Introduction
In the current era of globalization, unsustainability is a major challenge that modern supply chains experience in both local and global markets. For supply chains to overcome the challenge of unsustainability, they must have robust resilience. In essence, the degree of resilience in a given supply chain determines its capacity to remain sustainable in turbulence markets punctuated by competitions and economic crises.
Moreover, the nature of management determines the resilience of supply chains because risk management and prevention practices play a central role in the achievement of resilience and sustainability. According to Li, Wu, Holsapple, and Goldsby (2017), preparedness, alertness, and agility are three crucial components that define the resilience of supply chains. Preparedness is a proactive approach to resilience that prevents and resists effects of adverse events.
In contrast, agility is a reactive approach to resilience that determines the ability of a supply chain to respond and adapt to changes in its environment. Owing to the dynamic nature of markets, alertness is also a reactive approach to resilience that enables firms to monitor changes and make appropriate responses aimed at alleviating impacts or benefiting from opportune circumstances. Therefore, for supply chains to gain resilience in the turbulent and competitive markets, they must have high levels of agility, preparedness, and alertness.
In the modern era where the world seeks to achieve sustainable development goals in various sectors, sustainability is the major objective. Across the world, governments and consumers focus on sustainable development for it ensures prudent utilization of resources and promotes enduring development. Sustainability of firms or supply chains is dependent on the three aspects of development, namely, economic, social, and environmental dimensions (Mota, Gomes, Carvalho, & Barbosa-Povoa, 2015). Although sustainability is a composite factor, most studies have only focused on the economic dimension of development.
In this view, the present study seeks to examine the sustainability of supply chains based on these three dimensions of development. A comparison of resilience and sustainability shows that they have intricate links that determine the performance of supply chains. Therefore, the establishment of the link between resilience and sustainability is essential to the understanding of factors that contribute to the performance of supply chains in the modern era.
Overview
To achieve the objective of linking resilience to the sustainability of the supply chain, the study employed a survey research design. This research design is relevant because it entails collection of data using structured questionnaires with scales that measure components of resilience and dimensions of sustainability. The collected data were recorded in excel and frequencies of demographic information determined.
Moreover, Cronbach’s alpha was used to evaluate the reliability of scales used in data collection. In inferential statistics, correlation analysis was used to determine the magnitude and the direction of relationships between dependent and variables. Multiple linear regression analysis was used to test hypotheses and establish the degree of influence of each component of resilience on the overall sustainability.
Research Background
Supply Chain Resilience
Although it is a significant concept in management, resilience is still amorphous because empirical studies have not validated existing metrics that define and measure it. Li et al. (2017) report that there are 14 capabilities and 40 vulnerability factors, which provide a broad characterization of resilience in the supply chain, exist currently. The existence of diverse metrics complicates measurement of resilience in various industries and organizations.
Lebel et al. (2006) describe resilience as the ability of systems to maintain their structures and functions after undergoing substantial change. Given that organizations or firms are systems, they exhibit various levels of resilience as they cope with strenuous changes they encounter in turbulent markets. In this view, the work of the management is to understand and identify changes that destabilize organizations and create management strategies aimed at alleviating impacts and boosting resilience. Rose (2011) perceives resilience as a balance between restoration and advancement of systems after disturbance. An appropriate balance occurs when systems restore critical functions and advance others to develop resilience.
In organizations, resilience can be a product of reactive and proactive interventions that the management design and implement. Reactive management interventions aim to boost the capacity of organizations to restore their functions after experiencing adverse events, while proactive management interventions focus on preventing or resisting effects of adverse events (Li et al., 2017). Since organizations are unable to prevent the occurrence of all adverse events, reactive management strategies enable them to mitigate effects and improve resilience.
Critical components of the supply chain resilience either fall in reactive or proactive management interventions. Preparedness is a component that develops resilience of the supply chain using the proactive approach (Li et al., 2017).
Relatively, the supply chain that relies on preparedness in responding to adverse events has substantial resilience because it is proactive. On the contrary, agility and alertness are reactive approaches that organizations employ in mitigating effects of adverse events and stabilizing operations. In the supply chain, alertness refers to the identification of changes or adverse events, whereas agility entails quick adjustments of operations in response to changes or adverse events. Therefore, components of resilience allow organizations to develop proactive management interventions or initiate reactive management interventions.
Supply Chain Sustainability
The sustainability is an important measure of performance in the supply chain because it considers social, economic, and environmental aspects of operations. Governments and consumers across the world pressure organizations to adopt sustainable practices in their supply chain because they have considerable benefits on social, economic, and environmental aspects of development (Mota et al., 2015).
In this view, governments’ regulations and customers’ preferences play a central role in the design products and the supply chain. Mota et al. (2015) argue that the depletion of resources, deterioration of human health, and climate change are major drivers of sustainable supply chain management. Hence, sustainability conserves resources, improves human health, and preserves the environment for future generations while permitting contemporary optimal use. According to Liebetruth (2017), economic, social, and environment are three key dimensions of sustainability, which offer a comprehensive assessment of the performance of the supply chain. Respective performance of organizations in these dimensions collectively determines the supply chain sustainability.
Organizations that operate in closed loop-supply chains consider the sustainability as an indispensable management element in their operations. Forward and reverse logistics define the sustainability of the supply chain because they influence costs, conservation of the environment, the satisfaction of consumers, and protection of the environment (Mota et al., 2015). Legislations coupled with consumers’ demands have compelled organizations to provide sustainable products and services through the supply chain, which provides forward and reverse logistics. The economic dimension of sustainability focuses on costs incurred and profits generated by the supply chain.
Effective management of the forward and reverse logistics in closed-loop supply chains boost profitability because there is minimal wastage of resources and optimal utilization of operations (Mota et al., 2015). Thus, the assessment of the economic dimension reflects a significant proportion of the supply chain sustainability. Life-cycle assessment (LCA) offers an inclusive and reliable method of measuring the environmental sustainability of the supply chain because it considers raw materials consumed, emissions, health impacts, and disposal mechanisms. The social dimension of sustainability assesses the impacts of the supply chain on social systems, such as families, communities, workforces, and societies.
Resilience and Sustainability of Supply Chains
By viewing organizations as ecological systems, which respond to dynamic changes in the environment, it is apparent that resilience has intricate links to sustainability. According to Perrings (2006), organizations can have latitude, resistant, precarious, and panarchial state of resilience. Latitude form of resilience allows organizations to undergo average changes, while the resistant type of resilience does not permit any form of changes.
Precarious and panarchial forms of resilience contribute to the unsustainability of organizations because they represent unstable systems with a low level of resilience (Perrings, 2006). As systems comprise of sub-systems, synchronization of resilience states so that all organizations have the lowest level of resilience creates the highest vulnerability. Rose (2011) portrayed resilience and sustainability as inseparable elements of systems because their coexistence determines recovery process after adverse events. In essence, sustainability is the capacity of organizations to recover from adverse events by using their resources.
Based on the components of resilience, these resources can be proactive management interventions or reactive management interventions (Li et al., 2017). Effective management interventions enable organizations to utilize their resources sustainably. In their argument, Lebel et al. (2006) hold that organizations with resilience, capacity to cope with uncertainties, ability to adapt changes, conservation efforts, and sources of innovations exhibit a high level of sustainability. Therefore, resilience links to the sustainability of organizations and their respective supply chains for it determines the utilization of resources and management of operations.
Noticeably, resilience and sustainability are two important factors with intricate links in the supply chain. As components of supply chain resilience, agility, preparedness, and alertness allow firms to manage and cope with the diverse challenges that they encounter. Literature review shows that limited information is available regarding the link between resilience and sustainability of supply chains (Li et al., 2017; Mota et al., 2015; Govindan et al., 2015).
The existence of limited information is a research gap, which requires empirical studies to provide valid and reliable information. In their study, Li et al. (2017) established that three components of resilience have considerable influence on financial performance, while Govindan et al. (2015) noted that resilient, green, and lean practices account for considerable variations in the performance of the supply chain. These findings point out supply chain resilience influences various aspects of sustainability. Based on previous studies, the objective of the research is to establish the influence of resilience on the sustainability of the supply chain.
Hypotheses Development
The theoretical concept of the study demonstrates that resilience and sustainability have cause-effect relationships in the supply chain. Supply chain resilience is an independent variable comprising of agility, preparedness, and alertness (Li et al., 2017). Components of resilience determine the sustainability of supply chains because they influence the management practices. Sustainability constitutes the dependent variable in the study because it varies in response to the degree of resilience. As the study seeks to link resilience to sustainability, evaluation of the influence of resilience on each of the three dimensions of sustainability would generate three hypotheses.
Hypothesis 1
H0: The three components of resilience have no statistically significant positive influence on the environmental performance of the supply chain.
H0: β1, β2, and β3 = 0.
H1. The three components of resilience have a statistically significant positive influence on the environmental performance of the supply chain.
H0: β1, β2, and β3 ≠0.
Hypothesis 2
H0: The three components of resilience have no statistically significant positive influence on the economic performance of the supply chain.
H0: β1, β2, and β3 = 0.
H1. The three components of resilience have a statistically significant positive influence on the economic performance of the supply chain.
H0: β1, β2, and β3 ≠0.
Hypothesis 3
H0: The three components of resilience have no statistically significant positive influence on the social performance of the supply chain.
H0: β1, β2, and β3 = 0.
H1. The three components of resilience have a statistically significant positive influence on the social performance of the supply chain.
H0: β1, β2, and β3 ≠0.
Research Methods
Survey
The study used the survey as a research design in the collection of primary information from employees in various organizations in the United States. The purpose of the survey was to collect information from the top and middle management employees who understand resilience and sustainability attributes of their organizations. The survey comprised of three sections, which are a profile of respondents, scales of resilience, and scales of sustainability.
The profile of respondents assessed the management level of employees, number of employees, the category of organizational revenues, and type of organization. Scales of resilience constituted of agility, alertness, and preparedness, which evaluated resilience on a five-point scale. Sustainability was made of scales that evaluated economic, social, and environmental performance using a three-point Likert scale.
Description of Sample
The study targeted and sampled respondents who were in the top and middle management levels from different firms in the United States. The identified respondents were contacted formally by using introductory letters, which requested their voluntary participation and outlined the scope and objective of the study in improving supply chain management systems. Moreover, the study assured the respondents of privacy and confidentiality in the use of information collected from them.
The study managed to collect information from 32 respondents who managed to provide complete and usable surveys. Table 1 below summarizes the proportion of respondents according to their management level, size of firms regarding the number of employees and amount of revenue, and the type of organization.
Table 1: Profile of Survey Respondents.
Measurement Scales
The scale of supply chain sustainability constituted of nine items that measured performance in economic, social, and environmental dimensions of sustainability. Each item existed on a five-point Likert scale measuring the degree of performance in respective dimensions.
Supply chain resilience is a scale formed from 15 items representing the three dimension of supply chain resilience. Each of the components of supply chain resilience, namely, agility, preparedness, and alertness, comprised of five items measured on a five-point Likert scale.
Model Test
The analysis of scales shows that each component of resilience had five items, whereas each dimension of sustainability had three items. The reliability test of these scales shows that all scales except preparedness had values of Cronbach’s alpha that are greater than 0.7 (Table 2). Findings of reliability test imply that scales are acceptable in evaluating resilience and sustainability. Furthermore, factors analysis indicates that Eigenvalues and factor loadings are greater than 2 and 64% respectively. These findings mean that construct validities of scales are adequate for they explain a significant proportion of total variance (Table 2).
Table 2: Reliability and validity of the model.
Results of Hypothesis Tests
Correlation is the magnitude and trend of the relationship between dependent and independent variables. In this study, correlation analysis is essential because it defines not only strength but also the direction of the relationship between components of resilience and dimensions of sustainability. Correlation analysis (Table 3) reveals that supply chain preparedness has a moderate positive relationship with environmental performance (r = 0.58), economic performance (r = 0.56), and social performance (r = 0.41).
In contrast, supply chain alertness has a strong positive relationship with environmental performance (r = 0.70), economic performance (r = 0.73), and social performance (r = 0.63). Likewise, supply chain agility has a strong positive relationship with environmental performance (r = 0.73), economic performance (r = 0.71), and social performance (r = 0.65). These moderate and strong positive relationships imply that when sustainability increases, the resilience of the supply chain grows.
Table 3: Correlation Analysis.
Table 4 below depicts regression outcomes that tested the three hypotheses of the study. The regression analysis supports the first hypothesis that resilience has a positive influence on the environmental performance of supply chain. Essentially, supply chain resilience explains 59% (R2 = 0.59) of the variation in the environmental performance of the supply chain, F(3,28) = 13.387. However, the examination of coefficients indicates that agility is the only statistically significant predictor of environmental performance of supply chains (β = 0.625, p = 0.030). The coefficient implies that a unit increases in agility causes the environmental performance to increase by 0.625 units.
Regression analysis of the second hypothesis indicates that components of resilience account for 57% (R2 = 0.57) of the variation in economic performance of the supply chain. The regression model is statistically significant in predicting the influence of supply chain resilience on the economic performance, F(3,28) = 12.445, p = 0.000. Nevertheless, coefficients of regression show that none of the components of resilience is statistically significant in predicting economic performance (p > 0.05).
Testing of the third hypothesis using regression analysis indicate that components of supply chain resilience explain 44% (R2 = 0.44) of the variation in social performance. The regression model is statistically significant in elucidating the effect of supply chain resilience on social performance, F(2,28) = 7.235, p = 001. However, coefficients of regression indicate none of the components of resilience is statistically significant in explaining the variation of social performance (p > 0.05).
Table 4: Regression outcomes.
Discussion
The analysis of the findings indicates components supply chain resilience collectively explain a significant proportion of the variation in environmental, economic, and social performance. Regression analysis demonstrated that resilience accounts for 59% of the variation in environmental performance. As it comprises agility, alertness, and preparedness, resilience influences the environmental performance of the supply chain. The examination of the life cycle of products shows that it entails the procurement of raw materials, manufacture, distribution, consumption, disposal, and recycling (Mota et al., 2015).
The way organizations manage emissions during manufacture and guarantee safety during consumption and disposal of products are critical in the determination of the environment performance. In proactive resilience, organizations design supply chain with both forward and reverse logistics to ensure distribution and recycling of products in the market. Through agility and alertness, organizations respond promptly to adverse effects of their products and services in the market by taking views of customers, undertaking assessments, and mitigating hazards. Therefore, agility is a statistically significant predictor of environmental performance.
Regression analysis also illustrated that resilience explains 57% of the variation in the economic performance of the supply chain. The economic performance of organizations is a sensitive aspect of performance since it entails financial status. As there are numerous economic performance indicators of profitability, it is apparent that profitable organizations exhibit progressive economic performance, while unprofitable organizations have unfavorable economic performance.
Preparedness, as a proactive component of resilience, facilitates organizations to plan and manage logistic operations in a way that reduce costs and boost profits. Li et al. (2017) argue that organizations employ the component of preparedness in reducing costs by choosing an appropriate supply chain, allowing access to trends of sales and forecast, and sharing costs and risks. In the aspect of reactive resilience, organizations utilize components of agility and alertness in responding to changes in both internal and external environments.
Alertness permits organizations to identify strengths and weaknesses in the internal environment and threats, opportunities, and competition in the external environment (Li et al., 2017). Agility enables organizations to adjust lead times, product development cycle, and on-time delivery in response to the level of supply and demand. Cumulatively, preparedness, alertness, and agility reduce logistic costs and improve the profitability of supply chains and organizations.
Findings of the regression analysis show that resilience account for 44% of the total variance of social performance. Critical analysis of components of resilience points out that they predict the social performance of organizations. According to Mota et al. (2015), labor practices, product responsibility, society, and human rights are four pillars that measure social performance of organizations.
The pillar of labor practices covers working conditions and remuneration of employees, while the pillar of product responsibility examines the health and safety of products and services. While the pillar of society focuses on families and social systems in local communities, the pillar of human rights deals with compliance with inalienable rights, such as equality and integrity.
The component of preparedness has a positive impact on social performance because it ensures that organizations adopt and implement best labor practices, design safe products, undertake corporate social responsibility, and comply with human rights. As reactive components of resilience, agility and alertness enable organizations to make appropriate responses aimed at addressing issues arising from the four pillars of social performance. For that reason, social performance is a substantial indicator of resilience in the management of the supply chain among organizations.
The theoretical implications are that resilience play a significant role in the sustainability of supply chains. As agility is a statistically significant predictor of environmental performance, managers ought to leverage it and apply in the management of logistics operations. Other predictors in the model were not statistically significant owing to the design of the scales. Therefore, the use of comprehensive scales with numerous items is necessary to improve the internal and external validity of the findings, as well as reliability.
Conclusion
The impact of resilience on the sustainability of the supply chain is integral in improving effectiveness and efficacy of operations in various firms. In this view, the findings have demonstrated that agility, preparedness, and alertness collectively explain the variation in sustainability. Specifically, the findings have established that resilience accounts for 59%, 57%, and 44% of the variation in the environmental, economic, and social performance of the supply chains.
In all these predictions, regression analysis proved agility is a statistically significant predictor of environmental performance (β = 0.625, p = 0.030). This significant prediction means that when agility increases by a unit, the environmental performance grows by 0.625 units. Although other components of resilience are not statistically significant in predicting environmental, economic, and social performance, they contribute to the regression model for their scales are not only valid and reliable but statistically significant in improving the fitness of the regression model. Nevertheless, further research that uses comprehensive scales with enhanced validity and reliability is crucial to establish real impacts of resilience on the sustainability of the supply chain.
The findings of this study have some implications to supply chain management because it highlights relationships and predictive powers of components of resilience on sustainability. As an implication of the study, managers need to improve the sustainability of supply chains by boosting preparedness, alertness, and agility for they account for substantial variation in sustainability.
The improvement of proactive intervention (preparedness) and reactive interventions (alertness and agility) would enhance individual and collective influence on dimensions of sustainability. Managers also need to boost the resilience of their supply chains because they contribute to social, economic, and environmental dimensions of sustainability. Since supply chain agility is the most significant predictor of environmental performance, managers should optimize it to increase sustainability.
Agility has significant influence because it permits supply chains to be sensitive to changes in the internal and external environment, as well as forces of demand and supply. Overall, managers ought to mobilize resources and develop resilience of supply chains so that they can prevent adverse events and mitigate their effects whenever they occur.
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