Smart Manufacturing

CHAPTER 4Improving Supply Chain Resiliency Using Smart Technologies

Anthony Tarantino, PhD

Introduction

Enterprises face market, credit, reputation, legal, liquidity, and operational risks. Supply chain risk can be seen as a subset of operational risk, and arguably it may be the most challenging type of risk to mitigate. To provide effective supply chain resiliency, risk managers must account for risks from a wide variety of internal and external sources that can include rare but drastic black swan events. The 2003 SARS epidemic, the 2011 tsunami in Japan, and the 2019 COVID-19 pandemic created major shocks to global supply chains that were very difficult to predict with even with the most innovative modeling tools and contingency planning.

While it is common to think of global supply chains and their management as creations of the late twentieth century, global supply chains date back over 2,000 years, when trading prospered between China and Rome (silk and paper) and India and Indonesia (spices). We have evidence of effective supply chain resiliency in 215 BC, when Roman legions outsourced their rescue from Spain to merchant ships that were not part of the empire. The process included formal contracts and insurance.¹

Much of what we consider to be best practices in managing supply chain risks have their origins dating back hundreds of years. What has changed is the extent and velocity of change. According to the Brookings Institution, global trade increased from 39% of global ...