Facing Supply Chain Disruptions: Strategies to Ensure Relational Continuity

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Chapter And Authors Information

Laura Colm

SDA Bocconi School of Management, Via Sarfatti 10, 20136 Milan, Italy

Andrea Ordanini

Bocconi University, Via Roentgen 1, 20136 Milan, Italy
Facing Supply Chain Disruptions: Strategies to Ensure Relational Continuity
From the Edited Volume
Edited By:
Professor Richard Wilding
Content

Abstract

The COVID-19 pandemic is not comparable for extension and implications to any other crisis faced by organizations over the last decades. Understandably, in its first and most acute phases, managers have focused their attention on how companies could ensure business continuity at the organizational level, by guaranteeing safe operating conditions and reshaping working procedures. Yet, for companies operating in business markets, adjusting internal processes to face a supply chain disruption is not enough to ensure business continuity, as these companies also need to sustain the network of external relationships in the whole supply chain in which they operate. To avoid jeopardizing their long-term survival, maintain their scope of action, and keep up with the challenges of the new normal, business companies need to engage in effective strategies that focus on a different component of business continuity, which we call relational continuity. After a brief review of the literature, the chapter first introduces the relational continuity concept in supply chain relationships. Drawing on a series of qualitative in-depth interviews with managers from the industrial machinery industry, whose sampled firms are actually connected through a direct supplier-client relationship, the chapter identifies three strategies that industrial companies should implement to ensure relational continuity with their key partners (suppliers and especially clients): supply chain intelligence, relational slack and key partners’ integration. Their full-fledged implementation proved to smooth and strengthen relationships among all players in the supply-chain and make business companies more responsive and capable to address the relational challenges of the “new normal” scenario.

Keywords

supply chain disruption management, B-to-B relationships, business continuity, relational continuity, COVID-19

1. Introduction

The COVID-19 pandemic generated a global “shock” without any comparable prior at least since World War II and has therefore even been defined as a “black swan” event by many. Its breadth in terms of geographic, demographic and economic impact has caught individuals, business communities and policy makers completely unprepared. From a business standpoint, in the face of such an unprecedented disruption, most companies have focused their attention and early efforts primarily on internal processes and their necessary revision at the organizational level to cope with the situation (McKinsey, 2020). For instance, companies have used their organizational capabilities to manage the disruption, trying to safeguard employee’s health and safety (a novel dimension compared to previous disruptions), rapidly shifting all possible activities to the remote modus, while guaranteeing high performance levels despite revised processes.
In such a context, less attention has been initially dedicated to the relationships each company has along its supply chain. While the emphasis on the internal and organizational, firm-level strategies to keep business activities running is understandable, overlooking the effect of the crisis on the broader supply chain partner network can actually be detrimental. Indeed, ensuring business continuity – the capability of a company to continue its business operations even during a disruptive event is a necessary but not sufficient condition for enduring a crisis like COVID-19. These companies also need to sustain the network of external relationships in the supply chain in which they operate, otherwise they can execute organizational tasks but cannot realize business exchanges, a fundamental premise for the continuity in the supply-chain: we call this premise as relational continuity (see section 2 for more details). Indeed, while maintaining vertical relationships with up- and downstream partners influences significantly a company’s decisions and scope of action (Heide & John, 1990; Palmatier et al., 2007), this becomes even more critical during a disruption and particularly challenging in the light of the recovery phase and the new normal scenario. In this sense, keeping supply chain existing relationships running and even try to set up new ones, while trying to strengthen them in the light of an uncertain future, emerge as main priorities for supply chain managers.
Given the emergent nature of the topic, the investigation of this chapter is based on a series of qualitative interviews with managers from relevant companies of a core supply chain (industrial machinery) that faced threats to their relational continuity during the pandemic and strived to define effective strategic responses to face the upcoming, uncertain business conditions. Methodologically, the chapter follows a Theories-in-Use approach (see section 3), which permits to leverage on practitioners’ experience and to co-create relevant knowledge together with them, thus allowing to generate significant insights for both theory and practice (Zeithaml et al., 2019).
The key contribution of the chapter is the identification of a set of three strategies that industrial companies should implement to ensure relational continuity with their key partners and improve the whole supply chain’s response to the new normal scenario.

2. Business Continuity and Supply Chain Disruption Management: The Critical Role of Relational Continuity

Business continuity management refers to the “capability of an organization to continue the delivery of products and services within acceptable time frames at predefined capacity during a disruption” (International Organization for Standardization, 2019).
There is a sizable body of literature dedicated to business continuity (see Herbane, 2010 and Elliott et al., 2010 for detailed literature reviews about the topic), with two themes being particularly recurring and predominant: risk identification and risk mitigation. The first one refers to the recognition of potential causes for business interruption (e.g., natural catastrophes, machinery breakdowns, or supply shortages). The second one relates to all the actions and remedies that can be implemented to reduce the afore-mentioned risks – as they occur (e.g., limiting their impact on the company’s business) or in advance (e.g., adopting protective measures or preparing an emergency plan). Both aspects play a central role in allowing companies to safeguard, manage and maintain business continuity, thus being ready to resist and keep operating in the market even when disruptions or crises occur (Herbane, 2010; Zsidisin et al., 2015).
This organizational capability to withstand adversities or environmental shocks and keep the organization in function (either through endurance or adaptation) is also labelled as resilience – which has been envisioned as a core element for dealing with and responding to major supply chain disruptions. In that sense, creating resilient supply networks has become crucial for managers, stakeholders and researchers (see for instance Kleindorfer & Saad, 2005), especially in addressing supply chain risk (Ponomarov & Holcomb, 2009).
However, the COVID-19 pandemic has not only challenged continuity and companies’ resilience potential from the organizational, operations and logistical standpoint, that is, at the individual firm level. Instead, it also hampered regular contact and information exchanges among up- and downstream supply chain partners – which brought many consolidated business practices into question. For instance, suppliers and clients were not able to physically meet for longer periods – not at all during the acute phases of the pandemic, or only with great difficulty because of travel restrictions later on. Even remote meetings (e.g., through videocalls) were often only possible with considerable effort, especially in the beginning, when the need to keep regularly in contact and update each other was particularly critical. This challenged also supply chain partners’ opportunities to work together towards their common goals, which is a relevant aspect to ensure long-term supply chain success.
In fact, among the many antecedents of supply chain resilience (see Kamalahmadi & Parast, 2016 for a comprehensive review), collaboration was identified as a crucial element. It can be defined as the “glue” that holds supply chain players together during a disruption, emergency or crisis (Nishat Faisal et al., 2006) and thus serves as a strong resilience enabler (Soni et al., 2014). Indeed, more cooperative relationships positively impact resilience and supply chain players’ capabilities to sustain and navigate difficult periods and/or situations (Wieland & Wallenburg, 2013). For this reason, maintaining regular contact and cooperative relationships with the existing supply chain partners (as well as establishing them with new ones) through adequate strategies is fundamental to overcome supply chain disruptions after the acute phases of the COVID-19 pandemic: we call this component of business continuity relational continuity.
Relational continuity issues are typically latent in supply chains during normal times or, at the most, they tend to be smoothly managed within a context of regular market conditions. For instance, suppliers usually know how to best approach their current or prospective clients, visit them on a regular base to advance projects or nurture relationships, and are able to contextualize their needs in the light of the expected innovation trajectories of the respective industry. At the same time, clients, who typically believe to know their suppliers well (in terms of offer quality, delivery times, and negotiable prices), have established procedures to reach out to them and get their support (in terms of aftersales or maintenance) or explore innovation opportunities.
During the pandemic, though, all these relatively common and unproblematic relational activities got complicated and challenging to be carried out effectively among supply chain partners. In part, this got also amplified because of some pre-existing relational inefficiencies or weaknesses, that surfaced because of the COVID-19 disruption. Examples include absence of a clear and transparent information flow, relying on unspoken or implicit procedures, or building on self-referential assumptions instead of joint decisions.
Thus, the following of the chapter will focus on this still overlooked, yet managerially relevant topic from an empirical standpoint, by examining the strategic responses of actual players from the industrial machinery industry to the main relational continuity threats brought by COVID-19.

3. Relational Continuity in COVID-19 Times: An Investigation of the Industrial Machinery Industry through a Theories-in-Use Approach

In line with the goal of investigating an underdeveloped topic, this chapter adopts an exploratory, grounded theory approach, with qualitative inquiry (Glaser & Straus, 1967). Grounded theory research facilitates the discovery of meaningful patterns to understand what is happening in the empirical context of study and how the various actors behave in it (Mitchell, 2014). As such, it is particularly indicated to examine relational continuity during the COVID-19 pandemic – an unprecedented and unique disruption, not comparable to any other over the last decades.
Consistent with the iterative logic of qualitative research (Klag & Langley, 2013), the chapter relies on both theory and data to integrate existing theoretical accounts with field evidence and identify the main strategies implemented by supply chain partners in facing relational continuity problems during the pandemic, in order to provide managerially relevant insights about how to respond to challenges and prepare for the new normal. More specifically, we focus on the main relational issues experienced by managers of business companies operating in the same supply-chain, the set of strategic responses they set up as remedies against those threats, along with the specific activities to implement these responses.
The chapter follows the Theories-in-Use approach, which offers the opportunity to cocreate relevant knowledge with practitioners (Zeithaml et al., 2019) within COVID-19’s evolving scenario. Such practitioners come from companies of the industrial machinery industry in Italy – a critical industry for a country’s national supply chain during a disruption, in a European country that has been severely hit especially by the first wave of the pandemic. The purposive holistic sampling includes various players who operate in the same supply chain and that are actually connected to each other through a direct supplier-client relationship: a components distributor, an equipment manufacturer and an engineering company (system integrator), either headquartered or with a subsidiary in Italy (see Figure 1 for a visual representation of the sample and its characteristics). This approach offers two advantages. First, it accounts for different positions (up- and downstream) in the supply chain, which allows to distinguish between potential position-specific and common problems and responses along the whole supply chain during the pandemic. Second, it uses relationship dyads as unit of analysis and provides a more realistic picture of how companies face relational continuity issues during a supply chain disruption.

Figure 1. Sample characteristics: Supply chain partners in the industrial machinery industry

Accordingly, eight qualitative in-depth interviews were collected, involving managers from the three above-mentioned organizations of the industrial machinery industry, with different roles and seniority levels within their respective company: general managers (with an overall view of the business), buyers and supply chain managers (with an upstream focus on purchasing and procurement), and sales and marketing directors (with a downstream focus on clients’ needs and requirements). This allowed to capture different viewpoints about relational continuity and how it was experienced and faced (Gioia et al., 2012). The interviews were collected in Spring 2020 during the acute phase of the pandemic, and in the very moment in which companies necessarily had to set up new, revised and farsighted solutions for an uncertain future. They were carried out either via videocalls or on the telephone. They lasted 46 minutes on average and were audiotaped and transcribed into 51 pages of transcripts, supplemented by notes and further opportunistic conversations in the following months to explore specific or emergent issues over time. The analysis followed the stages suggested by Miles and Hubermann (1994).
The interviews allowed to perform an important, exploratory examination of the critical role played by relational continuity between up- and downstream supply chain partners, identifying three main strategies that comprise the concept of relational continuity, and that managers implemented to counter and endure the COVID-19 disruption, with a forward-looking perspective.

4. Three Strategies to Ensure Relational Continuity: Supply Chain Intelligence, Relational Slack and Key Partners’ Integration

The interviews conducted with key players of the industrial machinery industry reveal that ensuring relational continuity has represented a core issue during the acute phases of the pandemic and is also viewed as a critical challenge for the new normal scenario. Respondents clearly mentioned that finding ways to keep supply chain existing relationships running and even try to create new ones, while strengthening them in the light of an uncertain future (that might bring new, unpredictable disruptions), as a main priority for their present and future supply chain management.
Detailed inputs from the same interviews helped to identify a set of three strategies that industrial companies should implement to improve not only their own, but the whole supply chain’s response to the new normal scenario. These three strategies are outlined below and discussed in detail in the following of this chapter (see subsections 4.1, 4.2 and 4.3), with the support of actual evidence from the interviewed managers and the decisions they took.
• Supply chain intelligence involves the adoption of a vigilant posture on the supply chain to constantly assess and update information about suppliers’ and clients’ business operations, needs and concerns. This is supposed to help partners in addressing upcoming shifts and transformations in a timely manner, even anticipating change before it may occur.
• Relational slack requires supply chain players to extend their current network of relationships by adding suppliers which may act as back-up sources and keep investing in uncertain prospects which might be exploited under a new market scenario. Relational slack implies “sacrificing” some degrees of efficiency in the short-term, to get more flexibility and better responsiveness, and acts as shock-absorbing buffers in highly uncertain scenarios.
• Key partners’ integration involves a tighter and systematic integration of the activities of the core supply-chain partners, in order to ensure faster responses by one actor in the face of unexpected changes faced by another one. The integration of supplier’s and client’s operations and commercial/marketing functions plays a fundamental role in this context.

4.1. Supply Chain Intelligence: Anticipating Change through a Vigilant Posture on the Supply Chain

The interviews first highlight that a critical relational problem that emerged because of COVID-19 was the limited knowledge that companies had of their own supply chain partners. The pandemic revealed, in fact, how managers actually possessed a superficial knowledge of their suppliers and clients – both in terms of overall configurations and processes, and specific crisis-related reactions.
This turned out to be not only a problem in terms of lack of business knowledge, that companies were unaware of, but represented a huge threat to relational continuity. For instance, during the acute phases of the pandemic, players often did not know whether their supplier or client companies were still operative and to what extent, how to reach out to them if they were temporarily closed or non-operating, as well as how to replace physical meetings successfully with virtual ones. At the same time, well-established procedures, that “have always been working”, were all of a sudden no longer implementable. This has hampered both long-lasting relationships, as well as clipping the wings of new, potentially promising ones. In other words, COVID-19 pointed out that many supply chain relationships simply run well because they never had to face a major disruption. As soon as frequent and smooth communications had become difficult, two aspects surfaced: first, in most cases reciprocal knowledge was rather superficial; second, this superficial knowledge was one of the causes hindering regular, stable contact between supply chain partners. Indeed, a better reciprocal understanding and knowing more about each other would certainly have made it easier to stay in touch and be aligned during a supply chain disruption like COVID-19. For instance, supply chain managers, sales directors and CEOs had to face the following questions in this context:
• To which group(s) of economic activities do our suppliers and clients belong (e.g., according to the NACE classification, the statistical Classification of Economic Activities in the European Community)?
• Which and how many of our suppliers and clients are allowed to keep operations running? If they are allowed to, are they actually open? Are they fully operative?
• How can we systematically and effectively monitor our suppliers’ and clients’ “status” and status updates?
• Are some of our suppliers and clients privileging some productions, customers or markets (in terms of industry and/or region)?
• Are our suppliers able to produce and ship and our clients able to receive and pay goods?
• Did some of our suppliers and clients reconvert (wholly or partly) their production to produce medical or sanitary equipment? Is this just a temporary change or rather a lasting investment?
Managers explained that, while these questions had a rather short- or, at least, a medium-term focus, their reach was actually much broader. Indeed, these questions had uncovered problems that could also recur in the future, in case of another disruption, if not promptly handled and addressed. The following quote from a manager highlights this aspect:
“The pandemic has brought up a lot of issues –not only at the organizational or operational level. It hit us where we thought to be strong: in knowing our supply chain partners well. All of a sudden, we had a lot of uncertainties because we didn’t know a lot of things about our clients, that we thought we knew or that we just never asked ourselves. This has spurred reflections that go beyond the current emergency management and made as aware that we need to find ways to get to systematically get to know and monitor our partners more in depth, if we want to be prepared for the new normal – whatever this scenario might look like.”
As a consequence, another set of questions arose among managers with respect to the long run, and thus the post-emergency and the post-pandemic situation:
• How are our suppliers’ and clients’ decisions affecting the overall supply chain?
• What are the permanent effects of today’s decisions on tomorrow’s supply chain relationships?
• How can me make sure to constantly assess and update information about suppliers’ and clients’ business operations, needs and concerns? How can we do this efficiently, as well as in a time- and cost-effective way?
The situation highlights the widening gap between the accelerating complexity of supply chains and their underlying relationships in the context of COVID-19, as well as the limited ability of supply chain partners to cope with it. Unfortunately, an exact opposite situation would have been important to face the new, unexpected and dramatic pandemic situation in a mutually beneficial manner, to make the whole supply chain more resilient (see Nishat Faisal et al., 2006).
Confronted with the urge to address this knowledge gap rapidly, managers offered a common strategic response: setting up tools to quickly close this gap and can also help for coping with new disruptions in the future. Such cognitive tools reflect supply chain partners’ intelligence activities aim at increasing the knowledge and understanding of upstream and downstream supply chain partners in a structured, systematic manner.
More specifically, in the short-term this involved carrying out a systematic categorization of partners, through secondary data (e.g., information from databases, institutional and company websites etc.) and primary data (e.g., phone calls, e-mails, circular e-mails, information from agents, etc.). This information was sometimes collected by a dedicated task force (especially in larger firms), in order to use but also store it more effectively. Indeed, managers claimed for building an organized mapping of their supply chain partners, for instance, with respect to their current and planned, future business operations, their intentions and concerns with respect to those, and, more generally, with respect to their market and country information (including sanitary risk). This knowledge appears fundamental in the contingent disruption context, since it allows companies to obtain a thorough picture of the situation, especially if such information is collected, structured, explicated and made available within the company in real time.
At the same time, this knowledge needs to be regularly updated over time, in order to capitalize on the huge effort started during the acute COVID-19 phases. This intelligence activity can support managers in sorting their suppliers and clients and help understand which ones are/will be more problematic (for instance, because they have been more severely impacted by the crisis), might need or deserve more attention (for instance, because they are implementing responses to the crisis that are very deviant from their prior, original business plans – e.g., with respect to market coverage, inventory policies or pricing).
Figure 2 shows the relevant knowledge about up- and downstream partners, that can help managers not only to better navigate the present disruption, but also lay the foundations of a vigilant posture for the future to anticipate change. This allows creating better synergies with supply chain partners, as well as ensuring relational continuity – thus generating a virtuous circle. In this sense, the framework can act as a helpful “template” to collect, assess and share the information deemed relevant.
Vigilant activities should be regularly updated and integrated also when “business as usual” will be restored. This allows to make longitudinal comparisons, both within the same supply chain partner (e.g., supplier) and across partners (e.g., clients in the same industry). It also ensures a baseline in case of a new pandemic wave or other disruption.
Overall, regular interactions with suppliers and clients, with the specific aim of carrying out partner intelligence activities, facilitates managers’ capability to act in advance or understand early how a relationship or market situation is evolving and potentially being disrupted. This helps to act promptly and prevent expensive mistakes. Developing such an attitude is in line with the marketing capability of vigilant market learning that “enhances deep market insights with an advance warning system to anticipate market changes and unmet needs” (Day, 2011, p. 183). This posture may be not only relevant in the contingent pandemic situation, but also for the future phases, that will inevitably bear the mark of the crisis and make even weak signals extremely relevant – for instance to identify threats in advance, as well as to identify signs of economic rebound. A manager points this out in the following quote:
“Companies have a growing need to understand if the supplier will be able to work and deliver on time and if the client will order or not and what. And if he orders less, to understand why. For instance, a client ordering less would have been just a yellow light in the past, while it will be seen as a red light and greater worry in the future. Companies will have to dedicate more attention to understand why something occurs and need to collect information about this, process it and transform it into useful knowledge for the company. So, there is a stronger need for knowing more things.”

Summarizing, such intelligence activities are precious for assessing supply chain relationships’ health and can help revealing “invisible patterns” and trends in a timely manner. Indeed, these activities represent a useful way to create ongoing alignment of institutional arrangements between organizations, and optimize their relationships (Hartmann et al., 2018). By ensuring relational continuity, this also facilitates long-term recovery.

Figure 2. Information sets for developing a vigilant posture among supply chain actors

Figure 3. Shock-absorbing buffers for achieving relational slack in the short- and long-term

4.3 Key Partners’ Integration: Improving Responsiveness to Unexpected Changes through a Systematic Integration of Supply Chain Partners’ Activities

A third threat to relational continuity during COVID-19 emerged from the limited synergies between suppliers and their clients. Despite some companies’ significant degrees of openness to working together and their active collaborations along the supply chain, the lack of coordination and integration between partners operating systems emerged as a significant obstacle to cope effectively with the challenges brought by the pandemic. For instance, sporadic communication, partial information, and limited interactions during the exchanges became highly problematic in this context, since companies could not rely on their established mechanisms and “business as usual” to compensate for poor integration. The result of this lack of integration generated a mismatch between demand- and offer side.

Indeed, under these complex and uncertain conditions, supply chain actors can have different, rapidly changing priorities, which need to be synchronized properly to avoid partners working against each other instead of alongside each other. For instance, while procurement functions (and suppliers) put pressure on the sales and marketing functions (and clients) to redefine demand planning, the latter urge the former to deliver also last-minute requests and orders promptly, with no delay. This spurred special requests, revisions and exceptions the rule, with significant repercussions on companies’ capability to successfully manage different relationships and their peculiarities simultaneously. A manager described supplier-client alignment difficulties in the COVID-19 situation as follows:

“In normal times, things just worked out with our clients, but now they often didn’t. For instance, when we asked them what they wanted, and we worked towards that goal, maybe we found out a couple of days later that their need had changed, and we weren’t aware of it. So, we had to start all over again – if that was still possible. This is a problem right now but also a wake-up call for the future.”

Thus, the following questions emerged among the industrial machinery sector’s managers:

  • How can we be informed effectively and in a timely manner about the changing contingencies, needs and requirements of supply chain partners, especially when this was not systematically monitored before COVID-19?
  • Are we aware of both suppliers’ and clients’ specific needs? Are we in the conditions to meet them and how can we do this?
  • How can we handle exceptions successfully, but without creating too much redundancy? Can similar exceptions be grouped?
  • How can we simplify internal communications across functions, and external communications between functions and partners?
  • Which are the strengths/weaknesses in our internal and external information flow?
  • What kind of activities should be clearly integrated with those of the partner and why?
  • How can joint collaboration efforts along the supply chain be fostered in the short- and maintained in the long-term?
  • How could we act as facilitators in the supply chain’s up- and downstream alignment? To what extent do we need to rethink our current role in the supply chain to do so?

To address these concerns, managers mentioned the need for a more participated decision-making process. Since the very beginning of the pandemic, information exchange needed to become more explicit and structured, relying on clear collection and internal sharing procedures, rather than on unspoken habits, tacit knowledge and implicit behavior. This also implied always double-checking the exchanged information with the up- or downstream partner, in order to ensure that managers were working with the latest inputs and indications, and not with outdated ones. In addition, the more decisions were taken jointly from the beginning, involving all relevant spokespersons in the partner company, the faster the execution and the easier adaptations. Sometimes, this could imply changing the established communication paradigm, allowing for instance supply chain managers to directly contact clients (e.g., for product specificities or order confirmations) without asking the sales function, to accelerate decisions and improve their overall quality. This called for intense cross-partner and cross-functional collaboration efforts along the supply chain, in order to facilitate up-and downstream alignment and ultimately bridge the gap between offer- and demand-side, as the following quote shows:

Sometimes it wasn’t clear whether a mismatch occurred because there had been a poor information exchange upfront with the supplier or client or if the information had been acquired but got lost internally among our teams later on. Anyway, we needed information to be shared more effectively across functions. For instance, a client’s need could not simply remain in the area manager’s head but had to be made visible also to logistics and procurement, and available at company-level, to allow optimizing the whole process.”

Indeed, a more integrated information exchange and consequent set up of all relevant activities between core supply chains partners turned out as fundamental for ensuring relational continuity. In addition, as exceptions were becoming more frequent, it was also important to handle them as much as possible through joint, replicable procedures, in order to limit case-by-case decisions, while ensuring overall supply chain responsiveness. For example, managers explained that keeping track of all “special” cases that occurred (in terms of requests, difficulties, needs, etc.) was a first but important step to avoid redundancies, find common patterns and replicable responses to similar issues, thus improving responsiveness and partner knowledge for the future.

To improve synergies across supply chain partners, linear communication (from… to…) has proven ineffective. Usually, clients trigger actions up the supply chain and then upstream players pull (not push) information and products downstream, according to demand (Lummus & Vokurka, 1999). In face of disruptions, such a one- way, sequential logic turns out to be dysfunctional and needs to be replaced with an iterative logic, where the information flow is two-sided and requests can be activated either way according to parties’ availability (e.g., the supplier proactively asks the client about his interest in an alternative or earlier available product, instead of waiting for him to ask).

In this context, embracing an approach that is open to make offer adaptations available (on the supply-side) and actively contribute to crafting them (on the client-side) is another important step towards relational continuity. These might include flexible delivery options – e.g., the chance to get an order delivered at a set price over several months instead of all at once. This has a positive impact on inventory costs on the client’s side and allows suppliers to strengthen relational ties with buyers. Another example is making different service level options available. To better meet client needs, suppliers can leverage on modular offers, based on different service level options (e.g., insurance, guarantee or maintenance agreements included vs. on top). This allows them to choose the options that suit them best in terms of desired assistance, financial and logistics needs – helping suppliers in turn to better craft their offer with respect to the new normal.

Figure 4 shows these different supplier-client activities that need to be integrated in order to foster relational continuity in vertical supply chains and ultimately endure the COVID-19 disruption in the short- and long-term.

Figure 4. Supplier-client activities to be integrated for improving disruption responsiveness

5. Conclusions

Ensuring relational continuity along the supply chain in times of disruption – like in the case of COVID-19 – is a main (yet under-considered) challenge for companies operating in business markets. Indeed, it is not enough for them to ensure business continuity from the organizational standpoint, but they also need to maintain and foster their networks of external relationships in the broader supply chain in which they operate. Consistent with different principles of the relationship marketing literature (Palmatier et al., 2007), ensuring continuity in the vertical relationships is critical to mitigate the risks deriving from a supply-chain disruption, and defend companies’ positioning in the supply chain.
As a consequence, this chapter has examined the main threats to relational continuity and the main issues faced by supply chain partners during the pandemic, including their reverberations on the new normal scenario. Against this backdrop, through an in-depth exploratory analysis, it identified three strategies that supply chain partners need to engage in, to ensure and strengthen their relational continuity in the face of an unprecedented disruption: supply chain intelligence, relational slack and key partners’ integration (see Figure 5 for a visual representation of the strategies). These play a critical role in preventing supply chain partners from jeopardizing their long-term survival, allowing them to maintain their scope of action or even broaden and consolidate it, as well as keeping up with the challenges of the new normal scenario.
From an academic standpoint, the chapter responds to recent calls to further investigate the impact of COVID-19 on business relationships and supply chains (e.g., Crick & Crick, 2020). Also, drawing on real business situations – with concrete examples of adapted decisions and routines’ changes during the emergency – the chapter extends the extant literature on business continuity, by focusing on the concept of relational continuity and clarifying how its three strategies help to improve risk identification and risk mitigation along the supply chain (Herbane, 2010; Zsidisin et al., 2005). Thus, these insights can be of help for researchers, scholars and students from the operations and supply chain fields, as well as from the sales and marketing disciplines.
The chapter also speaks to managers (e.g., supply chain, purchasing, sales and marketing managers) operating in the manufacturing and engineering industries, offering actionable insights about how to implement the afore-mentioned strategies and ensure relational continuity while optimizing partners’ roles in the supply chain with concrete examples. These actions can help for better enduring future shocks and, to some extent, even getting prepared in advance for their occurrence.

Figure 5. Relational continuity strategies

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