The Covid-19 pandemic had not significantly hindered the organization's core business but instead acted as a nuisance in certain functions. The company kept its projected revenues intact for the remainder of 2020, so the pandemic did not have a negative business impact.
However, it was clear that personnel-related risks were greatly heightened at the time of the interview. The reliance on personal skills and local practices had caused some issues in cases of virus contraction. This is an element of resource limitations and strictly controlled internally, leaving ample room for improvement (Petit et al. 2010, 11). The fact that the organization relies primarily on internal supply is a source of baked resilience into the business model. Then again, demand volatility from the customer side seemed to be a significant vulnerability source. The issues related to supply and demand were all somewhat positive, as the issue at the time of the interview was that rental revenue and sales were so significant that the demand could not be realistically met at all. Arguably the capacity issues stem from the reliance on the single-core component supplier. Still, since the company also acts as an importer of the same components, the whole business model dictates their exclusive use.
When defined as the ability to withstand shock proactively, Robustness is present, but exclusively due to internal processes and redundancy because of the reliance on a single supplier (Wieland & Wallenburg 2013). Resilience and its core capacities were significant factors in supply chain-related decisions.
The conscious choice of multiple operational units and warehouses has proven to be highly effective in mitigating supply risk in disruption events. This dispersion type can have negative consequences when supply chain complexity dramatically increases, but the dispersion resources act as critical detangle points for risk (Petit et al., 2013). The company had faced some issues through dispersion concerning the lack of standardization in procedures between the operating units. Still, altogether, dispersion seems to be a significant source of resilience and competitive advantage. The absorptive capacity was in excellent order and seemed to stem from the ability to quickly change the production parameters according to customer need and demand. The internal sourcing between units does, however, undoubtedly increase logistics costs compared to the more centralized solution. Still, the on-site demand for flexibility from the customer's side does seem to more than warrant the existing model. Petit et al. (2010) listed centralized distribution as one of the critical hindrances of resilience in their research, so the dispersion approach may indeed serve the purpose of resilience well.
The adaptive capabilities, while locally in good standing, suffer from the rigidity of the supply network. Responsiveness suffers from the lack of capacity caused by the reliance on a few strategical suppliers, but this is indeed built into the business model and would be difficult to change. A reduced supplier base was also deemed to be a critical source of disruption by Petit et al. (2010).
However, a smaller supplier base is often a compromise for more robust connectivity and strategic partnerships (Pereira et al., 2014). The lack of interchangeability of the main production components between different suppliers also proves the point further. In this case, the recovery capacity had also been relatively untested as the business has remained relatively stable throughout. Still, excellent financial solidity would undoubtedly assist in the case of production halting disturbances. Financial strength is the crucial enabler for supply chain resilience (Petit et al., 2013; Pereira et al., 2014).
Contrary to the statement regarding reactive capacity by the SCM-B, the most significant resilience source seemed to stem from the response capabilities enabled by the dispersed resources and decision-making and the tight coupling with its strategic suppliers (see figure 8). The lack of flexibility was offset by the ability to scale operations through supplier involvement. Control in the proactive phases was achieved through agility stemming from the decentralized structure. Connectedness was achieved again with the tight internal and external coupling throughout the value chain. Recovery capacity remained undertested, but control measures existed through risk-pooling.
Figure 9 Resilience Capacity Distribution of Company B
The critical vulnerability points reflected the discussion well, with the emphasis on turbulence as the key source of vulnerability (see table 10) was the correct one because the pandemic directly influenced the key disturbance events. The resource limitation is greatly heightened due to the significant delay disruption and the reliance on a few key suppliers. Greater adaptive capacity would be required to mitigate resource risk more effectively (Petit et al., 2013). According to Aslam et al. (2020), adaptability enables companies to implement new strategies and techniques to address disruption, thus increasing resilience, but the difficulty of raising the adaptable capability stems from problems in aligning the supply chain and operating procedures; something quite prevalent during the interview. However, the particular lack of adaptability is decidedly built into the business model and does somewhat pronounce itself during a disruption event such as the Covid-19 pandemic. The most critical vulnerability sub-factor based on its frequency during the interview was undoubtedly personnel risk.
The risk experienced in replaceability of personnel and the reliability of outsourced labor has connections to multiple vulnerability factors. Most of the vulnerability is related to the sensitivity factor. This sensitivity does not stem from the inherent complexity in the supply network but rather from the lack of replaceability in crucial roles within the organization. This risk related to interpersonal difficulties in knowledge and skill should be addressed by standardizing process and training to enable at least functionality in a case of absence. The heavy use of outsourced labor stemming from risk areas in Europe has also been a significant issue in the southern Finland area. Therefore, the most critical point of vulnerability points to labor availability problems and the lack of replaceability in specific tasks.
Table 9 Company B Vulnerability Ranks
B Vulnerability Ranks Score Weighted score
Resource Limits 8 14
Sensitivity 6 7,5
Connectivity 7 7
Turbulence 3 6
Supplier/Customer disruptions 3 4,5
External Pressures 3 3
Deliberate Threats 1 1
The highlighted capabilities (see table 11) are centered around the de-centralized company structure. Essential dispersion sub-factors included the dispersion of resources and skills locally, personnel capability related to the business culture, and redundancy in an operational capacity. Collaboration is vital in a case of reliance on critical suppliers. This reliance was effectively mitigated via joint planning and scheduling. A mutual benefit was the basis for many interactions with the key suppliers, which relied on the company as a significant revenue source. The company’s relative size also positively influenced its resilience while also decreased vulnerability from the external environment. Company B did not face substantial market shifts or regulation changes as it operated in a steady market.
Table 10 Company B Resilience Capability Ranks
B Capability Ranks Score Weighted score
Collaboration 8 10
Dispersion 5 10
Redundancy 6 9
Flexibility in order fulfillment (agility) 7 7
Market position 5 5 dispersion to the company. The biggest issue in the future would be the detangling of reliance on “quiet” skill and knowledge.