The supply chain crisis anddisaster pyramid

A theoretical framework for understandingpreparedness and recovery

R. Glenn Richey JrDepartment of Management and Marketing,

Manderson Graduate School of Business,Culverhouse College of Commerce and Business Administration,

The University of Alabama, Tuscaloosa, Alabama, USA

Abstract

Purpose – The research on supply chains concerning disaster and crisis situations is in its infancy,but rapidly expanding on the backs of top researchers in the field. As with most young researchstreams there is very little theoretical grounding in extant studies. The purpose of this research is tointegrate four prominent existing theoretical perspectives to provide a concise yet holistic frameworkfor grounding future research.

Design/methodology/approach – The development of the disaster recovery pyramid is completedfollowing an extensive review of the resource, risk and crisis/disaster recovery, and preparednessliterature. Additionally, literature from the resource-based view (RBV) of the firm, communicationtheory, competing values theory, and relationship management theory are canvassed. Businessprofessional and academics are also interviewed to validate the pyramid.

Findings – The proposed framework is a call for future studies in the supply chain management andlogistics disaster, and crisis management arena. The findings suggest that much of the work in supplychain disaster and crisis preparedness and recovery can be theoretically supported in combination offour mature theoretical perspectives: the RBV of the firm, communication theory, competing valuestheory, and relationship management theory.

Originality/value – This is the first attempt to theoretically support the areas of supply chaindisaster and crisis preparedness and recovery. The motivation of this paper is to both develop aframework and support a drive for growing multiple research streams in the area. Avenues of futureresearch and theoretical grounding are suggested in a graphic representation.

Keywords Supply chain management, Disasters, Contingency planning, Research

Paper type Conceptual paper

IntroductionIt is September 10, 1993, and Dick Rogers drives frantically to the local Shalimar Floridahospital. The hospital is rated to handle the force of a Category 3 hurricane. Unfortunately,Hurricane Opal has just been upgraded to a Category 4 and the municipalities in the strikezone are being completely evacuated. As an MD Intern at the hospital, Dick expects thathe will be one of the key people relied upon to evacuate the hospital. He arrives andsearches frantically for his superior. Dick finds his boss and tells him, “I am here to helpwith the evacuation of the patients.” His boss laughs and says:

We aren’t moving anyone. The only way to move these patients out of the hospital is usingEMS (emergency medical services) and we can’t tie EMS down to an evacuation procedurewhen we need them to bring patients here.

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Vol. 39 No. 7, 2009pp. 619-628

q Emerald Group Publishing Limited0960-0035

DOI 10.1108/09600030910996288

This is just one example of the situation dependent complexities that managersexperience when supply chain crisis situations arise. A similar situation that many UScitizens remember occurred in New Orleans, Louisiana. You may remember images onFox, CNN, and the BBC of a parking lot full of yellow school busses that were not beingused to evacuate the Katrina flood victims. As water deluged into the 9th Ward, talkingheads on the networks chided federal, state, and local officials for not having thosebusses in operation. Why did the busses not move to save the distressed? The truth isthat the busses remained out of service because the drivers had evacuated from themunicipality with their families as was recommended to all those in the New Orleansarea.

Supply chain management research is increasingly focusing on supply chains intimes of crisis. The depth of related research is impressive for such a young area.Recent key topics in supply chain disaster and crisis management-related supply chainstrategy and logistics operations include: agility (Oloruntoba and Gray, 2006), riskmanagement/insurance issues (Kleidt et al., 2009), humanitarian issues (Gibbons andSamaddar, 2009; Kovacs and Spens, 2007), inventory management (Beamon andKotleba, 2006), facility location (Balcik and Beamon, 2008), collaboration/networks(Gibbons and Samaddar, 2009), and multi-level partner/non-partner integration (Perry,2007; Rathbun, 2007). These studies have initiated a building of ideas and propositionsthat need to be explored for the betterment of business and mankind alike. Yet, extantresearch has no common string or grounding framework from which to draw in orderto define the parameters of future studies. This research looks to begin thedevelopment of a framework for defining those boundaries. I title this framework thesupply chain disaster and crisis pyramid (DCP).

Supply chain disaster and crisis situations can arise in nearly any area of the worldin multiple forms. Hurricanes in the Gulf of Mexico and Atlantic Ocean; tornados inOklahoma and Texas; forest fires in California, Mongolia, and Central Africa; tsunamisin India and Indonesia; terrorism in London and Cairo; war in Iraq and Cashmere;swine flu in Mexico and Australia; AIDS in Africa and the USA; pirates in Somalia andon the internet; and the list goes on and on. The common thread with all these events isthat we as supply chain managers and researchers must develop plans to get peopleout of harm’s way and get aid into the impacted areas. I cannot think of amore important area of research in our field. Thus, there needs to be an ongoing call forthe development of research streams focusing on the supply chain disaster and crisisdomain. This study integrates a multiple theoretic perspective with the hope ofgrounding, uniting, and in some ways structuring the complexity that has becomesupply chain disaster and crisis research. This research will begin by discussing thecapstone of the pyramid and then relate the capstone to the base. After the pyramid isconceptually developed, I will address some approaches to grounding research andaddressing acceptable outcome variables. I will conclude by discussing a few avenuesof research that are vital to improving supply chain management in times of disasterand crisis.

Theoretical foundationsEvery good research domain needs a solid theoretical base. In the development of thethree “Supply chains in times of crisis”, special issues of International Journal ofPhysical Distribution & Logistics Management, I required myself to canvass the

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literature. My early expectations were that the task would not be all that difficult. Asthe manuscript submissions increased, I found myself reading across multipledisciplines and techniques. The literature was quite broad. Unfortunately, it was alsoquite theoretically shallow. Much of this can be attributed to two things:

(1) the immediacy of ground level operational need related to the topic; and

(2) the broad dispersion across multiple fields.

Still, I was able to define three specific cornerstones of the discipline to date:collaboration, communication, and contingency planning. Ultimately, theinterconnection is one of stakeholders:

(1) finding ways to effectively partner and develop improving collaborativerelationships built of long-term commitment;

(2) fostering information development and exchange for facilitating strategicplanning based in limited safeguarding; and

(3) developing contingency programs that incorporate the flexibility forresponding to the inevitable changes in expected events while pursuingsometimes inconsistent goals.

Figure 1 is a graphic representation of the DCP.The DCP is built on a foundation of the three Cs discussed above. This base can be

theoretically explained by relationship management theories (collaboration),communications theory (communication), and competing values theory (contingency).Additionally, the top of the pyramid is related directly to the resource-based view (RBV)of the firm. In the following section, I will very quickly explain each of these theoreticalpillars and then make some suggestions as to how they might be employed in futurestudies.

The capstone of the pyramid – resource managementIt is almost impossible to find a quality piece of research in supply chain disaster andcrisis planning and recovery that is not tied to resources. Stakeholders involved in thistype of resource management are both public and private. They also manageriallybridge from CEO’s and federal agency heads to front line employees and unitsupervisors. Regardless of level, these managers all have a task related to moving andleveraging human, financial, informational, technological, and physical resources.So theoretically, one would expect that empirical models would include a tie to howresources are employed, how resources are impacted, or how they interact with otherissues. This opens the door for research on both linear process models and moderatingand mediating interactions effects.

Resources play a vital role in supply chain partnerships. It is no surprise thatservice-oriented supply chains research is often firmly grounded in the RBV of the firm(Barney, 2001, 1991; Olavarrieta and Ellinger, 1997; Penrose, 1955, 1959; Wernerfelt,1984) and more recently the offshoot marketing prospective called service-dominantlogic (Richey et al., 2010; Vargo and Lusch, 2004). Resources like people and technologyare often defined as drivers of firm capabilities particularly relative to supply chainmanagement functions (Christenson et al., 2003). When resources are matched tostrategic initiatives in disaster and crisis situations, they may become firm and supply

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chain specific, and key to initiative performance. Conceptualizations of the RBVassume firms develop differential competitive advantage through: asset/resourceheterogeneity (firms possess resources that differ from other firms), imperfect mobilityof assets (firm assets are not easily transferred between firms), and ex post and ex antelimits on competition (environmental temporal limitations exist on competitiveresource valuation; Helfat and Peteraf, 2003; Peteraf, 1993). These assumptions allowfor the comparison of resource bundles valued on the basis of convertibility, rarity,imitability, and substitutability (Srivastava et al., 1998). Supply chains dealing withdisaster and crisis situations will need to correctly manage valuable, rare, inimitable,and organizationally specific resources to accomplish goals.

According to RBV, in a business-to-business context, service-related value is formedas the offering moves down the supply chain (Morash and Lynch, 2002; Olavarrieta andEllinger, 1997). Thus, under conditions of effective resource deployment(e.g. collaboratively across a supply chain) firms operating under crisis conditionsshould generate superior value for their stakeholders (Priem and Butler, 2001). Similar totraditional operating conditions, assets employed under crisis conditions should becomeaid driving capabilities in combination with matched organizational processes (Day,1994). These supply chain/logistics utility “bundles” include skills and knowledge that

Figure 1.The supply chain DCP

Resourcemanagementview of the

firm

Competingvalues theory

Communicationtheory

Collaborativeview of the

firm

1 3

2

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create firm (and/or relationship) specific resource combinations (Amit and Schoemaker,1993).

The RBV managerial goal is the development of core competencies or practicallystrategic weapons for use in fighting problems that might occur. Core competencies aredefined as “the collective learning in the organization, especially how to coordinatediverse production skills and integrate multiple streams of technologies” (Prahalad andHamel, 1990, p. 79). As firms across the supply chain focus on their core competencies,they are often forced to become more dependent on their business partners. Hence, onewould expect that the dynamics of disaster recovery and crisis management insupply chains to require multiple theoretical lenses beyond the RBV to fully embracesituational dynamics. Still, given the prominence of resource management inthe literature, and rightfully so, it seems logical that the DCP would “point” toresource management. Human resources must be moved from crisis locations to safelocations or from traditional operations to crisis locations. Physical and technologicalresources must be allocated, moved, opened, cleared, and customized. Informationalresources must be collected, cleaned, warehoused, and redistributed. Financial resourcesmust be acquired, allocated, distributed, and governed. The activity component in DCPresearch is huge and seems to thus be the consistent undercurrent in the literature. Inshort, all the literature has and should have a resource component. Next, I will brieflycover three additional perspectives that could bolster research in combination with RBV.

Collaboration: relationship management theoryBecause there are always multiple players in supply chain disaster and crisis situationsit should be no surprise that collaboration is an important issue. “Collaboration isdefined as two or more companies sharing the responsibility of exchanging commonplanning, management, execution, and performance measurement information”(Min et al., 2005, p. 237). As such, collaboration fits neatly into relationshipmanagement theory. There is debate as to whether there actually “is” a “theory” ofrelationship management. There may also be disagreement as to whether collaborationis relationship management or relationship management is collaboration. This debateis beyond the scope of this discussion. My point is that relationship management isvital to managing supply chain disaster and crisis situations. It is my view thatrelationship management is in many ways synonymous to collaboration as that manyof the key constructs are discussed. These include commitment, trust, loyalty(Daugherty et al., 2001), opportunism, (Heide, 1994) long-term orientation (Ganesan,1994), relationship magnitude (Golicic, 2006), etc.

In crisis situations, collaboration will likely be the glue that holds organizationstogether. Additionally, Stewart et al. (2009) point out the broadness of the web thatforms the extended supply chain in disaster and crisis situations. There is little doubtthat such a tangled web will provide a huge opportunity for not only new research, butalso to challenging the existing assumptions of relationship management logic. Forinstance, it is largely held that firms do not collaborate with partners who exhibitopportunistic behavior. Well – what if they have no choice? Imagine aninterconnection between Homeland Security, Wal-Mart, a state government, a citygovernment, and a fishing fleet. The situation is not hypothetical – it has occurred.

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Communication: communication theorySupply chain disaster and crisis situations demand effective communication. Localtelevision, the national weather service, and public media are heavily used. Manypeople overlook that in the private arena, company specific technology also facilitatescommunications. Intranet and extranets, electronic data interchange, videoconferencing, global positioning system, and even private ham radio all provideassistance while likely creating a network of immense confusion (Richey et al., 2010).A grim reality is that during Katrina, radio-frequency identification was actually usedto tag dead bodies. With all of the technological communication options combiningwith the classic approaches, the point is clear that we need to know who is managingthese networks.

There are a number of different approaches that researchers would take in studyingcommunication. Examining the logistics literature reveals that with a very fewexceptions (Large, 2005), most of the literature focuses on informationexchange/support (Daugherty et al., 2002) and communications technology (Skipperet al., 2008) rather than the full range of strategic communications issues. Perhaps,researchers examining supply chain disaster and crisis situations would considerreturning to the Mohr and Nevin (1990) and Mohr and Sohi (1995) classics oncommunication theory in marketing channels. Examining issues such asbi-directionality, formality, modality, and frequency could be of serious importanceas public and private entities attempt to understand what, when, and how much tocommunicate. Questions of climate, control, and structure should also be developed.Additionally, we need to have an understanding of norms of communication exchangeand the quality produced by those norms.

Contingency planning: competing values theoryContingency theory is based on the premise that things change. This argument is sobasic that most supply chain/logistics researchers tend to avoid it for fear of their workbeing seen as passe. Thus, contingency theory has given way to “contingency models”that are grounded in other theories. One of the strongest supporting theories that couldground supply chain disaster and crisis research is known as competing values theory.Competing values theory is rooted in organizational behavior theory but is growing inuse in business, to, business research. A business to business context emphasizes thesimultaneous inclusion of multiple (often conflicting) firm strategies, leadershipapproaches, and cultural positions (Cameron and Quinn, 1999) into the supply chain.Despite being underutilized in logistics and supply chain research, the competingvalues framework provides a strong theoretical perspective detailing two majordimensions of effectiveness:

(1) the extent to which adaptation is valued over stability; and

(2) internal orientation that emphasizes integration versus external orientation thatfocuses on rivalry.

Competing values theory provides grounding for future supply chain disaster andcrisis research by suggesting that firms simultaneously pursue various different andoften conflicting strategic goals regardless of the situation (e.g. Cameron and Quinn,1999; Quinn and Rohrbaugh, 1983). It is important to note that conflicting strategicgoals define a firm’s strategic position in the supply chain (Porter, 1979). With such

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wide network of organizations and a broad spectrum of goals, the competing valuesapproach provides a rich theoretical foundation for the analysis of both joint andconflicting strategic goals.

Research planes of the DCP for grounding future researchIn this section, I will make just a few suggestions about how the discussed theoriescould be combined to both improve and expand future research in the area of supplychain disaster and crisis recovery. This is not to suggest that these are the only theoriesor the only combinations available. My goal is to open research and provide basicsuggestions. I should also note that the discussion below is not research I have started.The ideas are fully open for other researchers to embrace and grow. Each “section”below is displayed as a plane on the DCP.

Section 1 – the reactive independents perspectivePlane 1 of the DCP suggests an interconnection between RBV, competing valuestheory, and communication theory. Here, supply chain members are reacting toinformation received as independent organizations in pursuit of likely disconnectedparties. This is the early reality experienced by researchers (Stewart et al., 2009). Thesefirms look to acquire access to resources based on their own needs. Communication islikely disrupted and focused only on civil defense. Firms generate an ability to play theoptions in the market but opportunistic actions may reduce the entire supply chain’sflexibility.

Section 2 – the proactive partnership perspectivePlane 2 of the DCP suggests an interconnection between RBV, communication theory,and relationship management theories. My expectation is that this view is verypositivist, but I am hopeful that we are on a shift to it being normative. If supply chainsworking in disaster and crisis situations can improve communication and becomeeffective collaborators, what resource needs can assist in improving safety, publichealth, sanitation failure, and food defense? To develop collaborative strategy basedtheoretically on resources and communications, levels of formalization and processsimplification should be addressed. This fact drives questions of strategic readinessand risk management. When it comes to technology, firms must examine theimportance of communications frequency and modality, technological support, anddata aggregation.

Section 3 – the co-opetition resource perspectiveCo-opetition is a concept that professes the ability of firms to cooperate and compete atthe same time (Brandenburger and Nalebuff, 1996; Kotzab and Teller, 2003).Combining competing values theory and collaborative theory opens the door for anunderstanding of a mixed approach to acquiring and balancing resources. Whensupply chain partners are both competing and collaborating, they must grow theirstrategic situational awareness, balance knowledge sharing and protectivesafeguarding, and develop the agility to grow partnerships and/or shift to otheroptions. I would like to say more here, but this concept has largely been ignored bymost supply chain, marketing, and logistics researchers with a few exceptions. Muchmore research is needed in this area.

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In search of an outcome variableTraditional outcome variables only sometimes fit disaster and crisis-related research.For instance, effectiveness is always important when dealing with people and theirlives. Efficiency is another story. When it comes to even one human life, cost efficiencygoes out the window and it should. Additionally, research needs to address appropriatedisaster and crisis-related performance outcome variables. One appropriate avenuecould be Mentzer et al.’s (2001) logistics service quality scale. Yet, their scale providesseveral two item dimensions that are problematic to future publication. Anotherapproach would be to examine service quality in disaster and crisis-related situations,but marketing researchers have discounted its value in favor of general customersatisfaction scales. Can customers/victims of crisis situations be measured via acustomer satisfaction scale? As a former (and possibly a future) victim I can tell you –No! We need research to develop a scale that grounds an outcome for our research(Beamon and Balcik, 2008).

ConclusionThis paper was written to encourage authors to:

. continue their disaster and crisis-related research;

. consider including more theory in their work and likewise impacting theoryitself; and

. grow their research on the support of multiple theories.

The field is open and of the utmost importance of all in the area of supply chain andlogistics management. It would be a shame if more in our area do not choose to add thisarea to their research agenda. I applaud those who have embraced the area andespecially those who have published in these supply chain disaster and crisis-relatedspecial issues. It is also important to note that this topic area is extremely relevant tointernational business. As such, data may be available in secondary form from anynumber of public sources.

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Corresponding authorR. Glenn Richey Jr can be contacted at: grichey@cba.ua.edu

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