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126 This guidance results from the National Cooperative Freight Research Program (NCFRP) Project 50, Improving Freight Transportation Resilience in Response to Supply Chain Disruptions. A final report for the project is also available that outlines the research approach and provides references for many of the actions recommended in this guidance. The guidance is organized into five sections. The first section presents a representation of a supply chain that is used as a framework for subsequent recommendations on where different participants can make the freight transportation system more resilient. The next section examines the key characteristics of disruptions that help define the magnitude of impact and often dictate the type of response that will occur from the different participants. The third section presents guidance in the form of a series of steps that then lead to specific strategies for making a supply chain more resilient. The final section presents this guidance in a more hierarchical manner that allows users to determine what types of strategies for enhancing supply chain resilience are appropriate for different circumstances. SUPPLY CHAINS AND RESILIENCE: DEFINITIONS Supply chains are critical in today's world economy and ultimately to how society functions. There are many general definitions of a supply chain, and many more that are specific to particular commodities and goods. In general, a supply chain consists of the physical means of moving commodities and goods from one location to another, the organizational and information systems that support this movement, and the institutional environment within which the movement occurs such as the relationships with customers and with regulatory agencies. Put in simple terms, as noted by the Federal Emergency Management Agency (FEMA), "it is the process of deciding what, when, and how much should move to where".2 As noted earlier a supply chain will vary by commodities and goods as well as by market. Figures 2 to 4 illustrate this with representations of supply chains examined as part of this research. Even though there are differences among the supply chains shown, there are some common components to each. For example, each supply chain has specific locations that consist of origins, destinations and transshipment points (often referred to as nodes). Much of the delay that occurs normally in the supply chain occurs at such locations, primarily due to congested facilities. Every supply chain also includes network flows (often referred to as links). Examples include maritime shipping routes, rail lines, highways, inland water routes, and aviation corridors. Most definitions of supply chains also include the transactional and information systems that support such movements. For purposes of this guidance, the following supply chain components lead to the types of strategies that can be used to make the supply chain more resilient. ï· Physical infrastructure â divided into network link flows and node transfers: Road, rail, inland water, airport, and port infrastructure. ï· Network logistic support systems â Command and control systems that allow scheduling, network rerouting, capacity flexibility, risk pooling, and human resource managing. ï· Transactional/financial systems â Interactive supplier/customer financial systems, information systems that support capital investment, and overall firm financial systems. 2 FEMA. 2018. " Supply Chain Resilience Guide," draft. December. Those who work in supply chains often say their goal is a lean, smart and connected supply chainâ¦.the intent of this guidebook is a lean, smart, connected and resilient supply chain.
127 ï· Market/institutional â divided into internal to an organization and external relationships â Regulatory/oversight relationships (prior to, during and after an incident), corporate policies, social and political systems, and social capital (reflects the interpersonal relationships and institutional structures that establish boundaries for interpersonal interactions)â¦or for private firms diversifying suppliers or carriers. Figure 2: Petroleum via Pipeline Supply Chain Figure 3: Electronic Imports Supply Chain
128 Figure 4: Supply Chain in Support of Military Deployment Supply chain resilience can be defined as "the adaptive capability of the supply chain to prepare for unexpected events, respond to disruptions, and recover from them, by maintaining continuity of operations at the desired level of connectedness and control over structure and function."3 An important extension to this definition of supply chain resilience is offered by Sheffi who states that it is "not just managing risk but also offering an opportunity to be in a better position than the competition to recognize and respond to an event, and even to gain advantage from a disruption.â4 In other words, supply chain resilience should not only be concerned with how to provide the most effective and efficient response to a disruption, but also how to anticipate likely disruptions and put in place the capability to minimize potential impacts, or hopefully avoid them altogether. Another important concept is social capital, which can be defined as the ability of groups or communities to cope with external stresses and disturbances as a result of social, political, and environmental change.5 In the context of 3 Falasca, M., Zobel, C., & Cook, D. 2008. "A Decision Support Framework to Assess Supply Chain Resilience." The 5th International ISCRAM Conference, (pp. 596-605). Washington, D.C. http://www.iscram.org/legacy/dmdocuments/ISCRAM2008/papers/ISCRAM2008_Falasca_etal.pdf 4 Sheffi, Y. 2005. "Building a Resilient Supply Chain." Harvard Business Review - Supply Chain Strategy, 1(8), pp. 1-4. October, https://hbr.org/2007/08/building-a-resilient-supply-ch 5 Adger, N. 2000. "Social and Ecological Resilience: Are They Related?" Progress in Human Geography, 24(3), 347-364. https://groups.nceas.ucsb.edu/sustainability-science/2010%20weekly-sessions/session-102013-11.01.2010-emergent- properties-of-coupled-human-environment-systems/supplemental-readings-from-cambridge- students/Adger_2000_Social_ecological_resilience.pdf
129 supply chain resilience, the concept of social capital is most relevant to the employees of the owners and operators of the networks and facilities that are disrupted. No individual or place is immune to disruption or disruption-related losses. Accidents, acts of terrorism, financial disasters, natural disasters, and so forth can lead to a wide range of consequences. It is nearly impossible to anticipate all of the possible configurations of a disruption and of the dynamics of a response. However, whereas most guidance focuses on how to respond to incidents in the safest and most expeditious manner possible, which is certainly an important aspect of enhancing system resilience, the guidance in this document also adopts a proactive approach to anticipate possible hazards and threats. This then leads to the identification of strategies to minimize or avoid altogether disruptive impacts. SUPPLY CHAINS AND RESILIENCE: STAKEHOLDER ROLES An important characteristic of the supply chain and one explicitly considered in this guidance is the distinction between public agency and private company roles. These differences occur primarily for incident-level responsibilities and planning-level efforts. For incidentsâ¦â¦ In a general sense, public agencies have three major responsibilities as it relates to supply chain resilience. First, and perhaps most importantly, public agencies own important infrastructure networks that support the efficient movement of goods and commodities. Even when considering that railroads own their own track, rail movements are often supported with the use of trucks (and thus roads) to move goods and commodities to and from rail terminals. The public agency role in providing, operating and maintaining this road network thus becomes an important contributing factor to supply chain resilience. This is especially critical in recovering from an incident by opening the disrupted roads as soon as can be safely done. Second, public agencies often provide the emergency response capabilities relating to firefighting, hazardous materials handling, ambulance and medical services, and managing traffic flow during an incident and community evacuations, if warranted by a particular incident. It is usually these public agencies that interact with companies as the firms respond to their own demands during an incident. Considerable focus has been placed on establishing the protocols and standard operating procedures to guide these interactions. Third, public enforcement (for public safety) and regulatory agencies (for investigations) often have focused missions with respect to the handling of incidents. In some cases, these missions can often be at odds with the objectives of other incident participants. Safety is always the most important goal, but following that, many of the transportation agencies and private carriers are anxious to reopen the facility or service as soon as possible. Regulatory and safety agencies want to understand the causes of the incident and thus do not want to disturb the incident scene until the necessary information is collected. For example, in a rail derailment, the railroad will want to remove the cars that still remain on the rail as soon as possible for delivery to the destination, whereas investigators might very well want to see âthe entire pictureâ before the site is disturbed. These two perspectives have sometimes resulted in tensions among those responding to an incident â¦.. simply because they each have different roles to play in the incident response. For pre-event planning and preparationâ¦.. Many businesses have developed plans for what to do in response to an incident, in particular defining the responsibilities for each unit in the firm depending on the type of disruption. These responses generally fall under the concept of business continuity plans. The importance of such plans was highlighted by the Great East Japan Earthquake of 2011 (see insert) where global supply chains were disrupted for months due to the loss of motor vehicle component supplies out of the affected area in Japan. One of the lessons learned from this experience was that most Japanese firms now have business continuity plans that outline the steps that will be taken for expected exigencies associated with such a large disruption. However, the major focus of business continuity plans is on the business itself and steps that need to be taken to recover service, maintain customer relations, and avoid negative
