Influence of Supplier Management on Supply Chain Resilience – a Multiple Case Study

Faculty of Economics and Business Master Thesis: Supply Chain Management

Influence of Supplier Management on

Supply Chain Resilience – a Multiple

Case Study

Author:

Torben Bethke BSc.

(s1943782) – TorbenBethke@gmail.com – 0049 (0) 1635498076

Supervisor: Dr. Kirstin Scholten

Assistant Professor of the Department of Operations

Second Supervisor: Dr. Jan de Vries

Bethke, T. (2014)

Preface

About six months ago, I started working on my master thesis project which turned out a striving battle against the multilayered dimension of the thesis topic. Countless hours have passed that will be mostly untraceable to the readers eye, but the struggle and battle with one’s self to strive for the best, carried a great burden. This article is a small capture of the endless discussions with my fellow colleague, dissolute explanations to friends, and the endeavor of the project.

Acknowledgements

Bethke, T. (2014)

Abstract

Purpose. This paper investigates how the role of suppliers affects supply chain resilience. The role of suppliers is determined by using the classical supplier management portfolio approach by Kraljic (1983) to distinguish between four cases in the processing industry. Supply chain resilience is understood as the combination of two capabilities robust and agility. The purpose is to identify how the supplier management affects the capabilities in supply chains.

Design / Methodology / Approach. A multiple case study in the process industry is conducted by interviewing several purchase/ supply chain managers. Interviews and secondary data are used to distinguish cases into three different types of supplier. All cases are analyzed following a multi-step coding procedure to identify resilience capabilities and compare them to other supply chains. Findings. The empirical data shows differences of resilience capabilities in supply chains to be either more robust or agile which shows that capabilities are not equally important for all cases. Therefore, supplier management can be said to influence the resilience of supply chains. The findings are used to develop a two-by-two matrix with the dimensions supply risk (horizontal) and resilience (vertical) as axes.

Practical Implications. The developed matrix provides linkage between purchasing managers’ supplier management and supply chain resilience capabilities. It also provides insights into upstream supply chain vulnerabilities and potential risks factors for a company. Finally, this papers implication is the development of simple two-by-two matrix that provides purchasers with a simple tool to understand how supplier management affects resilience in supply chains.

Originality / Value. This paper contributes to an advanced understanding how internal supplier management affects the resilience in supply chains. Furthermore, it is the first paper that provides insights into supply chain vulnerabilities and resilience from a buyer perspective.

Key Words:

Article Classification:

Bethke, T. (2014) Table of Content 1. Introduction ... 5 2. Theoretical background ... 6 2.1 Concept of Resilience ... 6 2.2 Purchasing ... 8 3. Methodology ... 11

3.1 Case Selection and Setting ... 12

3.2 Data Collection ... 13

3.3 Data Analysis ... 15

4. Findings ... 17

4.1 High Supply Risk ... 17

4.2 Low Supply Risk ... 18

5. Discussion ... 19

6. Conclusion, Limitations & Recommendations ... 21

7. Bibliography ... 24 8. Appendix ... 29 8.1 Data Triangulation ... 29 8.2 Interview Protocol ... 29 8.3 Results ... 31

Table of Figures

Figure 2 – Conceptual framework ... 11

Figure 3 – Identification of Cases in the Kraljic Matrix (1983) ... 13

Figure 4 - Methodology ... 17

Figure 5 - Matrix ... 19

Figure 6 - Cube model (based on Kraljic, 1983) ... 21

Tables

Table 2 - Secondary Data ... 15

Table 3 - Role of Supplier and Type of Disruption ... 16

Table 4 - Representative Data Coding Supplier Role ... 31

Bethke, T. (2014)

1. Introduction

More than 70% of companies experience at least one supply chain disruption per year (Business Continuity Institute, 2010; 2011; 2012). The effect of such interruptions on the normal flow of goods, material and/ or services (Craighead, Blackhurst, Rungtusanatham, & Handfield. 2007) is known to decrease stock prices by 33% - 40% and increase equity risk value compared to competitors over a three year period (Hendricks and Singhal, 2005). Hence, it becomes increasingly important to manage supply chains and to decrease the frequency and negative impact of disruptions in order to remain competitive. It is necesseary for companies to develop capabilities that help companies to overcome unforeseen disruptions in supply chains. Resilience concept focuses on supply chains’s adataptive capabilites to prepare, respond, and recover from a disruption (Ponormarov & Holcomb, 2009). Resilient supply chains are constructed by determining sources of vulnerabilities (Peck, 2005), and capabilities to survive disruptions (Wieland & Wallenburg, 2012; Jüttner & Maklan, 2011). Hence, matching capabilities and vulnerabilities constructs resilience in supply chains (Petitt, Fiksel, & Croxton, 2010). A function influencing upstream supply chain vulnerability is purchasing (Monczka, Handfield, Giunipero, & Patterson, 2008). While, purchasing and supply managers are responsible for the selection of partners, sourcing strategies and allocation of resources (Monczka et al., 2008), little research has been conducted on how such strategies can contribute to matching capabilities and vulnerabilities and ultimately supply chain resilience.

One approach to distinguish suppliers is a portfolio approach of which can be traced back to the Kraljic matrix (1983) which embodies the classical and most accepted theory (Gelderman & van Weele, 2005). The theory proposes to distinguishing suppliers on two dimensions, supply risks and impact on profitability (Kraljic, 1983). Its main premise is that by identifying and distinguishing between the roles of suppliers, purchasing performance will increase by adapting management practices to each type of supplier (Pagell, Wu, & Wasserman, 2010). However, differentiation of suppliers implies a variation in the management of relations and thus the allocation of resources (Kraljic, 1983). Hence, it affects building and maintaining the capabilities in supply chains. Based on the classical Kraljic (1983) approach, this paper explores how the role of suppliers, affects the resilience of supply chains. A multiple case study methodology is employed to investigate the effect of supplier categorization on resilience.

In answering the research questions this thesis contributes to the field of supply chain resilience in three important ways. First of all, to develop a purchasing resilience portfolio clearly establishes the link between supplier selection and supply chain resilience. Secondly, by considering the impact of upstream vulnerabilities, this thesis gives insights into how to build resilience in the upstream supply chain of a company. Thirdly, managerial implications are to provide knowledge about how supplier management affects capabilities in supply chains, helps to effectively allocate resources and to prepare supply chains better to handle disruptions.

Bethke, T. (2014)

design, case selection, data collection, and the multi-step coding procedure on resilience capabilities in the supply chains. Part four presents the findings in a two-by-two matrix and the implications to resilience are discussed in the subsequent part. Finally, part six concludes on the main research objective and its theoretical as well as managerial implications, the papers limitations, and nominates direction for future research.

2. Theoretical background

2.1 Concept of Resilience

Disruptions in supply chains are defined as “unforeseen events that interfere with the normal flow of materials and/or goods within the supply chain” (Craighead, et al., 2007, p. 132) and therefore significantly threatens normal business operations (Wagner & Bode, 2008, p. 309). Disruptions originate from several sources exogenous or endogenous to the supply chain (Trkman & McCormack, 2009), and can originate from the demand side, supply side, or be catastrophic (Wagner & Bode, 2006). Thus, disruptions are beyond the reach of a single company and no supply chain is invulnerable to disruptions no matter how well it is managed (Peck, 2005). Risks of disruption arise from vulnerabilities in supply chains (Wagner & Bode, 2006). Vulnerabilities are understood as supply chain characteristics that are directly linked to a given supply chain disruption (Wagner & Bode, 2006) and supply chain susceptibility to the harm of an event is of significant relevance (Wagner & Bode, 2009, p. 278). These vulnerabilities in supply chains can be seen as atomistic (part of the supply chain) or holistic (across the entire supply chain) (Svensson, 2000). Consequently, it can be derived that decreasing characteristics that make a supply chain susceptible for disruptions, decreases the severity of a disruptions impact (Wieland & Wallenburg, 2012). However, it is not possible to foresee and prepare for all possible cases (Peck, 2005). Instead, capabilities that make a supply chains resilient are necessary to overcome disruptions (Wieland & Wallenburg, 2012).

Bethke, T. (2014)

(2012; 2013), Figure 1. Their definition into proactive (robustness) and reactive (agility) measures makes it possible to distinguish chronological how supplier management affects the resilience capabilities in supply chains.

Figure 1 - Capabilities to Form Resilience (Wieland & Wallenburg, 2013)

2.1.1 Robustness

Literature on robustness is extending quickly and there exists a large consensus on factors that determine the robustness of supply chains. Robustness literature key terminology is the focus on the ability of a supply chain to perform during disturbance (Klibi, Martel, & Guitouni, 2010; Vlajic et al., 2012; Wieland & Wallenburg, 2012). A robust supply chain remains effective for all potential situations (Klibi et al, 2010), therefore does not need to alter its state and can continue to operate within a desired performance range (Vlajic et al., 2012, Wieland & Wallenburg, 2012). It is further specified that supply chain robustness is determined by the degree a supply chain shows an acceptable performance on key performance indicators before and after unexpected events that cause disturbances (Vlajic et al., 2012, p. 177). In addition, it can determine the recovery of a system as it resistance decreases the gap from a performance decrease to the desired recovery level. The definitions of robustness generally state that the supply chains remains in its initial state (Nair & Vidal, 2011; Wieland & Wallenburg, 2012) but uncertainty and unforeseen disruptions can require that a supply chain is able to react quickly (Christopher & Peck, 2004). Thus, a supply chain needs not only to be robust but also needs to incorporate agility to be resilient (Wieland & Wallenburg, 2013).

2.1.2 Agility

Agility is understood as a driving capability in a supply chain to respond to disruptions (Wieland & Wallenburg, 2012, Jüttner & Maklan, 2011; Tang & Tomlin, 2008). It determines a supply chain’s capability to respond or react rapidly to a disruption (Swafford, Gosh, & Murthy, 2006). Literature on agility identifies factors that determine the agility of a supply chain and distinguish agility into several underlying concepts including visibility, velocity (Christopher & Peck 2004), and flexibility

Robustness Agility

Resilience of Supply Chains

Bethke, T. (2014)

(Tang & Tomlin, 2008; Swafford et al., 2006). Agility in supply chains is necessary when the supply chain needs to react rapidly to unforeseen changes (Christopher & Peck, 2004) and supply chain robustness is no longer sufficient to survive a disruption. A slow reacting supply chain can result to substantial financial losses and loss of competitiveness (Norrman & Jansson, 2004). The focus in adjusting the supply chain to changes and is not focused how effectively it is achieved but that it modifies to the new circumstances (Swafford et al., 2006). Therefore, the capability that makes supply chains react quickly to unforeseen changes is necessary to build resilient supply chains (Wieland & Wallenburg, 2013).

2.2 Purchasing

Purchasing managers are responsible for the procurement of supplies and services. They are responsible for tasks that include availability, coordination, and an efficient flow of supplies (Kern, Moser, Sundaresan, & Hartmann, 2011). Purchasers are responsible for choosing strategies, selecting suppliers, and allocation of resources (Monczka, et al., 2008). Therefore, they generally have a high degree of supplier contact on the upstream side of the supply chain (Zsidisin, Ellram, & Ogden, 2003) and thus influence the vulnerability (Monczka et al., 2008). Moreover, suppliers become more and more important for the value creation of companies (Dubois & Pedersen, 2002) and supply chains are lengthening that stretch around the world vulnerable to unpredictable and a changing world (Peck & Jüttner, 2002). Purchasing can be responsible for up to 80% of a company’s total costs (Ramsay & Croom, 2008) and thus purchasers seek strategies to optimze their resources allocation. One way to increase the purchasing performance is to adapt a supplier management approach such as supplier portfolios. Based on the supplier management approach, purchasers distinguish between suppliers and decide on the allocation of resources which determine the capabilites in suppply chains.

2.2.1 Supplier Portfolios

Supplier portfolios suggest differentiating suppliers and optimizing the way suppliers are management (Dubois & Pedersen, 2002). To adapt a different management strategies to suppliers allows to optimal allocate limited resources and it will increase purchasing performance (Pagell, Wu, & Wasserman, 2010). The Kraljic matrix (1983) is the classical and most used portfolio approach in purchasing (Gelderman & van Weele, 2005). Other authors developed based on the Kraljic matrix (1983) adapted versions (e.g. Oldsen & Ellram 1997; Bensaou, 1999, Gelderman & van Weele, 2003) and use it to explore its applicability to more recent purchasing themes such as sustainability (e.g. Pagell, Wu, & Wasserman, 2010). Moreover, the Kraljic matrix (1983) is also used to compare supplier portfolios to other theories (Dubois & Pedersen, 2002), such as the network approach (Snehota & Hakansson, 1995). Thus, the classical Kraljic matrix (1983) is still relevant in the field of purchasing.

Bethke, T. (2014)

there are many alternative suppliers for others (Kraljic, 1983). Thus, a supply chain which involves a supplier with limited or no alternatives should have several measures in place to avoid disruptions. Other scholars continued to develop the Kraljic (1983) theory and proposed several strategies on how to determine the measures of the dimensions. Gelderman & van Weele (2003) suggest using cross-functional teams to develop appropriate measures, while Kraljic (1983) names several alternatives to determine the profit impact of a supplier. A low supply risks is implied when supplies are standardized and are available from other suppliers in the market so that no dependency arises between buyer and supplier. Next, each quadrant of the Kraljic (1983) matrix is introduced and related to the capabilities of resilience to provide an understanding of the discrepancies between risk avoiding strategies and resilience.

Noncritical items have a low financial impact and low supply risk. Suppliers offer standardized products, which vastly available from numerous sources and should be sourced from several suppliers (Kraljic, 1983). Purchases are evaluated on prices and reliability of suppliers to perform to the agreed terms (Kraljic, 1983). This implies a decentralized rather than centralized purchasing approach (Gelderman & Semeijn, 2006) and thus product can be obtained from several sources. Multiple sourcing is a strategy to strengthen supply chains robustness (Norrman & Jansson, 2004) as the diversification and easy substitution of the product can decrease risk of supply default (Costantino & Pellegrino, 2010; Tang, 2006). The high degree of standardization of products and availability in the market allows for an easy substitution of suppliers at minimal costs (Kraljic, 1983). However, an easy substitution strategy would decrease any integration to a minimum and minimize employment of ICT for quick identification of disruptions in the supply chain (Pereira, 2009). Contrary, IT employment could significantly decrease costs and improve procurement performance (Gunasekaran & Ngai, 2004). In addition, IT can be beneficial to make a disruption visible (Blackman, 2013) and increase the speed of communication among supply chain members about a disruption (Pereira, 2009). Purchasing is responsible for an efficient ordering (Kraljic, 1983) using transaction costs economics (Allen, 1991). Yet, multiple suppliers increase the complexity in managing relations and determining the optimal number of suppliers (Sarkar & Mohapatra, 2009), which dissipates additional purchasing resources. Moreover, purchasing managers scatter resources over several relations and thus fragments capabilities to identify and deal with disruptions.

Bethke, T. (2014)

contingency plans and employment of ICT to detect disruptions (Pereira, 2009). The focus on ordering efficient and effective would minimize inventories which can protect a supply chain functioning from disruptions (Chopra, & Sodhi, 2012). Another way to decrease the costs would be for the supplier to adapt the ICT of the stronger party and increase the visibility of disruptions (Pereira, 2009). Thus, it is constraint to provide agility in the supply chain to form resilience.

Bottleneck items have a low financial impact but have a high supply risk. They are sourced from (often) just one available supplier and companies need to mitigate risks by contracting and optimizing inventories (Kraljic, 1983). This can mean to have additional inventory and other backup plans in case for a shortage in supply (Kraljic, 1983). The likelihood of a monopoly as single supplier increases dependency for the focal company with no alternative available (Costantino & Pellegrino, 2010; Wang, Gilland, & Tomlin, 2010), and therefore the risks of supply default and disruptions is more severe with no alternative available (Norrman & Jansson, 2004). Kraljic (1983) proposes inventory buffers and backup plans to deal with these risks. However, inventory buffers can increase vulnerabilities due to wrong forecasts and holding inventory (Chopra & Sohdi, 2012), while improving the robustness of supply chains to withstand disruptions (Tang, 2006). The limited availability of suppliers in the market makes multiple sourcing strategies difficult which otherwise could offset a disruption from one supplier difficult. Hence limits strategies to build robustness in supply chains (Wieland & Wallenburg, 2012).

Strategic items have a high financial impact and high supply risk. These supplies are significant to a company’s profitability and are sourced from a small number of suppliers (Kraljic, 1983). Companies should seek close relationships that focus on long-term securing of the supplies and engage in contingency planning, and gaining control over supplier (Kraljic, 1983). Question to make or buy the item may be a concern for long-term strategic plans. Purchasing management should allocate most resources to these relations as they have both, high supply risk and high impact on profitability (Kraljic, 1983). Nevertheless, this quadrant should receive most attention by purchasers to identify risks and contingency plans should be in place (Kraljic, 1983). Limitations in the number of suppliers ascend vulnerabilities and intensive relations are costly to develop and maintain (Bensaou, 1999), therefore raising more sources for vulnerabilities in supply chains. A disruption in this supply chain would strongly influence on finances according to Kraljic (1983) and limitation in alternatives sources decreases robustness which would be offset by larger inventories (Tang, 2006). Yet, Kraljic (1983) suggest developing a long-term relation to secure supplies. This could lead to supplier and buyer investments (Bensaou, 1999) or ICT integration that could increase the visibility of disruptions (Pereira, 2009).

Bethke, T. (2014)

This paper’s conceptual framework is a two by two matrix with supply risks (low, high) on the horizontal axis and resilience (robust, agile) on the vertical axis, Figure 2. The understanding of the framework is that depending on the supply risks, supply chains develop more robust or agile capabilities and therefore help a company to overcome disruptions. A low number of suppliers would mean that a company is developing strategies to secure supplies from suppliers either by preventive measures that strengthen the supply chain or is able to react quickly to a disruption. A high number of suppliers would mean that the company uses strategies to decrease dependency on single suppliers and spread the risk of supply shortage. The difference between low and high supply risks will eventually impact the resilience capabilities to more robust or agile supply chains depending on the company’s supplier management. Supply risk is the dimension on which supply chains are distinguished to understand the balance of resilience capabilities.

3. Methodology

Resilience in a supply chain context still lacks advanced understanding of the interplay of capabilities and requires further empirical research (Blackhurst et al., 2011). This research is explorative as it intends to identify resilience in multiple supply chains based on suppliers’ management using a case study methodology.

A case study methodology is most suitable to apply for three reasons: (1) the objective focuses on “how” and “why” questions, (2) researchers have no control over events, and (3) the focus is on a contemporary phenomenon within a real-life context (Yin, 2009, p. 13). All three reasons are present within the research. The research question is to identify how the role of the supplier affects the resilience in the supply chain. Second, the research focuses on disruptions in the past and last, it is subject to an existing management problem of company Alpha.

Bethke, T. (2014)

Employing multiple-case studies provides researchers with knowledge of resilience in several, chance to test, and locally ground theory than a single case study (Miles & Huberman, 1994). Thus, it yields results that are more generalizable than a single case (Eisenhardt & Graebner, 2007). As this paper aims at identifying the relation between the role of suppliers and its effect on the resilience of supply chains, it can be understood as X causes Y research objective (Miles & Huberman, 1994, p. 24). Hence, the relationship between the role of suppliers and the resilience in the supply chain is empirically investigated by an inductive explorative multiple case study. The unit of analysis in this research is the supply chain, which is investigated in four cases with company Alpha as buyer and represents multiple embedded cases (Yin, 2009, p. 46). The case study research design is founded on the guidelines proposed by Yin (2009), and Karlsson (2011), which require constant adjustments in the research as it is a “linear but iterative process” (Yin, 2009, p. 1). Company Alpha was selected as main partner because it employs a proactive management to its suppliers, is identified by experts as suitable to conduct research, and is strongly interested in academic research on its maturity as business. Furthermore, processing companies, like company Alpha, rely on the physical availability of supplies and therefore a shortage can result in visible downtime and delay, which often has severe impact on the company’s production and profitability. Thus, it provides a good base to identify and understand action and reaction. Gaining access to confidential data of companies is a main hurdle any researcher faces and often results in anonymity of the cases (Yin, 2009). Even so, not recommended but not avoidable (Yin, 2009) this report anonymizes involved companies and data to provide an understanding of the situation to the reader, while protecting confidentiality of businesses. The focal company, that is the main supporter of the project, is labelled company Alpha.

3.1 Case Selection and Setting

Company Alpha is a joint venture of two global businesses in the processing industry that has been operating for more than 60 years employing several thousand employees. The company processes raw materials into a variety of products which are offered national and international to business and end customers. The business complexity in operations, supply chains and physical requirements of products can cause unexpected disruptions. Supplier management is very important for company Alpha as it relies heavily on its suppliers to ensure quality and safety in processes and procedures.

To gain the status as supplier for company Alpha, all suppliers have to follow a selective procedure that test the manufacturer processes. After the certification the supplier can be used by the joint venture and other companies of the owner companies. The aim of this procedure is to capture the smallest total costs of ownership for company Alpha and assure product quality at the manufacturer. Actors in the case supply chains vary in the size of employees from approximately 100 to several 100,000, and are operating national, international, and global.

Bethke, T. (2014)

1. The first supply chain case involves company Alpha, the first tier supplier Tools&Co, and a second tier supplier (manufacturer).

2. The second supply chain case involves a first tier supplier (Equip. Ltd.) to company Alpha including a huge, highly customized product which was assembled at the premises of company Alpha.

3. The third supply chain case involves an automated and electronically supervised supply chain of company White. The supplier of electronic equipment is Elect. Ltd.

4. The fourth supply chain case involves a regular maintenance contract of products which requires the shipment of substitute products and service provider.

Figure 3 – Identification of Cases in the Kraljic Matrix (1983)

* see part 3.4 for analysis

3.2 Data Collection

To accomplish data triangulation (Voss, Tsikriktsis, & Frohlich, 2002)(appendix 8.1), data collection used the following techniques: (1) five in-depth interviews with managers, (2) observations during informal meetings, (3) consultation with an external expert, and (4) a review of press releases, internal report, and company websites. The development of an interview protocol, case study protocol, recording of interviews, and multiple researchers collecting data, strengthened the reliability of the research (Yin, 2009).

Bethke, T. (2014)

The project is supported by top management of company Alpha which is of value to gain interviewees’ collaboration, resources, and open doors (Voss et al., 2002). Interviewees were chosen after counseling with managers in a snowball sampling. It resulted in the selection of four interviewees with similar management responsibilities but diversity in supply chains, Table 1. Three interviews were held face to face at the premises of the interviewees and two interviews were conducted via phone due to availability and distance issues. An interview protocol (appendix 8.2) was developed in collaboration with a second researcher and was reviewed by an academic expert. It is based on the literature review and served to structure the interviews. Interviews were individual and semi-structured (varying between 30 – 90 minutes), and conducted during the last quarter of 2013 and beginning of 2014. Researcher triangulation was achieved by having two researchers conducted the interviews with changing roles for each interview. One researcher was responsible for addressing questions and the other researcher was responsible for taking notes on the content and context (Eisenhardt, 1989). Feedback and discussions between the researchers after each interview was iterative to improve the research structure and probing procedure. All interviews were recorded, transcribed verbatim within 24 hours and emailed to the interviewee for verification (Voss et al. 2002). If there were any unclear answers, interviewees were contact via email to clarify content. Moreover, interviewees were informed beforehand and addressed again at the beginning of each interview of confidentiality treatment of the information, which is documented in a signed form of consent.

During the interviews, the respondents were asked to recall an example of an unexpected disruption in a supply chain and to describe their organization’s behavior, the interviewees’ role, and other involved parties such as suppliers. Probing was used to receive detailed responds on specific aspects directly linked the supply chains members actions and questions about general issues were directed to the interviewee to receive information about the interviewee and the organization. Respondents were asked to state the actual events rather than the interviewees’ opinion about events.

Bethke, T. (2014)

Table 1 – Overview of Interviews Case Company Role in

Supply Chain Function of the Interviewees Supply Chain Involvement Structure & Type Length

1 Alpha Tools&Co Buyer 1st _{- tier} supplier Contract Holder Contract Manager > 4 > 7 Semi-structured Semi-structured (via phone) 90 minutes 30 minutes

2 Alpha Buyer Contract

Manager > 1 structured Semi-(via phone)

45 minutes

3 Alpha Buyer Contract Holder > 3

Semi-structured 90 minutes

4 Alpha Buyer Contract

Manager

> 1

Semi-structured 60 minutes

Table 2 - Secondary Data

Document Name Type of Document Year

1 2 3 4 5

Disruption Report for Government Event Publication

Government Publication Project Publication

Supplier Selection Procedure

Report Documentation Report Presentation Slides 2012 2013 2013 2009 2013

3.3 Data Analysis

The data analysis started with a within-case analysis and was followed by a cross case analysis to compare the findings, generalize and gain a deeper understanding of the within-case findings (Huberman & Miles, 1994). Data was analyzed based on the steps outlined by Miles and Huberman (1994) and supported during the coding and re-coding of data by the software Atlas.ti (Atlas.ti GmbH).

Bethke, T. (2014)

An internet search for the product contributed as secondary source as the knowledge of managers does not necessarily yield exact knowledge about the actual market. In one case an expert was consulted to provide more insights to the market, Table 3.

Table 3 - Role of Supplier and Type of Disruption Case Stated number of

supplier Secondary data profitability Impact on Type of supplier according to Kraljic (1983)

1 4 - 5 => 5* High Leverage

2 =< 3 2 - 3 High Strategic

3 2 - 3 3 High Strategic

4 1 - 2 X Low Bottleneck

X= no additional data identified *Case 1 includes the knowledge of an external expert

Bethke, T. (2014) Figure 4 - Methodology

4. Findings

The findings of the analysis are presented below to describe the four quadrants of the conceptual framework. Supply chains need to be robust and agile but as the conceptual framework proposed, the capabilities are not equally important for all cases. As a result the findings of the four cases are presented in the associated quadrant of the new matrix. The quadrants are named (1) dependent, (2) tailored, (3) autonomous, and (4) variable.

4.1 High Supply Risk

Bethke, T. (2014) 4.2.2 Tailored

The supply chain faces a high supply risks and tends to be more agile. A high supply risks due to the product specifications, operational importance, and financial magnitude developed a relationship between members in the supply chain. The company is willing to invest in the relationship and involvement between the parties forms routines in contact personal and cross functional supply chain teams. The frequent exchange of information and insights to the buyers/ supplier work increases the visibility of events in the supply chain. Visibility and direct links between companies improves the speed of the supplier to react and is important to restore the supply chain. The cross supply chain teams and communication is necessary due to the specifications required by the buyer side and is customized to meet the needs of the buyer and restore the supply chain.

4.2 Low Supply Risk

This quadrant is low in supply risks and tends to be more robust. A lower supply risks implies that the product can be sourced from several suppliers and that the product is procured to achieve lower costs. It is a product that is more frequently used by the buyer and products are used for several purposes which is possible due to standardization in product specifications. Company Alpha kept products in its inventory from a previous order. When the disruption in the supply chain occurred, the company made the problem visible to its suppliers by standardized procedure. They engaged cross-functional teams to resolve the disruption so that all parties can be satisfied. However, the long restoration of the supply chain between manufacturer and buyer is shortened by the use of preexisting stock of the company. Therefore, the company is working on restoring the supply chain, while it can mitigate the impact of the disruption for the company. As one interviewee states: “we just found replacement for the product in our own stock.” It is independent from the supply chain to be restored, but the company is interested to restore the original supply chain and add the products to its stock for the future.

4.2.2 Variable

The fourth quadrant is low in supply risks and a dominant agility capability. Unfortunately, no supply chain case was available and therefore the findings can be only derived from the other cases but remains mostly guess work. The other low supply risks quadrant is more robust than agile as it uses inventory to overcome the shortage due to the disruption. This quadrant would not have such robustness but the agility is more present. It does not exclude the robustness factors but because of circumstances this is not enough and the supply chain needs to adapt to changes. But the high degree of standardization and alternative in the market would presume that the company is able to react by resembling the supply chain to other suppliers quickly and overcome the impact of the disruption.

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risks are of importance on how a company prepares, responds, and recovers from unforeseen disruptions.

Figure 5 - Matrix

5. Discussion

Though resilient supply chains require both a proactive and reactive part, it appears that each supply chains benefits differently from capabilities based on the supply chain characteristics. The findings in the previous section illustrate that supply chains resilience has no blueprint and requires thoughtful and skillful managers that understand the characteristics of each supply chain.

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several items only one supplier has the required certification. The company develops its own bottleneck for purchasing managers with barrier to source from alternative suppliers in the market. Inventory is an effective and often used strategy to prepare for disruptions (Vlajic et al. 2012; Chopra & Sodhi, 2012). But with increasing financial impact and customization it becomes too expensive to rely on a single robustness strategy and thus require another way how a supply chain can overcome a disruption. In this paper the adaptability of products that could be used as substitute during the disruption in the supply chain is related to postponing (Boone, Craighead, & Hanna, 2007). However, it requires a certain degree of standardization of the products and costs should not erode the benefits of supply chain capabilities (Pettit et al. 2010). Moreover, to hold inventory a company needs to anticipate a certain demand and can develop measures such as safety stocks to prepare against disruptions in the supply chain (Blackhurst et al., 2011). But, the cases in this paper varied in their frequently and sometimes demand occurred only on new projects with specific defaults. Therefore, it is very difficult to forecast demand and the high costs hinder to purchase bulks (Tang, 2006). Yet, it is observed that the general standardization of product size and range is contributing to find alternative supplies in case of shortcomings. In the other cases this strategy is not applicable due to the type of disruption, e.g. the disruption occurs after the warehouse, or simply because the supply chain is of such physical as well as financial size that it is not possible. These cases incorporate a higher degree of collaboration and communication with the supplier and thus develop cross supply chain teams and cross functional teams that allow visualizing quickly the disruption among supply chain members. Visibility of disruptions to supply chain members is very important to get the suppliers involved to develop solutions. Increasing the visibility of disruptions to suppliers increases the speed the supply chain reacts to changes (Wieland & Wallenburg, 2013). It raises the knowledge about each other and implicitly prepares the supply chain to respond quicker with increasing visibility of the disruption (Blackman, 2013).

Resilience is the supply chain capability to prepare, respond, and recover (Ponormarov & Holcomb, 2009). The supply chain cases of this paper different in the last of the three resilience phases. It was very striking that that the cases with a high supply risks showed that they did not simply return to the normal state of the supply chain but aimed at improving the items and communication. As a result of the disruptions, the supply chain members develop and improve the supply chain or the items. A long-term focus of the business relations (Kraljic, 1983) could be the cause for this. It did end in improvements of the supply chain or its products, while the low risks supply chain only aimed at restoring the supply chain until the products are sufficient. The short-term interaction and variance of ordering supplies next time with a different supplier prevent that supply chain members learn from the disruption as supply chain.

Bethke, T. (2014)

capabilities in the supply chains, Figure 6. It takes a different approach than other approaches of developed resilience portfolios. Pettit et al. (2010; 2013) propose a matrix that with an increase of capabilities and decrease of vulnerabilities, while Blackhurst et al. (2011) suggest another resilience matrix based on their resource based view. Both researches point to one direction or quadrant in which resilience is possible, which is with high capabilities (Pettit et al. 2010) or high enhancers (Blackhurst et al., 2011). From their perspective, the matrix of this paper would distinguish further the resilient quadrant.

Figure 6 - Cube model (based on Kraljic, 1983)

6. Conclusion, Limitations & Recommendations

Bethke, T. (2014)

To answer the research question, supplier management does affect the resilience in supply chains. The allocation of resources and the management of suppliers can result in stronger manifestation of robustness or agility capabilities in supply chains that help to survive disruptions.

This research theoretical contribution is to provide insights how the supplier selection affects the resilience in supply chains. It also adds to the literature stream on vulnerabilities (e.g. Peck, 2005; Wagner & Bode, 2006) by giving comprehensions to the impact of upstream vulnerabilities for a buyer company. Moreover, resilience literature addresses the proactive management of suppliers in supply chains (Wieland & Wallenburg, 2013), which this research contributes to by researching how proactive management of suppliers affects resilience in supply chains.

The managerial implication is that by providing a simple matrix it offers managers insights on how a classical portfolio approaches for supplier management impacts capabilities in companies supply chains. Thus, it provides insights to understand for variety of supply chains which capabilities are more significant. To understand the implications of a company’s supplier management on supply chain capabilities increases the awareness for vulnerabilities and can help to survive a supply chain disruption. To survive a supply chain disruption can have a strong impact for the competitiveness of a company (Norrman & Jansson, 2004) and thus should be a strategic objective (Sheffi & Rice, 2005).

Another contribution of this research is that it shows how the purchasing managers directly influence upstream supply chains vulnerability and thus the risks of disruptions. Moreover, the cases show how an active management of suppliers can reduce the impact of disruptions and improve business practices. Therefore it provides insights on purchasing functions role of supplier management and its impact on supply chain resilience which has a wider view on the magnitude and implications of disruptions. The cases provided insights on how important it is to have specific strategies to procure different supplies and therefore increase the resilience. Furthermore, the research helps to reduce the gap in literature to identify the right strategies for different supply chains (Blackhurst et al. 2011).

The discussion section of this paper proposes a cube model (Figure 6) that adds a third dimension to the Kraljic matrix (1983) providing an increased understanding how resilience can be influenced by different suppliers. Of course, further research is necessary to confirm the findings and replicate the paper findings to other companies and industries.

Bethke, T. (2014)

This paper has several limitations and provides ground for further research. First of all, the cases are applied only to three quadrants so that research should focus developing a holistic multiple case study that covers all quadrants and distinguishes the implications. This should be repeated in the process industry to test this paper’s findings and generalized to a cross industry research to support the universal applicability of supply chain resilience (Blackhurst et al., 2011). It would be interesting to investigate how resilience applies in service supply chains (Ellram, Tate, & Billington, 2004). Second, the literature of resilience still requires more empirical data as well as statistical analyses to strengthen the understanding of resilience capabilities. Finally, this research provides empirical data about how supply chain resilience is different from supply chain to supply chain. Therefore, it provides a first step to a more sophisticated approach that could evaluate the performance of supply chain resilience.

Bethke, T. (2014)

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8. Appendix

8.1 Data Triangulation

Overview of Validity and Reliability during the research project (based on Yin, 2009)

Type Method Research Phase

Construct validity Multiple interviews Review by expert

Introduction into company and purchasing context

Expert support for identification of cases

Expert review of interviewees

Data collection

Research Design/Data collection

Sample selection

Data collection, Data analysis Internal validity Two researchers

Interview guidance by experienced research

Data collection Data collection External validity Single case studies

used for replication logic,

Research Design/ Analysis Reliability Case study protocols,

Interview protocol & transcripts Data collection Data collection

8.2 Interview Protocol

Supply Chain Resilience Project

Bethke, T. (2014)

supply chain integration on supply chain resilience and how purchasing, in particular relationships, can contribute to supply chain resilience. To enable the Research Team to gain insights we are asking you to engage in a short interview (about 60 minutes –questions we are interested in are listed below). We guarantee anonymity of statements in the report and that data will only be used by the researchers and not forwarded to any other persons or organization.In return for your support we would be delighted to provide your company with both customized initial feedback and a detailed report on our overall findings on completion of the project. In addition, we would be pleased to invite you to a presentation and workshop on our findings at RUG or your company. We are very grateful for your consideration and hope that you find our project interesting and worthwhile. If you have any questions in relation to this document or the project, please do not hesitate to contact us.

Interview Questions

1. Could you please describe your background and your position/role at the company? 2. Please describe the supply chain which encountered an unexpected disruption?

 Structure

 Information flow

 Relationships with suppliers

3. Please describe in detail a disruption in the previous mentioned supply chain?  When/How did you find out?

 Impact of the disruption  Supplier interaction

 Programs and contingency plans in place 4. How did you respond to the disruption?

 Specific actions

 Involvement of different departments

 Supplier involvement in managing disruption

Bethke, T. (2014)  Length from discovery of disruption till recovery  Changes in (infra-)structure, relationships

6. How is your supply chain prepared for future disruptions?  Involvement of supply chain members

 Contingency plans (outreach in the supply chain)

 What changed in comparison to pre-disruption preparation

8.3 Results

Table 4 - Representative Data Coding Supplier Role

Dimension Category Codes Representative Data

Suppl

y Risk

Alternative suppliers

(Anything that is stated about the availability of alternative suppliers during the procurement

process)

Standardization of products (Anything that describes the products characteristics and degree of customization)

“The next time we would go to one of the other one.” (Interviewee 3)

“But on this level probably 4 or 5.” (Interviewee 4) “so we need to go to 3 manufacturers to get a quote” (Interviewee 1)

“They are part of a tender.” (Interviewee 2) “Was not fully under specification but they got a concession to the specification so they could actually use it” (Interviewee 1)

“The materials were not compliant to the specification” (Interviewee 2)

“The standard company Alpha uses in the globe contract don’t have that specific type of class/ ratings” (Interviewee 1) P ro fit ab ilit y I mpac t Costs of supplies

(Anything that determines the costs of the products)

Disruption consequences (Anything that can be related to

the consequences of the disruption, including financial or

media aspects)

You have to think of billions (Interviewee 3)

“And this piece of equipment was about XXX euros.” (Interviewee 4)

Bethke, T. (2014)

Table 5 - Coding Procedure Capabilities

Dimension Categories First Order Codes - Representative Data

Rob

ustn

ess

Anticipation: Ability to discern potential future events or

situations (Pettit et al., 2010) Supplier Notifications Internal Decision Making

“We had notifications and discussions about it” (Interviewee 4)

“We decided every year again” (Interviewee 4)

Preparedness: The freeing of resources

and collecting of contingency plans to overcome these events (Hamel & Välikangas,

2003) Inventory Monitoring System Scheduling Predefined Contact Persons

“We found replacement for the product in our own stock” (Interviewee 1)

“All our production facilities, all our plants are linked to a control room.” (Interviewee 4) “They provide regular preventive

maintenance.” (Interviewee 5)

“I am the focal point for everything related to this.” (Interviewee 3)

Agi

lit

y

Visibility: Visibility refers to the

identification of the status of entities, location captured in messages about events

(Francis, 2008).

Process Insights

Cross Functional Supply Chain Teams

Formal Reports

“They were aware of the problem we have here” (Interviewee 3)

“That’s why the CMT got involved, got the TA-the technical authority- got TA-the buyer from TA-the procurement department involved, from Tools& Co, and the manufacturer had people involved and their project management and we had a meeting at the manufacturer”

(Interviewee 1)

“the vehicle is a nonconformance report that basically triggers the remedial actions” (Interviewee 1)

Speed/ Velocity: The speed with which a supply chain can react to

changes (Christopher & Peck,

2004) Respond Team Supplier Accessibility Priority Setting of Personal Cross Functional Teams

“You start putting together an investigation team.” (Interviewee 4)

“Instead of doing this test over here, we had our guys flying over there.” (Interviewee 4) “It was the same day I was starting on it.” (Interviewee 3)