The four buzzwords of supply chain risk management. Wouldn't it be nice if you had a supply chain that was all-in-one: resilient, robust, flexible and agile? In this post I will try to explain the difference between these concepts, as seen from my academic viewpoint. Further reading material is included in the links.
The Agile Virtual Enterprise, a 1992 book by H.T. Goranson differentiates between agility and flexibility. Flexibility is scheduled or planned adaption to unforeseen yet expected external circumstances. Agility is unplanned and unscheduled adaption to unforeseen and unexpected external circumstances.
In Building a secure and resilient supply network, a journal article from 2003, James B Rice and Federico Canatio focus on security and resilience by upholding flexibility and redundancy as two methods with the greatest potential to create resilience. Redundancy is capacity that may or may not be used; it is this additional capacity that would be used to replace the capacity loss caused by a disruption. Flexibility, on the other hand, entails redeploying previously committed capacity.
Hau Lee's now renown 2004 article, Building the Triple-A-Supply Chain, uses the three big "A"s: agility, adaptability and alignment, where agility means to respond quickly to changes (and disruptions) in supply and demand, adaptability means to adjust to shifting markets and alignment implies an equitable sharing of costs, gains, risks, knowledge and information across the whole supply chain.
Martin Christopher and Helen Peck from the University of Cranfield in the UK wrote Building the Resilient Supply Chain in 2004, where they contend that resilience implies agility, and go on to define supply chain agility as the ability to quickly respond to unpredictable changes in demand and supply, slightly akin to Goranson’s definition. An agile and responsive supply chain, they argue, requires agile partners upstream and downstream of the focal firm.
A conceptual model of supply chain flexibility and Supply Chain Flexibility: Building a new model are two very similar yet very different journal articles by the trio of Leslie K Duclos, Rhonda R Lummus and Robert J Vokurka, who see flexibility as a cross-enterprise undertaking composed of 6 components: 1) operations – the ability configure assets and operations according to customer trends, 2) market – the ability to customize design and build close relationship with customers, 3) logistics – the ability to receive and deliver according to locational changes in supply and demand, 4) supply – the ability to reconfigure the supply chain, 5) organization – the ability to align labor force skills with customer or demand requirements and 6) information systems – the ability information systems architectures and systems with changing information needs in response to changes elsewhere in the organization.
Yossi Sheffi is perhaps one of the more prominent proponent of the resilience movement with his 2005 book The Resilent Enterprise, much of which can be found in his 2005 article A supply chain view of the resilient enterprise, co-written with the above mentioned Rice. Sheffi sees flexibility as a way to achieve resilience, stating that instead of relying solely on supply chain redundancy, a well-managed firm should develop resilience, by building flexibility that can be used to ‘bounce back’ from disruptions. To me, that would rather be agility (in line with Goranson’s definition) than flexibility.
Brian Tomlin differentiated between contingent and mitigative actions in 2006, when he wrote On the value of Mitigation and Contingency Strategies for Managing Supply Chain Disruption Risks. Flexibility can here be seen as a contingency action, that is: actions taken in the event of a disruption. Redundancy can be seen as a mitigation action, that is: actions taken in advance of a disruption, hence incurring a cost regardless of disruption. I have tried to explain the difference between the two in my post on mitigative and contingent actions.
In 2006 Christopher Tang wrote an article titled Robust Strategies for Mitigating Supply Chain Disruptions, where he proposed 9 strategies for making a supply chain more robust, that is, enabling a firm to deploy disruption-specific contingency plans, thus becoming more resilient. He even presented his ideas on YouTube.
Resilience Management: A framework for assessing and improving the Resilience of Organisations is a 2007 research report from the New Zealand research project Resilient Organisations. Here, resilience depends on 1) keystone vulnerabilities, criticality and preparedness, 2) situation awareness, stemming from an assessment of the keystone vulnerabilities, and 3) adaptive capacity, which is nothing other than flexibility and agility. Resilience, in essence, is the ability to survive disruptive changes despite severe impact.
Finishing off closer to home, in 2008, Bjørn Egil Asbjørnslett from the Norwegian University of Science and Technology contributed a chapter on Assessing the Vulnerability of Supply Chains to a book on Supply Chain Risk by George Zsidisin and Bob Ritchie. In the chapter, largely based on his previuos works and his PhD on the vulnerability of production systems, he sees flexibility as the inherent capability to modify a current direction to accommodate and successfully adapt to changes in the environment, whereas robustness refers to the ability to endure such changes without adapting. Resilience is the ability to survive despite withstanding a severe and enduring impact.
So, is it possible to make some definitions from the above? Yes:
- Flexibility: the planned and/or scheduled adaptation to expected changing circumstances
- Agility: the unplanned and/or unscheduled adaptation to unforeseen and unexpected changing circumstances
- Robustness: the ability to withstand and endure changing circumstances without adaptation
- Resilence: the ability to survive changing circumstances despite suffering severe impact
This figure is a good illustration:
Flexibility or agility, robustness and resilience are different sides of the same coin, yet at the same time distinctively different animals. Note that there is a distinct notion of different severity in each of these definitions. The ability to survive (resilience) is likely to be more important in a business setting than the ability to quickly regain stability (robustness) or the ability to change course (flexibility or agility).