhancing opportunity

Control mechanism Description

Internally directed Securing production

Internal actions aiming at ensuring production, for

example swapping

employees (Augusto, Micheluzzi, Rosa, &

Roberta, 2018)

Externally directed

Securing demand

Use of production capacity to produce products that are not in the focal industry, which is product diversification (Riyanto & Schwienbacher, 2006).

Securing supply

Finding new suppliers that can deliver products during a disruption (Giunipero &

Eltantawy, 2003) Internally and externally

directed Relationship building

Building collaborative efforts such’s as information sharing to enhance control (Caroline, 2019)

The capability to achieve control is supply chain resilience. Sheffi & Rice, (2005) describe a resilient company as one that is able to seize opportunities. First, in a competitive environment to increase the market share. Second, in a position of having market power to cement leadership in the market (Sheffi & Rice, 2005). Market power is the ability to change prices or acquire and distribute resources (Kenton, 2019). This research sees the opportunities described by Sheffi &

Rice, (2005) as the two main opportunities and where the control enhancing opportunities relate to overview of the opportunities (Table 2).

Table 2 overview opportunities based on Sheffi & Rice, (2005)

Opportunity Improving

Increase market share Revenue, amount of customers, profit (Sudarsanam, 2004)

Cementing leadership Ability to change prices, to acquire and distribute resources (Kenton, 2019)

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9 In order to seize and create opportunities, companies have to engage in different resilience strategy practices. In the next section, the concept of supply chain resilience and the strategies will be further addressed.

2.2 Supply Chain Resilience

The effect of disruptions, if not addressed, will have detrimental implications for business (Pettit, Croxton, & Fiksel, 2013). A way of reducing the impact of the disruption is supply chain resilience. This study will use the following definition of supply chain resilience “The adaptive capability of a supply chain to prepare for and/or respond to disruptions, to make a timely and cost-effective recovery, and therefore progress to a post-disruption state of operations – ideally, a better state than prior to the disruption” (Ponomarov & Holcomb, 2009, p. 131). This definition suits this paper since by trying to seize opportunities one is also aiming for a better state after a supply chain disruption. To achieve a better state after the disruption, there are several strategies in supply chain resilience that address how to prepare and respond to the disruption (Tukamuhabwa et al., 2015).

2.3 Supply Chain Resilience Strategies

For achieving supply chain resilience Tukamuhabwa et al., (2015) undertook an extensive literature review and identified four of the most common strategies in resilience: Flexibility, Agility, Redundancy, and Collaboration. Supply chain resilience strategies are different ways of preparing and/or responding to disruptions (Tukamuhabwa et al., 2015). In this research they are also seen as different ways of building and seizing opportunities (Table 3).

Table 3 Supply chain resilience strategies based on (Tukamuhabwa et al., 2015)

Resilience strategies

Definition Classification Reference

Flexibility

Ability of an organisation to adapt to changing

environments and

stakeholder requirements (Erol, Ozgur; Sauser, Brian;

Mansouri, 2010)

Supply chain flexibility (Pettit et al., 2013) Development flexibility (Martin Christopher, 2000) Product flexibility (Martin Christopher, 2000) Operational Flexibility (Baghalian, Rezapour, &

Zanjirani, 2013) Agility

The capability to respond to unpredictable situations fast in demand and supply (Christopher & Peck, 2004)

Visibility (Martin Christopher & Peck, 2004)

Speed (Jüttner, U., & Maklan,

2011) Redundancy

The utilisation of spare capacity and inventory that

Amount of inventory (Boone, 2011)

Amount of suppliers (Scholten & Schilder, 2015)

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can be used during a disruption (Christopher & Peck, 2004)

Operational capacity (Martin Christopher & Peck, 2004)

Collaboration

Collaboration is the ability of two or more organisations to work together to effectively mitigate supply chain problems for their mutual benefits (Pettit et al., 2013)

Supplier development (Ghijsen, Semeijn, &

Ernstson, 2010)

Customer development (U. & Jüttner & Maklan, 2011)

Competitor development (Martin Christopher, 2000) Communication and

Information sharing

(Johnson, Elliott, & Drake, 2013)

Flexibility

Flexibility is a key factor in supply chain resilience where it enables fast and effective responses to environmental changes and stakeholders’ needs (Erol, Ozgur; Sauser, Brian; Mansouri, 2010). Several flexibility practices have been identified, such as postponement, flexible supply base, transport flexibility, flexible employees, and order delivery flexibility (Tukamuhabwa et al., 2015). Each of these practices achieve the ability to prepare and/or respond swiftly and effectively to a disruption. For example, postponement can be used when environmental changes occur that cause a demand surge whereby time to satisfy the demand is procured from the customer beforehand. This preparation for a potential disruption enables fast responses in the event of a disruption occurring. In the contract it can be formulated that delivery can be postponed under certain circumstances (demand surge). The procured time is used to postpone the delivery of goods thereby enabling recovery from the disruption (Iyer, Deshpande, & Wu, 2003).

Agility

Agility as a supply chain resilience strategy is “the ability to respond rapidly to unpredictable changes in demand or supply” (Martin Christopher & Peck, 2004). To rapidly respond, Visibility and Speed are needed (Christopher & Peck, 2004). Visibility in Agility is defined as the ability to see throughout the supply chain (Christopher & Peck, 2004). This means that a company has knowledge about their customers’ demands and use the information to prepare or react (Chopra, 2004). Speed relates to the pace of adoption of adjustments and the time needed to recover from a disruption (Christopher & Peck, 2004; U. & Jüttner & Maklan, 2011). For example, building speed can be done by seeking shorter delivery times with suppliers which enables faster receiving of goods thereby preparing the organisation for disruption and enabling it to react quicker to the disruption (Martin Christopher, 2000). This research will use visibility and speed as the boundaries of the research. In practice, this relates to monitoring customers and suppliers (visibility), forming crisis teams that react quickly (speed) and also forming crisis

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11 teams that are assigned to come up with the necessary measures (Neshat, 2012; Rice & Sheffi, 2005).

Redundancy

Another method for dealing with disruptions is by having redundant capacity in the supply chain. Examples of Redundancy are extra capacity in production, transportation, inventory, and storage capabilities (Christopher & Peck, 2004). Building redundancy can be an expensive way of creating resilience; for example, acquiring new machinery (M. Christopher & Rutherford, 2004). In disruptions, Redundancy maintains the ability to continue the organisation’s normal processes or create extra time (Pereira et al., 2014 IN Augusto et al., 2018). Redundancy is linked to Flexibility as studies have found it is an influencer of Flexibility ( Johnson et al., 2013;

Jüttner & Maklan, 2011). The differences between Redundancy and Flexibility would be hiring extra operators (Redundancy) versus retraining operators to do multiple operational jobs (Flexibility) (Augusto et al., 2018; Tukamuhabwa et al., 2015). The distinction is that Redundancy involves building new capacity that may be used and Flexibility is redeploying existing capacity (Rice & Caniato, 2003).

Collaboration

In supply chain resilience Collaboration is the ability of two or more organisations to work together to effectively mitigate supply chain problems for their mutual benefit (Pettit et al., 2013). Some of the collaborative activities are information sharing and joint planning (Pettit, Croxton, & Fiksel, 2013; Scholten & Schilder, 2015). Scholten & Schilder (2015) mention the importance of information sharing in Collaboration. Achieving resilience through Collaboration implies the type of information that is shared must be agreed upon (forecasts, transport information, market trends, production scheduling) as well as the means of sharing information (Scholten & Schilder, 2015). An example of Collaboration achieving supply chain resilience is Toyota’s 1997 supplier plant fire. Toyota collaborated with the supply chain partners by sharing technical information about the parts that were needed to be able to start production at different locations. Through the sharing of technical information with the supply chain partners, the required parts were available in a short period of time ( Nishiguchi and Beaudet 1998 IN Tukamuhabwa et al., 2015). In this case, Collaboration aided recovery by enabling supply chain participants to share resources and provide coordination (Tukamuhabwa et al., 2015).

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12 2.5 Conceptual Framework

Resilience strategies are the mechanisms that can be adjusted to be able to build and seize opportunities in market position, such as increasing market share or cementing leadership. How the resilience strategy builds resilience is known, though how these strategies can transform disruption into an opportunity is unknown. The question is how do resilience strategies build and seize opportunities in disruptions. An opportunity is seen as improving the market position by either increasing the market share or cementing leadership. Figure 1 gives an illustration of the framework.

Figure 1: Conceptual framework

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3. Methodology

3.1 Research Design

This research aims to understand how supply chain resilience strategies can build and seize business opportunities. To answer the question, this research uses a qualitative research approach with an explorative multiple case study. This research used the supply chain resilience strategies as a focus for building and seizing opportunities which has, to the author’s knowledge, been overlooked. The aim is not only to identify what practices build and seize opportunities but also to understand the underlying mechanisms. To find the underlying mechanisms a multiple case study is best suited due to its ability to conduct detailed investigations of organisations and provide analysis of the multiple contexts and processes that are involved (R. Yin, 1984). Furthermore, multiple case studies in supply chain resilience provide the ability to research in-depth phenomena through interviewing participants, thereby building a diverse perspective of the problem (Harrison, Birks, Franklin, & Mills, 2017). The different participants’ perspectives, that are collected through interviews, can be used to answer how supply chain resilience creates opportunities (Yin, R Robert, 2009). To achieve reliability and validity, data is collected from different sources and cases (i.e. supply chain, sales, operational purchasing and sales interviewees). An exploratory case study is appropriate in this specific context to analyse individual differences and similarities where the focus is on how and why (Yin, R Robert, 2009). To increase reliability, multiple sources of data are used: interviews with different participants (i.e. account managers, supply chain managers and purchases) and company presentations for customers. The multiple cases will contribute to the analyses by comparing different outcomes and results between supply chain resilience and opportunities (Gerring & McDermott, 2007).

3.2 Case Context

The supply chain disruption caused by COVID-19 was used as input for the Cases due to global and cross-industry implications of the disruption (Fernandes, 2020). Given that COVID-19 has had a significant global effect it will be insightful to compare how supply chain resilience created opportunities with the same disruption source in different industries. The industries that were chose are all in a production environment which are the food/processing, packaging and medical devices industries.

The food/processing industry was chosen because of demand surges caused by consumer stockpiling due to COVID-19 (Fottrell, 2020). Furthermore, most governments decided that

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14 food chains were deemed to be essential and should remain open during the COVID-19 crisis (Rio-Chanona, Mealy, Pichler, Lafond, & Farmer, 2020). Also, the difficulties in storing perishable materials and finished products make the industry susceptible to supply chain disruptions (Donk, 2001).

The packaging industry has a global supply chain which makes it very susceptible to the COVID-19 disruption due to different lockdowns in each country. The company in question produces industrial bags which are critical items for their customers meaning availability and quality are the key supply chain characteristics needed. This means that having an adaptable organisation is vital to maintain availability in a disruption (Rinaldi & Bandinelli, 2017).

COVID-19 severely hit the medical devices industry due to hospitals stopping all non-essential procedures therefore halting the demand. (Oving, 2020) The industry is very innovative and has high regulatory requirements.

Due to the unique situation, COVID-19 and to be sure the companies were suitable for this research, some pre-interview correspondence was done. Table 4 provides an more in depth situation how COVID-19 affected the companies chosen for this research.

Table 4 additional case context

Company Impact of COVID-19

Food Early significant demand increase, due to end consumer hoarding of food, Transportation issues because of boarder restrictions.

Medical devices

Very high demand decrease, due to hospitals stopping all non-acute procedures. Resulting in long waiting list for patients at the hospitals after when the hospital went back to “normal”.

Financial governmental support was needed to keep company afloat.

Packaging supplier

Production issues due factoryclosures because of lockdown measures in some of the country where they had production facilities. Demand increase due to market trying to secure own supply.

All

companies

Social distancing measures had to be implemented, which cost a lot of time and resources combined with the other supply chain problems, the situation was challenging.

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15 3.2 Case Selection

The unit of analysis is the firm level in the supply chain. The unit of analysis creates the possibility to analyse different practices and outcomes of various organisations. This study focuses on disruptions as an input for the development of opportunities. Four organisations were selected, which all experienced different supply chain disruption due to COVID-19. Each organisation was a different case but all cases had opportunities to increase the market share and cement leadership whereby the differences in the cases were the resilience strategies and control mechanisms used (Table 5). As the companies were affected by the same disruption, this allows literal replication of the opportunities (Yin, R Robert, 2009).

Table 5 case selection table

Case Industry Opportunities

1 ^Food Increasing Market share / Cement leadership

2 Medical devices Increasing Market share / Cement leadership 3 Food/processing Increasing Market share / Cement leadership 4 ^Packaging Increasing Market share / Cement leadership

3.3 Data Collection

The primary source of the data is 12 in-depth semi-structured interviews performed in the period April until June 2020. Semi-structured interviews allow the capture of complex problems and characteristics of situations while also retaining Flexibility (R. Yin, 1984). In this study each interview is conducted online by using programs such as Google Meet, Skype, Zoom and Microsoft Teams. The initial intention was to perform the interviews face-to-face, but due to COVID-19 related travel and social distancing restrictions, this was not possible. In every case, three interviews were conducted, with relevant employees with various responsibilities (Table 6). The interviews were chosen based having at least one the following criteria:

• Extensive knowledge about actions taken in response to COVID-19

• Active involvement in the decision making process

• Responsible for implementing actions in response to COVID-19

To ensure reliability and validity, an interview protocol was developed (Yin, 1984) (Appendix A). The interview protocol was based on resilience strategies; the questions are open-ended, which provided the option to obtain detailed responses. The variables used for the research are based on the resilience strategies identified by Tukamuhabwa et al. (2015).

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16 Interview Execution

Before the interview started a consent form was signed. In the consent form, the interviewee agreed upon the use of their answers as data for this study. The interviewees were also made aware that the interviews and companies would be anonymised. Furthermore, the interviewees were informed about the aim and the background of this research. After that, the interviewees were asked if recording the interview was permissible.

The start of the interview focused on general questions about the company and the interviewee’s position in the company. Open questions about the effects of COVID-19 were asked. The questions addressed company disruptions and how they, as a company and as an individual, responded. Questions were asked about the preparedness of the company and how the disruptions changed their position in the market. Two researchers conducted the interviews, which raises the internal validity (Eisenhardt, 1989). In Table 6 an overview of the interviewees is presented with Case (company) 1, 2, 3, 4 and interviewees A, B, C, D.

Table 6 interview table

Industry Case number

Interviewees Position interviewee

Interview Length (minutes)

Food 1 1A Operational

director

40

1 1B Supply chain

manager

40

1 1C Procurement

manager

100

Medical devices 2 2A CEO 40

2 2B Executive VP 45

2 2C VP engineering 45

Food /Processing

3 3A Generic buyer 60

3 3B Process planner 60

3 3C Procurement

manager

75

Packaging 4 4A, 4B Purchaser,HR

manager

55

4 4C Account manager 55

4 4D Customer sales

representative

55

3.4 Data Analysis

The interviews were recorded and transcribed in Microsoft Word and coded in Microsoft Excel.

Based on raw transcripts, relevant sentences applicable to this research were taken as quotes from each of the cases to get an overview of the relevant aspects (first-order codes) (Karlsson,

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17 2009). The data was then coded into two separate directions, one aiming at the resilience strategies and the other aimed at the opportunities (see excerpt Coding Tree Tables 7 and 8).

Further, each interview was first coded separately and then analysed for each Case and combined analysis.

Coding Tree Table 7 was coded the following way: the first-order codes were grouped into second-order, which were deductively linked to supply chain resilience activities (Miles &

Huberman, 1994). An example of a second-order code would be “increasing inventory” that is deductively derived from the first-order quote “to prevent non-delivery of our products we increased our safety stock of bare materials so that, if there would be a disruption of COVID, we could still be able to produce” (2A).

Coding Tree Table 8 is a continuation of Table 7, where the second-order codes were linked to supply chain resilience strategies and the opportunities mechanisms. The second-order code

“increasing inventory” was linked to the third-order codes amount of inventory (resilience) and securing supply (control mechanisms). Therefore the second-order codes were grouped into third-order codes and then linked to the supply chain resilience strategies of Tukamuhabwa et al., (2015) and to the opportunities of Chattopadhyay et al. (2001) and Rice & Sheffi (2005).

Another example is the first-order code “In the beginning, we really had problems with our capacity. Because the volume increased by 30%, we reached a bottleneck. That is why we started the cooperation with the small cutting companies. Because if the demand stayed that high, we got a problem.” (1A). Which linked to the second-order code Production location adjustability. The second-order code was then linked to the third-order codes supply chain flexibility (resilience) and securing production (control mechanism), and then linked to Supply chain resilience strategy Flexibility and the opportunity, cementing leadership.

Table 7 excerpt coding tree

First-order Second-order

“Because we got many customers for whom we buy bags in India, there is a complete lockdown in India. All the bags we have in production over there we had to take back and produce in our own production facilities in Turkey. And therefore many customers have divided their order, and we are delivering hardly or8ders” (4C)

Production location adjustability

“we were scaling up with raw materials, we were informing suppliers also and asking them what is possible because in the end the raw materials, they grow in the open field and it is not in the warehouse” (1C)

Demand information sharing suppliers

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“When we really saw that big increase, we thought okay if lots of people will get ill in our company and you will never know what happens. Then we also had a collaboration with a small cutter. Who delivers in the horeca, to small cafes and restaurants and bars. And of course, did not have any work anymore. And for one and a half week, they cut four different vegetables for us”(1C)

Supply chain assistance

“We heard that some people wanted to order extra but did not get delivered. And that is also why maybe it sounds a little bit ridiculous but we really in the first week already we rented the canteen we made soup we made ehhh showers we had and toilets really to take care of the drivers as well”

(1A)

Preferred customer

“what proactive measures are taken to recover) We are looking at the need of the CAD labs. So that’s a different situation that we will be a backlog of patients so there will be more patients treated in less time.” (2A)

Services improvement

“So the pressures for the procedures is increasing the coming years. As I sad this results in a higher need for better procedures” (2C)

knowing market trend

“I mean 3-4 weeks ago we were working as always.. So the change was very very rapidly and drastic. And it is also refreshing in a way that you can come to the conclusion it is fine to work from home and you do not need to come here each and every day. So, it also has positive points from my point of view” (1B)

proactive decision making

“So, we have 6 to 8 weeks shipping time. So at least the main items for this years are on the boat or somewhere in Europe in the warehouse” (3C)

increasing inventory

“no capacity so there is something happening there but I really it takes a lot of effort to get produce ting there. Then we have the other locations turkey, Romania, Czech Republic, there’s also the coronavirus there so also higher on a global, nationwide level not necessary for their production facilities” (3A)

supplier diversification

“I think we have good partnerships with lots of our suppliers. But also 1c can tell a lot about that. And ehh.. we heard in the market but maybe it is a rumour that sometimes in some cases we got more than other competitors s.so that if they could choose that they will deliver at Company 1.

But we did not have a shortage of ingredients or vegetables so I think that is a good case or good sign”. (1A)

Preferred customer

Table 8 Expert coding tree

Second Third Resilience strategy/

Opportunities

Production location adjustability Supply chain flexibility Flexibility

Securing production Cementing leadership

Demand information sharing suppliers Information sharing Collaboration

Securing supply Cementing leadership

Supply chain assistance Supplier development Collaboration

Relationship building Cementing leadership/ Increasing market share

Preferred customer Supply chain flexibility Flexibility

Securing demand Increasing market share

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Services improvement Development flexibility Flexibility

Securing Demand Increasing market share

Knowing market trend Visibility Agility

Securing demand Increasing market share

Increasing inventory Amount inventory Redundancy

Supplier diversification Amount of suppliers Redundancy

Preferred customer Supplier development Collaboration

In the data analysis, the seconder-order codes are descriptions of opportunity actions. The deductive codes were linked to how the resilience strategies created an opportunity. The second in-depth analysis of all the codes from the specific cases was grouped in a single file and was sorted per resilience strategy and opportunity. The combination resulted in an in- depth analysis of the mechanisms how which strategies build and seized opportunities. The patterns that emerged is that different strategies were able to build both of the opportunities but in different ways. To ensure validity and reliability, Table 9 shows the practices.

Table 9 overview validity and reliability (Yin,2009) Criterion Implementation

Construct validity

Evaluation of interview protocol after each interview to improve the question and interview strategy.

Internal validity

Performing case and cross-case analyses to validate different patterns External

validity

Focusing on COVID-19 as the disruption caused and differentiation between multiple industries to elevate the different potential methods to added in generalisation.

Reliability Follow the l interview protocol and permit the interviewee to speak in their native language if necessary to ensure clear answers, using the English as a default to avoid translation issues. All interviews were transcribed and send back for evaluation interviewee. Consent form interviews are guaranteed with the emphasis on anonymity.

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4. Findings

The results reveal that the resilience strategies have implications on the four control mechanisms (control enhancing) : securing supply, securing demand, securing production and relationship building. To build and seize opportunities, each case had similarities and differences how the resilience strategies were used though the outcome was similar either increasing the market share or cementing leaderships. In Table 10, case actions are ordered based on the supply chain resilience strategies and the control enhancing situations. In the following section, actions will be analysed over how it helps to create or build an opportunity for the case company.

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Table 10 resilience actions that build and seized opportunities

Increasing market share Cementing leadership Increasing market

share/ Cementing leadership Securing demand Securing supply Securing production Relationship building Flexibility

Production location adjustability

(1,4)

Product diversification (2,3) Production process

adjustability(,12)

Services improvements (2,4) Innovation output (2,3) Customer diversification (3)

Decreasing Supply chain dependability (2)

Supply base change (1,2,3) Preferred customer (1,3)

Supply chain capacity sharing (1)

Production process adjustability (1,2) Production location adjustability (1,4)

Supply chain assistance (1,2,3)

Preferred supplier (1,3)

Agility

Knowing market trend (1,2,3,4) Proactive decision making (1,2,3,4)

Supply base change (1,2,3) Disruption preparation (1,2)

Setting up crisis team (1,2,3,4) Forecasting methods (1)

Information sharing (1,3)

Redundancy

Production location adjustability (4)

Market diversification (3,4) Product diversification (3) Customer diversification (3)

Increasing inventory (1,2,3,4) Preferred customer (1,3) Supplier diversification 1,2,3,4)

Production capacity (1,2,3,4)

Collaboration Services improvements (2,4) Information sharing (1,2,3,4)

Preferred customer (1,3,4) Services improvements (3,4) Information sharing (1,2,3,4)

Services improvements (2,4,3)

Supply chain assistance (2) Information sharing

(1,2,3,4)

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21 4.1 Increasing Market Share

The data shows that for building and seizing opportunities to increase market share, the external environment needs to be controlled. Therefore securing demand was essential for maintaining or increasing market share. In many of the cases, resilience strategies were overlapping in how demand was secured.

4.1.1 Securing Demand

The control mechanisms securing demand enabled seizing an opportunity to increase the market share in these Cases. This was either through collaborative efforts or through the ability to adjust to changes in the environment due to COVID-19.

Collaboration efforts were the linking factor between the resilience strategies in most of the Cases. All Cases used Collaboration, such as information sharing with the supply chain partners to build the knowledge and capabilities to be able to prepare and respond to COVID- 19. For example, collaborative efforts with the end consumer in Case 2 enabled an understanding of what the customer needed to change because of COVID-19. “If I understand it correctly, you are working with physicians to see how can the procedures be done quickly to help with the backlog of patients?” Yes, you can summarise it like that” (2B). Knowing the market trends improved visibility (Agility) and provided development input (innovative output). The collaborative effort, therefore, enabled the following situations to increase the market share.

Cases 2 and 3 achieved securing demand through Flexibility of the innovation output, product diversification and customer diversification which increased the market share of each company during the disruption. In both Cases their innovative output developed a product that had Flexibility and Redundancy in applications and/or markets. In Case 2, the product and services improvement enabled the customers to improve procedure times, which was needed to eliminate backorders from COVID-19, resulting in higher customer demand for the product.

“We are developing products that do multiple tasks. With our product, you can perform 3 to 4 tasks in one product. So in that way you can speed up the procedures…Normally you would also try to introduce such products, but now the physician is more open for changes.” (2C).

Case 3 had a more consistent demand during COVID-19 than their competitors, this was due to the diversification of their demand because of the wide portfolio where their new product could be used. “We are one of the only companies who have product x, and it is used in a lot of vegetarian products. And that is really good in this situation”(3B). The Flexibility of the

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21 product implications and Redundancy through market diversification of the Cases secured demand and seized an opportunity to increase the market share.

For Case 4 there was hardly any collaborative input needed to secure demand due to the Flexibility and Redundancy of the production location adjustability. COVID-19 caused, in some countries, full lockdown, meaning that some of the facilities of Case 4 had to be closed.

Due to having different production facilities at different locations across the world, Case 4 was able to ensure supply to their main customers. Case 4 noticed an increase in customer inquiries who had supply problems. This was due to the inability of competitors to deliver because of the lockdowns. “New customers came up as they were not able to get big bags from their former suppliers. We got some more inquiries and orders in addition to what we had before. So that increased the lead time again, so with India and China being closed, we had to switch everything to our biggest production facility in Turkey”(4A). Very little collaborative input was needed to secure the demand, though at some stage Case 4 did outsource some of its production to keep up with demand but it was still able to increase the market share through the new customers.

This is different than in Cases 2 and 3 where collaborative input was used to direct the actions that were taken. This does not mean that Case 4 did not use collaborative efforts to react to COVID-19. Customer Collaboration regarding customer prioritisation so that available capacity was used for customers who needs the supply the most. “And now you have to say ok we have an agreement but what do you really need at which date, so we produce lower quantities and then deliver several batches, these are the main things we did to secure the supply for our customers.” (4C).

4.2. Cementing Leadership

The data shows that several control mechanisms enable the building and seizing of opportunities to improve the market position. The opportunities were mainly focused on improving the ability to acquire and distribute resources better than the competition. These actions might not directly increase the market share of a company, but it does build a better state after the disruption, on which they can develop and potentially grow their market share.

4.2.1 Securing supply

As with securing demand, Collaboration enables the linking of strategies to build control. All Cases had collaborative efforts with their suppliers to acquire the information needed to take

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21 appropriate actions. Becoming a preferred customer of the supplier was important in

securing supply during the disruption, but it most likely improves the ability to acquire resource after the disruption, thereby cementing leadership in the market.

Case 1 and 3 achieved preferred customer status in different ways. In Case 1, Collaboration with a supplier about drivers' needs was of high importance. Due to regulatory changes because of COVID-19, truck drivers were not allowed to use the company's facilities anymore. With input from the supplier (information sharing) measures were to implemented ensure that drivers had sufficient and correct facilities (shower, canteen), which resulted in a positive reaction from the supplier which shared information that this was not normal behaviour.

"For instance their drivers. They are not allowed in our buildings. We had to communicate with them about it. We wanted to organise the place where they could stay outside the premises. If you have a driver from say Spain, you cannot say you cannot enter the building, and you have to organise something for them. So, we had to make sure that there would be a place to stay"

(1B)….. "We get compliments from our suppliers about the way we treat their drivers here. That differs us from some other companies they supply to." (1A)

Collaboration with the supplier created the inputs for the course of action to be taken.

Flexibility and Agility of Case 1 made it possible to implement the necessary measures quickly, thereby building goodwill with the supplier. The opportunity to build a better relationship with the supplier improved the ability to acquire supply (cementing leadership) not only during the disruption but most likely also after.

In Case 3, preferred customer status was achieved through long pre-disruption relationship building (disruption preparation). The company already had preferred customer status with the supplier which made the supplier more willing to supply the company during the

disruption. "Because we have a good relationship build upon many years with this company in Istanbul. The need we have, and there is much shifting from India and other companies who want to buy also products from Istanbul. However, they are being served later" (3C).

The option to be served first during the disruption was a demonstration of the ability to acquire resources and showed an improvement in the market position. Case 1 was different where the disruption was used to obtain the preferred status; in Case 3, the status was already in place then utilised in the disruption.

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21 Another way demand was secured was by cementing leadership. This is seen in Case 2's supply chain dependability and the ability to change supply base change in all four Cases. Decreasing Supply Chain Dependability was, in Case 2, an essential factor in cementing leadership by enabling a switch of suppliers, thereby improving their ability to acquire resources ahead of the competition. The Flexibility to switch suppliers by avoiding outsourcing as much as possible decreased their supply chain dependability compared to their competitors. Therefore cementing leadership through a superior ability to acquire resources than the competition. "Due to the small scale and short supply chain, which helps to withstand the current crisis compared to your competitors, results in having relative Flexibility to choose suppliers than the competition?” Yes, I think that we have an advantage on that front" (2C). This has also added to the ability to change supply base if necessary, which improved the ability in securing supply.

Flexibility to change the supply base was used in other cases to improve the ability to acquire resources. It resulted in some of the Cases in an opportunity to cement leadership. Next to the Flexibility to choose a different supplier, Agility through Speed and visibility was crucial in changing the supply base. In Case 3, the visibility of realising that a supply product could be changed and the ability to change suppliers fast, enabled improvement in their market position.

"Yes we had one type of chemical, and it was produced only in India, India stopped so we did not get it anymore ….. I also know as procurement to see it as an opportunity, it is not the most value-adding product it is giving you a chance to change up your suppliers or the type of product you buy" (3A).

Case 1 achieved a similar result by having a supplier at multiple geographic locations which were preparations performed before the disruption . ".. we have different areas where we got the supply from. So, if you have Arugula, It is from different areas, if one area is closed down, then we can get it from another area. So, we really spread out the risk" (1A). In both Cases, the supply base change enables leadership to be cemented through improving the ability to acquire resources, not only during the disruption but also after. The Flexibility in location and the Agility to acquire resources builds resilience and leads to improved market position.

To complete securing supply, all of the Cases used Supplier Diversification, where increasing inventory resulted in Redundancy in supply availability. Having redundant suppliers and inventory secured the supply better than competitors that did not have the same Redundancy and therefore gained an opportunity to improve the distribution of resources.

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21

"We try to have multiple suppliers. If one of them has troubles, we want to buy more from another. And the other way around. I think that we have that for many of our products" (3A)

….. ". But we maintain quite high safety stocks. So it is actually not a problem for us" (3B).

This situation is a clear example of how Flexibility and Redundancy of the location adjustability of an inventory can realise an increase in new customers and thereby seize and build an opportunity to increase the market share.

4.2.3 Securing production

Control can be enhanced internally and externally. So far, the focus has been on securing the external environment to either increase the market share or cement leadership. The Cases also used resilience strategies to ensure their internal production was maintained, resulting in increased ability to distribute resources more efficiently than the competition and thereby improving their market share.

During COVID-19, to secure production several collaborative efforts were undertaken by the Cases to share supply chain capacity. For example, in Case 1 there was a 30% demand increase. Internal production had insufficient capacity to deal with the increased demand.

Several actions were taken in changing production locations, such as outsourcing capacity to an external party, which resulted in internal production not being overloaded. "Especially in the beginning. We really had problems with our capacity, because of the volume increase of 30%

we reached a bottleneck. That is why we started the cooperation with the small cutting companies" (1A). Case 4 did a similar thing but outsourced to a competitor “involve also some other party suppliers we had in the past so we contacted them if they can deliver the bags for us or if they can offer bags to us” (4A). In both Cases, again the Collaboration with the other external party enabled Flexibility to switch production location, which restated in cementing leadership by improving the market position due to enabling to enhance resource distribution.

The Flexibility in the Production Process in Case 2 enabled than to cement leadership due to their improved ability to distribute their resources. The adjustability of the production process in Case 2 enabled having lower dependency on supply chain partners which became an opportunity during COVID-19. "In contrast to them (competitors), we are differently organised.

We have all raw materials here, and we are almost not dependent on others for our production process other than the suppliers who make the raw materials" (2C). Due to the internal process adaptability, the market position improved for Case 2 during COVID-19. The competition had production issues due to outsourcing. Theoretically this might have led to Case 2 increasing

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21 market share but because of customer limitations in procedural ability did not occur. Therefore Case 2 was only able to improve its ability to distribute the resources better than the competition.

Due to COVID-19 regulatory changes, all the supply chain partners and competitors had to adapt. Therefore all the Cases implemented Crisis Teams and implement forecasting methods. Due to the supply chain-wide implications, there were some opportunities to strengthen market position by improving the ability to acquire and distribute resources. Speed and visibility were crucial in this respect. The companies that were able to implement changes faster than the competition cemented leadership in the market. An example of this situation is Case 1: "They determine what to do. The communication lines differ. The speed and the total number of measures we have to take was enormous. As I said, I have not counted, but we had to take 60-70 measures easily, in the past two or three weeks" (1C). At the time of the interviews it was unknown how the competition was able to implement their own changes. Therefore it is unclear if leadership was cemented.

Further production was secured in all Cases through Redundancy of production capacity whereby the capacity of the facilities enabled them to continue production in a disruption.

"Competitors contracted only two or three production sites and were not able to switch to the demand change. We have 15 productions sited worldwide and have 5 distributors where we buy products" (4A). Leadership was cemented because the Cases were still able to distribute resources compared to the competition.

4.2.4 Relationship building

The data shows that relationship building with the supply chain partners is the critical linking factor in the ability to increase the market share and to cement leadership. In most resilience practices, collaborative efforts with supply chain partners are a precondition for seizing opportunities. The data shows that collaborative efforts are aimed at product and service development and assisting in disruption mitigation. The Collaborative effort described in the following section did not always result in the ability to seize a short term market opportunity, but more building a foundation to increase market share and cement leadership later.

Collaborative efforts of Cases 1 and 2 to assist the supply chain during COVID-19. In Case 2, resources were used in trying to produce PPE for medical personnel, which was in short supply.

The main intention was not to gain profit but rather helping the community and to keep their

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21 employees working due to an almost full production stop. The Flexibility in resource allocation enabled then to help supply chain partners. By doing n

o tangible gain can be measured for the goodwill but a trustworthy reputation is developed which could benefit in building market leadership in the further. “We are not building masks for profit but more to help the community, we do not need to make a profit, but the costs need to be covered” (2C).

Another example is in Case 1 where part of the competition lost their customers. Case 1 outsourced some of their production to some smaller producers assisting them in staying financially afloat during COVID-19. “Then we also had a collaboration with a small cutter.

Who delivers in the hotel and catering industry, to small cafes and restaurants and bars. And of course, they did not have any work anymore. And for one and a half weeks they have been cutting four different vegetables for us” (1A). This was different than in Case 4 where outsourcing had no intention of helping the other producers. Their main aim was to keep their own happy. In this Case 1, as the same in Case 2, there was no need to help the community, there was no direct gain from Cases 1 and 2. However, the decision was made to assist, which might enable the ability to seize an opportunity later.

The data shows, in all Cases, that relationships are built through Information Sharing Actions such as educating customers, forecast sharing and disruption updates. The relationship which was forged or built during the disruption might enable the ability to seize an opportunity to increase market share and cement leadership at a later date. An example of the fruit of such efforts can be seen in Case 4 where they mentioned that the relationship with the customers progressed in a positive direction. “I think this relation changed to a positive in terms of customers. As we said at the beginning that communication increased, It had a positive effect on the coronavirus to strengthen relationships internally and externally” (4A). The opportunity seized by Case 4 was a stronger relationship with customers through collaborative efforts. This improved their market position and cemented leadership due to an ability to distribute resources more efficiently than competitors who had weaker relationships with their customers.

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5. Discussion

This research is, to the author’s knowledge, the first study that takes the perspective of supply chain resilience as a tool to build and seize opportunities; as mentioned in the Introduction, Winston Churchill once said: “Never let a good crisis go to waste”. Most resilience literature describes the aim as to achieve a better state after the disruption, though it has not been known how that is achieved. The concept has been known for some time as Rice & Sheffi, (2005) state companies that are more resilient can gain opportunities to increase their market share and cement leadership. Through the underlying mechanism, the way opportunities are built and seized was unknown. From the data in this research, it became clear that resilience strategies build and seize opportunities. In most instances, Collaboration enabled them to build opportunities, with Flexibility, Agility and Redundancy being the tools used to seize opportunities. Meaning that, to never waste the change a crisis creates, a company should invest in its resilience. Conversely the cost of doing nothing risks a company’s competitors taking advantage instead.

5.1 Collaboration antecedent of increasing market share and cementing leadership The findings indicate that Collaboration plays, an essential role in many instances in the ability to build and seize opportunities. Through collaborative efforts, information sharing and supply chain assistance enabled companies to seize opportunities, to increase market share, and cement leadership. The information sharing was used as input for other resilience strategy responses, such as product and service improvements. This aligns well with the findings of Scholten &

Schilder (2015) where they mention a positive relationship between collaborative efforts and the supply chain resilience of a company. Tukamuhabwa et al., (2015) mention that Collaboration can facilitate sharing resources (supply chain assistance). This research shows that resource sharing was used to aid other supply chain players in dealing with COVID-19.

The intent was not to gain directly, but rather to build better relationships where leadership can be cemented. Both collaborative information sharing and supply chain assistance have been described the resilience literature previously.

As a continuation of Scholten & Schilder, (2015) and Tukamuhabwa et al., (2015) research, this study implies that Collaboration not only improves resilience but is also instrumental in building and seizing opportunities. Therefore this study proposes the following:

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21 P1. Collaboration is an antecedent of building opportunities:

a. Information sharing through Collaboration created the input to response to seize and build opportunities

b. Supply chain assistance builds the relationship to improve the ability to acquire resources

5.2 The role of Flexibility, Agility and Redundancy in seizing opportunities

Collaboration is an antecedent to both building opportunities and resilience. Flexibility, Agility and Redundancy, the other resilience strategies, are governing mechanisms that enable the seizing of opportunities. For example, Collaboration with the end consumer enabled the acquisition of the information needed to improve the product and the services. The improvements were implemented through the Flexibility of the development process and the speed (Agility) in which the improvements were put back to the customer. This enabled the company to improve its market share and cemented leadership in the market. This finding is in line with Jüttner, U., & Maklan, (2011), who studied the financial crisis of 2008. Their finding was that Flexibility and Agility can prevent some of the negative aspects of a disruption such as revenue losses. In addition to Jüttner, U., & Maklan, (2011), this study suggests that not only revenue losses occur but that the market position and share can be improved.

The different results between this study and Jüttner, U., & Maklan, (2011) might be explained through the specific scope and main disruption of the respective studies. Whereby Jüttner, U.,

& Maklan, (2011) main focus was the relationships between supply chain capabilities, this study considers how opportunities are built through resilience.

The findings show that Collaborative efforts are not always possible nor required for seizing opportunities. Flexibility and Redundancy in production capability and locations adjustability enables demand to be secured. This in turn increases the market share due to a company’s internal ability to adjust to the disruption, thereby securing production and supply better than their competition. This resulted, for Case 4, in new customers who needed the supply they were not able to get from competitors. Therefore Flexibility and Redundancy enabled them to seize the opportunity to acquire new customers (increasing their market share). Johnson et al., (2013);

Rice Jr & Caniato, (2003) indicates that Redundancy is a duplication of capacity and adaptability of deploying resources to be able to continue production during a disruption, thereby also leading to Flexibility. This study confirms Johnson et al., (2013) and Rice Jr &

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21 Caniato, (2003) that Flexibility and Redundancy can maintain production during a disruption, though this study implies that it also can lead to an opportunity to increasing the market share and cement leadership. Therefore the role the resilience strategies play in building resilience is similar in the way they can be used in seizing opportunities by enabling companies to prepare and respond to the disruption in a way that enables them to take advantage of the situation.

Therefore this study proposes the following:

P2. Having a more favourable supply chain in terms of Flexibility, Agility and Redundancy enables/increases the likelihood of firms to be able to seize opportunities in times of disruptions 1. A higher level of responsiveness contributes to seizing opportunities and greater the

ability to react, the more likely it is that an opportunities will be seized.

2. The higher level of responsiveness contributes to seizing Opportunities Better the Redundancy the more likely to seize the opportunity

2. Literature Review

Abstract

Contents

1. Introduction

2. Literature Review

3. Methodology

4. Findings

Increasing market share Cementing leadership Increasing market

share/ Cementing leadership Securing demand Securing supply Securing production Relationship building Flexibility

Agility

Redundancy

4.1.1 Securing Demand

4.2.1 Securing supply

4.2.3 Securing production

4.2.4 Relationship building

5. Discussion