key: cord-0989161-odi2huzi authors: Lahyani, Rahma; AlSaad, Faisal; Merdad, Lujain; Alzamel, May title: Supply chain resilience vs. COVID-19 disruptions during the second wave date: 2021-12-31 journal: Procedia CIRP DOI: 10.1016/j.procir.2021.10.006 sha: b0cbc5ed6cbc36cd4975f2a892cd3f2ca73bd233 doc_id: 989161 cord_uid: odi2huzi The majority of companies around the world suffered severe supply chain disruptions since the first wave of the pandemic. This paper, in contrast, focuses on how prepared were companies when the second wave struck. We focused our study on the impacts of COVID-19 disruptions on Supply Chain Management during this second wave in Saudi Arabia, though not clearly defined by a rise in number of cases, we will rely on the dates the lockdown took place during. The purpose of our study is to understand how resilient different companies supply chains were and if that resilience impacted their recovery level. We conducted our study on Saudi companies from different industries and multiple sizes. We excluded international companies operating globally, in order to focus the findings and ensure our analysis covers the local scene. We collected the data using survey questionnaires answered by employees involved in the Supply Chain, Procurement, and Project Management or C-suite level personnel. We conducted our data analysis using SPSS to run a correlation analysis between our findings on the Supply Chain Resilience and our sample Recovery Level. We used a Resilience Testing Model which consists of linking correlations derived from analysing data collected. We have found through our descriptive analysis that, even though companies vary in their scores of understanding, importance, availability of alternatives and preparedness, they all exhibited a disruption from COVID-19. The lessons learned from the correlation analysis is that companies are expected to begin searching for a more diversified supplier base in the near term, thus looking to build a versatile, but cost-effective, supply chain. Shifting supply chains nearby, decreasing the suppliers base, increasing the digitalization of supply chains are essential tactics companies have to start committing to. Due to the fast development in the domain of communication and an ongoing trend of digitization and digitalization, manufacturing enterprises are facing important challenges in today's market environments: a continuing tendency towards reduction of product development times and shortened product lifecycles. In addition, there is an increasing demand of customization, being at the same time in a global competition with competitors all over the world. This trend, which is inducing the development from macro to micro markets, results in diminished lot sizes due to augmenting product varieties (high-volume to low-volume production) [1] . To cope with this augmenting variety as well as to be able to identify possible optimization potentials in the existing production system, it is important to have a precise knowledge of the product range and characteristics manufactured and/or assembled in this system. In this context, the main challenge in modelling and analysis is now not only to cope with single products, a limited product range or existing product families, but also to be able to analyze and to compare products to define new product families. It can be observed that classical existing product families are regrouped in function of clients or features. However, assembly oriented product families are hardly to find. On the product family level, products differ mainly in two main characteristics: (i) the number of components and (ii) the type of components (e.g. mechanical, electrical, electronical). Classical methodologies considering mainly single products or solitary, already existing product families analyze the product structure on a physical level (components level) which causes difficulties regarding an efficient definition and comparison of different product families. Addressing this COVID-19 is one of the most researched topics in the world, it affected governments, economies, corporations, and every single individual on planet earth. The majority of companies around the world suffered severe supply chain (SC) disruptions when the pandemic struck. This is pertaining to the first wave. This paper, in contrast, focuses on how prepared were companies when the second wave struck. Many researchers consider COVID-19 to be the black swan event that forces organizations to reshape and transform their local and global supply chain models [4, 6] . During 2020, the pandemic has revealed many organizations vulnerabilities to fulfill customer demand or reach their target markets during lockdowns. Indeed, COVID-19 pandemic has tested the resilience and flexibility of supply chain management (SCM) within organizations. The repurposed and reshaped supply chains of the future will need to be both resilient and responsible, as the COVID-19 crisis pushes supply chain leaders to accelerate the adoption of agile methods to work around uncertainty. Globally, and according to a research conducted by the consulting firm Accenture, 94% of Fortune 1000 companies see supply chain disruptions from COVID-19, while 75% of companies have had negative impacts on their business, and 55% of companies plan on downgrading their growth [1]. However, it is crucial that we understand the meaning of Supply Chain Resilience (SCR). SC is defined as the flow of material, information, money, goods and services from raw material suppliers through factories, offices, warehouses to end consumers [5] . While resilience is defined as a supply chain system s ability to reduce the probabilities of disruption, reduce the consequences of those disruptions and reduce the time to recover to normal performance [3] . Understanding the aforementioned definitions leads us to asking why do supply chains have The majority of companies around the world suffered severe supply chain disruptions since the first wave of the pandemic. This paper, in contrast, focuses on how prepared were companies when the second wave struck. We focused our study on the impacts of COVID-19 disruptions on Supply Chain Management during this second wave in Saudi Arabia, though not clearly defined by a rise in number of cases, we will rely on the dates the lockdown took place during. The purpose of our study is to understand how resilient different companies supply chains were and if that resilience impacted their recovery level. We conducted our study on Saudi companies from different industries and multiple sizes. We excluded international companies operating globally, in order to focus the findings and ensure our analysis covers the local scene. We collected the data using survey questionnaires answered by employees involved in the Supply Chain, Procurement, and Project Management or C-suite level personnel. We conducted our data analysis using SPSS to run a correlation analysis between our findings on the Supply Chain Resilience and our sample Recovery Level. We used a Resilience Testing Model which consists of linking correlations derived from analysing data collected. We have found through our descriptive analysis that, even though companies vary in their scores of understanding, importance, availability of alternatives and preparedness, they all exhibited a disruption from COVID-19. The lessons learned from the correlation analysis is that companies are expected to begin searching for a more diversified supplier base in the near term, thus looking to build a versatile, but cost-effective, supply chain. Shifting supply chains nearby, decreasing the suppliers base, increasing the digitalization of supply chains are essential tactics companies have to start committing to. COVID-19 is one of the most researched topics in the world, it affected governments, economies, corporations, and every single individual on planet earth. The majority of companies around the world suffered severe supply chain (SC) disruptions when the pandemic struck. This is pertaining to the first wave. This paper, in contrast, focuses on how prepared were companies when the second wave struck. Many researchers consider COVID-19 to be the black swan event that forces organizations to reshape and transform their local and global supply chain models [4, 6] . During 2020, the pandemic has revealed many organizations vulnerabilities to fulfill customer demand or reach their target markets during lockdowns. Indeed, COVID-19 pandemic has tested the resilience and flexibility of supply chain management (SCM) within organizations. The repurposed and reshaped supply chains of the future will need to be both resilient and responsible, as the COVID-19 crisis pushes supply chain leaders to accelerate the adoption of agile methods to work around uncertainty. Globally, and according to a research conducted by the consulting firm Accenture, 94% of Fortune 1000 companies see supply chain disruptions from COVID-19, while 75% of companies have had negative impacts on their business, and 55% of companies plan on downgrading their growth [1]. However, it is crucial that we understand the meaning of Supply Chain Resilience (SCR). SC is defined as the flow of material, information, money, goods and services from raw material suppliers through factories, offices, warehouses to end consumers [5] . While resilience is defined as a supply chain system s ability to reduce the probabilities of disruption, reduce the consequences of those disruptions and reduce the time to recover to normal performance [3] . Understanding the aforementioned definitions leads us to asking why do supply chains have COVID-19 is one of the most researched topics in the world, it affected governments, economies, corporations, and every single individual on planet earth. The majority of companies around the world suffered severe supply chain (SC) disruptions when the pandemic struck. This is pertaining to the first wave. This paper, in contrast, focuses on how prepared were companies when the second wave struck. Many researchers consider COVID-19 to be the black swan event that forces organizations to reshape and transform their local and global supply chain models [4, 6] . During 2020, the pandemic has revealed many organizations vulnerabilities to fulfill customer demand or reach their target markets during lockdowns. Indeed, COVID-19 pandemic has tested the resilience and flexibility of supply chain management (SCM) within organizations. The repurposed and reshaped supply chains of the future will need to be both resilient and responsible, as the COVID-19 crisis pushes supply chain leaders to accelerate the adoption of agile methods to work around uncertainty. Globally, and according to a research conducted by the consulting firm Accenture, 94% of Fortune 1000 companies see supply chain disruptions from COVID-19, while 75% of companies have had negative impacts on their business, and 55% of companies plan on downgrading their growth [1]. However, it is crucial that we understand the meaning of Supply Chain Resilience (SCR). SC is defined as the flow of material, information, money, goods and services from raw material suppliers through factories, offices, warehouses to end consumers [5] . While resilience is defined as a supply chain system s ability to reduce the probabilities of disruption, reduce the consequences of those disruptions and reduce the time to recover to normal performance [3] . Understanding the aforementioned definitions leads us to asking why do supply chains have COVID-19 is one of the most researched topics in the world, it affected governments, economies, corporations, and every single individual on planet earth. The majority of companies around the world suffered severe supply chain (SC) disruptions when the pandemic struck. This is pertaining to the first wave. This paper, in contrast, focuses on how prepared were companies when the second wave struck. Many researchers consider COVID-19 to be the black swan event that forces organizations to reshape and transform their local and global supply chain models [4, 6] . During 2020, the pandemic has revealed many organizations vulnerabilities to fulfill customer demand or reach their target markets during lockdowns. Indeed, COVID-19 pandemic has tested the resilience and flexibility of supply chain management (SCM) within organizations. The repurposed and reshaped supply chains of the future will need to be both resilient and responsible, as the COVID-19 crisis pushes supply chain leaders to accelerate the adoption of agile methods to work around uncertainty. Globally, and according to a research conducted by the consulting firm Accenture, 94% of Fortune 1000 companies see supply chain disruptions from COVID-19, while 75% of companies have had negative impacts on their business, and 55% of companies plan on downgrading their growth [1]. However, it is crucial that we understand the meaning of Supply Chain Resilience (SCR). SC is defined as the flow of material, information, money, goods and services from raw material suppliers through factories, offices, warehouses to end consumers [5] . While resilience is defined as a supply chain system s ability to reduce the probabilities of disruption, reduce the consequences of those disruptions and reduce the time to recover to normal performance [3] . Understanding the aforementioned definitions leads us to asking why do supply chains have to be resilient during such times? According to [9] , the less resilience, the more vulnerable firms will be, where it is proposed that firms will be the most profitable in the long term the more resilient they are. While companies represent the players in the economy, the resilience of the economy relies on the speedy recovery of the institutions within the economic system. In our attempt to understand SCR in the Kingdom, measurement of SCR remains a challenge. According to [7] , resilience is a multidimensional performance construct and is thus unable to be accurately characterized or measured by a single metric. However, evaluations of post-pandemic performance data over time can be used to measure SCR. Furthermore, we attempt to measure Resilience through the SC s recovery levels, comparing overall results from the first wave [2] to the second wave too shall give us a clearer picture into the learning curve of local companies. The purpose of our study is twofold: (i) to understand how resilient different Saudi companies SCs were during the second wave and if that resilience impacted their recovery level and (ii) to build a SCR model. The remainder of the paper is as follows. We start by introducing the topic in Section 1. Section 2 describes the methodology of this research while Section 3 is devoted to present and discuss the results and findings. Conclusions are presented in Section 4. We focused our study on the impacts of COVID-19 disruptions on SCM during the second wave, though not clearly defined by a rise in number of cases, we will rely on the dates the lockdown took place during. We conducted our study on companies from different industries and multiple sizes. We avoided surveying companies which are operating globally, to ensure that our analysis covers the local scene. This helped us avoid instances where international firms operating in Saudi Arabia reporting the location of their international headquarters or giving the total revenue of the firm as opposed to the Saudi office. We collected the data using survey questionnaires answered by employees involved in the SC, Procurement, and Project Management or C-suite level personnel. We conducted our data analysis using SPSS to run a correlation analysis between our findings on the SCR and our sample recovery level. The survey was distributed personally to potential respondents and not publicly shared. After cleansing the data collected, our sample size was set to 10 companies. The field and average number of employees of each category are presented in Table 1 . We have conducted data analysis using the software SPSS for correlation analysis and descriptive analysis. We propose a resilience testing model as presented in Figure 4 . It consists of linking correlations derived from analyzing data collected. The findings provided by testing the proposed model are discussed below. The disruptions of COVID-19 on the SC vary from one company to another. Half of respondents had identified that both immediate suppliers and the presence of multiple entities in the SC represent a major source of disruption while in a previous research we conducted during the first wave ( [2] ), 44% of respondents consider that both immediate suppliers and immediate customers were a major source of disruption. In addition, during the second wave, not a single company recognized themselves as a source of disruption, as opposed to the previous research, in which 16% admits that the disruption came internally from their own processes. These two findings show that companies are more aware about the challenges that SC may face during the second wave and are more prepared to manage disruption. 60% of our respondents indicated that the major disruption reason was delays in shipment from suppliers in addition to unavailability of transportation capacity. To further understand the different dimensions impacting the respondents answers, we have compared the companys size (based on number of employees) to the score that was given to four dimensions defined as follows: • The extent of understanding the environment to manage SC disruptions, • The level of importance of SC management in following different network design decisions, • The level of preparedness of the company and its SC to deal with the pandemic situation caused by COVID-19, and • The availability of SC alternatives within the SC model. The companies are categorized based on the average number of employees in this field as follows: large (more than 25000 employees), medium (between 500 and 2500 employees), small (below 500 employees). While the above dimensions included multiple variables scored from 1 to 5, we have calculated the average scores to reach an overall score for each category and for each dimension as shown in Figure 1 . The results show that the larger the company is, the more prepared it is against COVID-19 disruptions, and the higher the importance it places on its SC risk management (SCRM). This finding is consistent with our results in the research conducted on the first wave [2] . Also, the larger the company is, 2 Fig. 1. Companies sizes (employees) vs. average scores on different dimensions less available alternatives it has for its SC, something that is still not quite resolved yet as we see medium-sized companies have slightly better alternatives than big companies. We believe the reason could be the instability of demand or the lack of strategic alliances struck between big companies and suppliers. Overall, we found that all company sizes have suffered from similar sources and impacts of disruptions. The question remains if the companies learned how to become more resilient and go through a speedy recovery compared to pre-pandemic times and to the first wave. Therefore, we compared our results on the two waves as presented in Figure 2 . Results demonstrate that large and medium companies are now enjoying a better current recovery level than wave 1. Almost 70% of both large and medium companies are reporting increasing performance of their SC, compared to 43% and 38% respectively, during wave 1. On the other hand, small companies performance is deteriorating, this can be explained by the fact that they were unable to fully come back and recover from the consequences of wave 1, and thus are still witnessing disruptions caused by the first wave. Figure 3 discussed this recovery issue. Indeed, after wave 1 (represented in blue color), companies with different sizes were more optimistic, claiming that the worst was behind them. However, the orange color representing the second wave shows less confidence in recovery and looks more realistic. This could also be the cause of a double-down effect of disruptions caused by wave 1. Resilience is the ability of a SC system to reduce the probabilities of disruption, to reduce the consequences of those disruptions and to reduce the time to recover to normal performance [3] . The SCM literature do not define a specific measure of resilience. We have found through our descriptive analysis that, even though companies vary in their scores of understanding, importance, availability of alternatives and preparedness, they all exhibited a disruption from COVID-19. We define the recovery level our measure of resilience. First, we propose a resilience model which indicates that the higher the level of the company s understanding of the environment to manage SC disruptions, the higher the level of importance it places on SCRM, the more prepared the company s becomes to deal with pandemics which creates more SC alternatives and increases the recovery level hence the SCR. To test the resilience model presented in Figure 4 , we ran a Spearmans Rho correlation analysis to understand the strength and the direction of relationships between the variables discussed in Section 3.2. Spearmans Rho, or Spearmans rank correlation coefficient is a non-parametric measure of rank correlation, which measures the strength and direction of the monotonic relationship between two variables [8] . As the proposed model variables are monotonic and our data is in a ranking order, Spearmans Rho is the most suitable correlation test for our model. We propose to test five different relationships between our variables and we compare the results on the second wave with our previous results on wave one as discussed in [2] . Relationship 1: Understanding Environment to Manage SC Disruptions vs. Importance of SC Risk Management. Contrarily to wave 1, results presented in Figure 5 confirm the absence of a significant relation between understanding the environment and the importance of SCRM. Yet, a moderate negative correlation (2-tail significance level at 6%) between the importance of SCRM for site selection, and understanding the events in external environment that are likely to cause disruptions. Figure 6 demonstrate the following findings: • Strong positive correlation (2-tailed significance level at 5%) between the importance placed on SCRM for supplier of raw materials and parts, and the level of preparedness expressed in terms of (i) having employees with the needed skills to deal with the disruption and (ii) having procedures to protect their goods from criminal activity and contamination. The latter is the only finding consistent with our results on wave 1. • Strong positive correlation (2-tailed significance level at 5%) between the importance placed on SCRM for site selection and the level of preparedness pertaining to SC visibility. • Strong positive correlation (2-tailed significance level at 1%) between the importance placed on SCRM for transportation decisions, and the level of preparedness expressed by (i) having SC partner alternatives, (ii) having employees with the needed skills to deal with the disruption, and (iii) having procedures to protect their goods from criminal activity and contamination. The findings show that companies are more aware of the SCRM and have developed more strategies and searched for alternatives to be more prepared to deal with the pandemic. Results presented in Figure 7 show Results show a strong positive correlation (2-tailed significance level at 1%) between the recovery level and the level of preparedness pertaining to having procedures and plans in place and SC visibility. However, there is no significant correlation between the availability of SC alternatives and the recovery level as the confidence interval shows -0.111 on the lower bound, and 0.947 on the upper bound. Therefore the availability of SC alternatives and markets could not be considered as a factor in the resilience model especially that this relationship was proven to be negative in wave 1 as the pandemic was global and was not market specific. To summarize our findings, it is noteworthy that different sectors have witnessed different disruptions due to the pandemic. Also, there is no clear second wave in Saudi Arabia, the country in focus of this paper. True, there has been 2 lockdowns, the big and first one during the first wave, and the second is a limited lock-down in which few industries have seen more disruptions than the others. Since the first wave of the virus, lockdowns are the most effective strategy for dealing with the crisis. The reduced exposure of people to social interactions can reduce the spread of the virus in totality. However, the strategy has adverse implications for the global economy and could potentially shut down the SC. Overall, similar trends are visible in both the first and second waves in terms of resilience and sustainability of the SC. However, companies can better prepare for the eventualities of the second wave by undertaking specific measures to strengthen the SC as demonstrated by the resilience model discussed above. Some of these measures are briefly presented in what follows: 5 • As demonstrated by relationships 4 and 5 discussed above, it is crucial for an organization to forecast and plan for eventualities that could adversely affect the resilience and sustainability of the supply chain. Upon determining the events that can disrupt the supply chain, the organization can institute strategies that can guarantee their survival when they happen. • SC managers should understand the changing SC environment and manage the SC risk. They can instill confidence in the employees, suppliers, and customers by reviewing their business plans to adopt contemporary business practices, such as e-commerce. By providing an option for online sales, customers can have confidence that they can shop from the comfort of their homes. • Emerging logistics factors can also influence supply chains and their changes. Indeed, the digitization of supply chains and logistics using big data helps companies to prepare for changes in the post-pandemic business environment. • SC managers should start searching for a more diversified supplier base in the near term, thus looking to build a multipurpose and cost-effective supply chain. Building long-term strategic supplier alliances and consolidating the supplier base into one or a few suppliers, resulting in a smaller supply base are essential tactics companies should consider. • Companies should relaunch operations in nimbleness and consider the current policies to avoid the SC disruption such as shifting supply chains nearby or to different countries. Overall, the virus could institute critical changes within the business landscape. Therefore, to support business operations, resilience in the SC should be sturdy to support new business strategies. In summary, the COVID-19 pandemic adversely affected the selected sector s SCR. The lockdown containment measure has created a disturbance in the SC. The participants interviewed from five industries indicated they had anticipated the second wave of the Corona Virus that happened early in 2021. The research utilized survey questionnaires, which were intended to reveal the five industries level of preparedness, the importance of SC, and availability of alternative SC channels. The objectives were instrumental in determining the impact of the pandemic on the resilience capacity of the industries. Although the COVID 19 infection rate continues to increase, it appears that most organizations have learned from the first wave and are more prepared for any eventualities, have alternative SCs, and consider their SC significantly important. The research indicates that those industries with a high level of preparedness had the highest resilience to the disturbance of the pandemic. It is, therefore, crucial for an organization to forecast and plan for eventualities that could adversely affect the resilience and sustainability of the SC. Upon determining the events that can disrupt the SC, the organization can institute strategies that can guarantee their survival when they happen. Therefore, the research has concluded that preparedness is the single most essential factor for determining an organization s SCR and sustainability. In order to enhance our analysis in the future, we should first increase the sample size and query more companies from the Saudi market. Furthermore, we need to assess resilience against the complexity of product/service output and learn more about the degree of liquidity of firms during disruptions and whether this has any correlation to resilience. We can also investigate the level of digital sales maturity of firms during interruptions to check whether firms selling online have had less interruptions than those which do not. This research was supported by grants IRG 19102 and IRG C20117 from Alfaisal University. This support is gratefully acknowledged. Studying the supply chain resilience in Saudi Arabia during the first wave of COVID-19 A decision support framework to assess supply chain resilience Research at the intersection of entrepreneurship, supply chain management, and strategic management: Opportunities highlighted by COVID-19 Issues in supply chain management The COVID-19 outbreak: from black swan to global challenges and opportunities On the quantification of operational supply chain resilience Bootstrap confidence intervals. MIT report Ensuring supply chain resilience: development of a conceptual framework