Supply chain resiliency: Absorb versus respond

Abstract

Global supply chain shocks are nothing new; history is littered with examples of abnormal demand patterns or supply disruptions, with the recovery from COVID-19 being the most recent. This paper explores strategies for building resiliency into supply chains by investing in capabilities to absorb demand and supply shocks or create the ability to respond quickly and effectively to devastating supply chain events. Each supply chain is unique and may require a blend of strategies, depending on the infrastructure required to produce the products and distribute them throughout desired markets. With specific case studies and theoretical approaches, this paper provides a framework to utilise when planning for business continuity and supply chain resilience. It is shown that many resilient design principles can be embedded in day-to-day processes without too much effort, while for other more critical products more robust strategies must be planned. The core goal of this paper is to outline the differences between absorb and respond strategies and identify what type of strategy is better for what situation. Both authors have theoretical and practical experience developing plans for supply chain disaster recovery and optimising the investments needed to enhance resiliency and preparedness. Utilising this approach to supply chain design, building absorb capacity or responding rapidly to major disruptions, and by leveraging their collaboration with supply chain partners, companies can give themselves a competitive advantage.