Developing Strategies for Sustainable and Resilient Supply Chains

iris-AperTO University of Turin’s Institutional Research Information System and Open Access Institutional Repository SUBMITTED MANUSCRIPT This is the authors’ submitted version of the contribution published as: Zimmermann, R., Senna, P., Pereira, P., Fornasiero, R., Zangiacomi, A., Betto, F. (2025). Developing Strategies for Sustainable and Resilient Supply Chains. In: Zimmermann, R., Rodrigues, J.C., Simoes, A., Dalmarco, G. (eds) Human-Centred Technology Management for a Sustainable Future. IAMOT 2024. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-031-72490-9_61 Article publication date: 27 March 2025 The publisher's version is available at: https://link.springer.com/chapter/10.1007/978-3-031-72490-9_61 When citing, please refer to the published version. This full text was downloaded from iris-Aperto: https://iris.unito.it/ Developing strategies for sustainable and resilient supply chains Abstract. Although recent studies have recognised that sustainability and resilience should be considered part of the same efforts in the context of a transformative perspective, research combining both constructs is still scarce. This study adopts a comprehensive perspective that acknowledges that maintaining business continuity (through persisting, adapting or transforming), to reduce long-term risks is a common aspect of sustainability and resilience. It aims to identify strategies to be applied by companies and SCs in order to increase their social, environmental and economic sustainability, as well as their ability to be ready, respond and recover from unexpected events. Considering that the actions and strategies to deal with sustainability and resilience can be different and eventually paradoxical, this work applies the organizational ambidexterity approach as a theoretical background. Keywords: sustainability; resilience; supply chains; organizational ambidexterity Introduction The contemporary context is characterized by successive, increasingly frequent, and far-reaching events, with a major impact on people's lives. Some of them are hard-topredict crises – the so-called black swan events – such as the COVID 19 pandemic and the war in Ukraine; and others are the result of actions taken over time that undermined different aspects of society and the environment, such as the overpopulation in certain parts of the globe, the refugees' crises, the scarcity of water, among others. At the same time, companies and supply chains (SC) face several business challenges, many of them related to the predominant model of global SCs. Previous studies on SC sustainability generally agree that adopting sustainable practices ensures business continuity while lowering long-term risks. Business continuity is also an essential element of a resilient SC (Ivanov, 2018). However, although recent studies have recognized that sustainability and resilience should be considered part of the same efforts in the context of a transformative perspective (Silva et al., 2023), research combining both constructs is still scarce (Ivanov, 2018). Numerous authors have reiterated the idea of resilience as a system's capacity to recover and go back to its initial state. In this work, resilience is understood as the “capacity to persist, adapt or transform in the face of change” (Wieland & Durach, 2021), which means that being resilient does not necessarily imply returning to the initial state. The actions to increase SC resilience can be divided into proactive actions, closely related to the concept of readiness, and reactive actions, linked to the capabilities to respond and recover (Chowdhury et. al 2017). This study aims to identify strategies to be applied by companies and SCs in order to increase their social, environmental and economic sustainability as well as their 2 capacity to be ready, to respond and to recover from unexpected events. Considering that the actions to deal with sustainability and resilience can be different and eventually paradoxical, this work applies the organizational ambidexterity approach as a theoretical background. Organizational ambidexterity refers to the capability to simultaneously deal with paradoxical or conflicting activities (Gibson & Birkinshaw, 2004; He & Wong, 2004). In this context, ambidexterity emerges to better manage this dilemma and perform the best in both directions. Literature Review The term sustainability is usually referred to as the development that ensures current needs without endangering the ability of future generations to meet their own needs (European Commission, 2022; Elkington J, 1994); including environmental, social, and economic dimensions, all of which must be managed in tandem with one another. Although sustainability has received a lot of attention in recent decades, the complexity of the notions surrounding the term has grown along with the complexity of the corporate and societal situations. In order to support sustainable development, the European Commission (2022) emphasizes that economic development must be in line with social fairness, human rights respect, strong labor standards, and high environmental standards. Practices like green supply networks, closed-loop supply chains, and circular supply chains are examples of how SC management (SCM) is now addressing sustainability challenges. Previous studies on SC sustainability generally agree that adopting sustainable practices ensures business continuity while lowering long-term risks. Business continuity is also one of the essential elements of a resilient SC (Ivanov, 2018). However, research combining sustainability and resilience is still a nascent topic (Ivanov, 2018). Resilience can be associated with the capacity to encompass three moments: readiness, response, and recovery. Readiness refers to the ability to be ready for changes that may occur. Response is related to the capacity of an organization to respond efficiently to disruption (Sheffi et. al 2005; Chowdhury & Quaddus, 2016); while recovery is associated with the capacity to continue after the disruption occurs. The different strategies to be adopted in the context of SC resilience allow companies to improve their capacity to persist, adapt or transform in the face of change (Wieland & Durach, 2021). Additionally, actions to increase SC resilience can be divided into proactive actions, closely related to the concept of readiness, and reactive actions, linked to the capabilities to respond and recover (Chowdhury et. al 2017; Rahman et al., 2022). Taking into consideration the model developed by Chowdhury et al. (2017), this study aims to focus on proactive actions, considering that these actions strength the control of SC actors' operations, even in times of disruption and, therefore, possibly contribute to the organization's capacity in adapting or transforming. Flexibility, redundancy, integration/visibility, efficiency, market strength, financial strength, and readiness are further categories into which proactive capabilities might be subdivided. Flexibility stands for the capacity to adapt to a particular circumstance. In supply chain resilience, 3 flexibility means having the ability to change production patterns (such as quantity, scheduling, and inputs), sourcing or distribution procedures (such as adding new suppliers or substitute parts or routes and modes of transportation), as well as growing the ability for customization and hiring a workforce with different sets of skills. Redundancy is related to having a reserve capacity for manufacturing and distribution, stock of raw materials, components, or finished goods, and backup utilities to utilize as a backup plan are all examples of redundancy. According to Messina et al. (2022), integration and visibility refer to the capacity to share and collaborate information and to be able to link processes and systems as well as obtain and/or deliver the necessary information on time from and to relevant partners for improved decision support. Efficiency can be achieved by reducing waste, increasing the productivity and effectiveness of the workforce, and ensuring adequate quality control, and robustness as a consequence. Boosting resilience can also be achieved by strengthening the company's position in the market (e.g., customer relationship, satisfaction, brand image, differentiation, and finance; e.g., diversification, funding availability, profit consistency, and insurance). Methodology This study uses mixed methods to allow the identification of strategies to increase sustainability and resilience of SCs. The overall methodological approach is presented in Figure 1. Fig. 1. Methodological approach The study begins with the analysis of risks previously identified in the ReSChape project (2023). The project performed a broad identification of SC risks related to each dimension of the PESTLE framework and a classification of them in sustainability categories. These risks were validated in a workshop with experts from different knowledge areas. Following, in order to identify the current knowledge on the relationship between resilience and sustainability in the SCM literature, a literature review using a systematic 4 approach was performed. The systematic method suggested by Denyer and Tranfield (2009) was used to ensure that the review is transparent, auditable and replicable. This study used the following steps proposed by Denyer and Tranfield (2009): (1) location of studies; (2) selection and evaluation of studies; (3) analysis and synthesis; (4) presentation of results. The first step was the location of relevant studies. Words related to resilience, sustainability and SC were used to search for previous studies. Following recent studies, Scopus was defined as the database for the search, which was based on all possible combinations of the three groups of keywords. Only journals (articles and reviews) were searched, limited to the areas of “Business Economics”, “Engineering”, “Operations Research Management Science”, “Environmental Sciences”, “Social Sciences” and “Decision Sciences”. There was no restriction for the date of publication. The following search string was used: ( TITLE-ABS-KEY ( "resilien*" AND "sustainab*" ) AND TITLE-ABS-KEY ( "supply chain" OR "value chain" ) ) AND ( LIMIT-TO ( LANGUAGE , "English" ) ) AND ( LIMIT-TO ( DOCTYPE , "ar" ) ) The first search, carried out on May 31, 2023, returned a total of 870 items. After the abstract reading, 104 papers that were related to the objectives of the research were maintained and were fully read by the researchers. After the final reading, 59 papers were selected as the final sample. Following, the identified risks and the current literature on the topic were used as inputs to the identification of actions to increase SC resilience and sustainability. Complementary, another search has been carried out within the Scopus database in order to identify supplementary literature specifically for the actions. The timeframe used considered more recent papers published in high-ranking journals from 2020 onwards. The following “modular” search string was used for this purpose through a set of customised strings: ( TITLE-ABS-KEY (“risk keyword”) AND TITLE-ABS-KEY ( "supply chain" OR "value chain" ) ) AND ( LIMIT-TO ( LANGUAGE , "English" ) ) AND ( LIMITTO ( DOCTYPE , "ar" ) ) When risks were too specific and it was not possible to find papers to identify actions, keywords related to the “megatrend” OR “trend” – as identified in a previous stage of this research – were used instead of “risk keyword”. Below there are two examples of search strings used in this step. Megatrend – Protectionism; Risk – Price variation | ( TITLE-ABS-KEY (“price variation”) AND TITLE-ABS-KEY ( "supply chain" OR "value chain" ) ) AND ( LIMIT-TO ( LANGUAGE , "English" ) ) AND ( LIMIT-TO ( DOCTYPE , "ar" ) ) Megatrend – Digital economy; Risk – Poor infrastructure and low capital | ( TITLEABS-KEY (“poor infrastructure” OR “low capital”) AND TITLE-ABS-KEY ( "supply chain" OR "value chain" ) ) AND ( LIMIT-TO ( LANGUAGE , "English" ) ) AND ( LIMIT-TO ( DOCTYPE , "ar" ) ) term”. After the identification stage, actions were classified according to: ▪ Responsible actor for the action (supply chain actors and/or policy makers); ▪ Resilience capabilities according to the definition of Chowdhury et al. (2017); 5 ▪ Sustainability dimensions: Economic, Social and Environment; ▪ Actions prioritization stemming from the risk prioritization (Very High, High, Medium, Low or Very Low in terms of probability and expected impact on the SCs). The actions were then grouped into the sustainability dimensions and resilience capabilities, using a content analysis approach and according to the classification given to the risk that it intends to address. Six researchers were responsible for conducting the actions classification process. The achieved model was named “Supply Chain Sustainability and Resilience Radar” as it aims to help supply chain actors define the most appropriate strategy for their organization, as a set of actions in the context of the supply chain. Thus, each action is positioned on this radar according to its main contribution in terms of sustainability and resilience. Finally, the validation of the “Supply Chain Sustainability and Resilience Radar” took place on the 12th of September 2023 in an online workshop with 41 experts on topics related to SC management from the European Union zone. The workshop ended with the validation of more than 100 actions and their position on the radar regarding sustainability and resilience. 1 Results and discussion This research was able to produce and validate a model – the “Supply Chain Sustainability and Resilience Radar” (Figure 2) – that is one of the first attempts to relate sustainability and resilience, with more than 100 actions. Each action is placed in the radar according to its main contribution and has a single code constituted by two parts, a prefix – P (political), E (economic), S (Social), T (Technological), EN (Environmental), and L (Legal), and suffix based on a counting number. The model allows SC actors to explore the actions according to the most suitable plan regarding their organization, once those risks have a very heterogeneous nature. More than 100 actions are included in the Supply Chain Sustainability and Resilience Radar, which is categorized based on how each action contributes to the resilience capabilities and sustainability aspects. The strategies encompass resilience capabilities and sustainability dimensions, with the intention of combining actions that impact both. This is done in response to the realization that more modular and interconnected approaches are needed for current and future SCs, to the detriment of traditional standalone strategies. Given that the actions were prompted by a variety of heterogeneous risks, the selection of which actions to implement necessitates taking into account the priorities of the many parties in each SC as well as its context. As a result, SC actors may choose to implement 6 only a portion of a strategy's activities, or they may mix actions from many strategies to suit their unique requirements. Fig. 2. Supply Chain Sustainability and Resilience Radar For example, the part of the radar that encompasses the resilience capability “redundancy” and the “economic” sustainability pilar is considered the strategy “Economic/Redundancy”, and includes three actions, as shown in table 1. Table 1. Actions and strategy for economic sustainability and redundancy Economic/Redundancy: This strategy aims to increase economic response by identifying and promoting adaptive changes to the supply chains and introducing actions that secure supply chain actors’ revenue. ID Action E_1 Identify and promote adaptive changes to the supply chains (re-design, situational re-planning and dynamic rescheduling, multi-region supplier, multi-sourcing, reserved inventory, and alternative shipment) P_26 Introduce insurance products for commodities to secure supply chain actors' revenues. 7 S_20 Integrate the inventory with returns and sales channels, as well as suppliers, to oversee current stocks. Use AI and big data to foresee inventory requirements. Finally, during the workshop, besides validating the actions and the model, the experts were invited to discuss possible trade-offs between resilience and sustainability, and between resilience capabilities themselves. For example, in action L_11 – “Increased mandatory post-market surveillance to ensure better product safety, minimize risks and fines, and also protect image.” – it was identified that an increment in costs associated with Product Lifecycle Management could be verified, which means that a decision on readiness may compromise economic sustainability, although it was the pillar where this action was firstly placed. Eight actions with potential trade-offs were identified. Conclusions SCs are under pressure to become more adaptable to the disruptions they face, necessitating actions and strategies beyond the ordinary. This study has yielded 134 distinct actions impacting various risks, each with diverse origins, positively influencing the resilience and sustainability of implementing organizations. Additionally, 20 strategies have been formulated, combining sustainability dimensions and resilience capabilities. Both actions and strategies form a dynamic model, tested in a multinational, cross-sector workshop, titled 'Supply Chain Sustainability and Resilience Radar,' involving experts. The model was designed to be dynamic, both in terms of its application and its evolution. Each company, starting from its own challenges, can identify actions which can fit with its request. At the same time, the model is a “living tool” as new actions can be incorporated when appropriate, and current actions can be excluded if the probability and impact of the related risk are considered to decrease substantially. The analysis of the results demonstrate that the actions demand the participation of a broad set of actors, including policymaker. It was also concluded that there are many more synergies than trade-offs between action, reinforcing the need for a joint transformative approach. The study contributes to literature by shedding light on the resilience capabilities and sustainability dimensions which need to be further investigated; and to practice by providing a guidance through the research findings to managers in the European setting to deal with the complexity and uncertainty of supply chains References 1. Chowdhury, M.M.H. & Quaddus, M. (2017), Supply chain resilience: Conceptualization and scale development using dynamic capability theory. International Journal of Production Economics, 188, 185-204. DOI: https://doi.org/10.1016/j.ijpe.2017.03.020. 8 2. Chowdhury, M.M.H. & Quaddus, M. (2016), Supply chain readiness, response and recovery for resilience. 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