How to make volatile supply chains viable
Written by CIPS Knowledge & Insight
Written by CIPS Knowledge & Insight
“Resilience” has been the go-to supply chain strategy since the pandemic sharply upended global networks. But with volatility now a permanent feature of international trade, could supply chain 'viability' usurp resilience as the most effective approach?
As short-term disruption gives way to a constantly shifting landscape, viability is emerging as a model focused not just on surviving crises, but on aligning procurement strategy and businesses with long-term instability.
We spoke to Dr Nuha Luqman, vice president of supply chain excellence at TAQA, who is currently running a research project on viable supply chains and what influences the viability of an organisation’s supply chain.
Read on to find out the difference between viability and resilience, how to develop a viable supply chain, and how viability in practice works at Unilever, Toyota and Apple. You can also contribute to Luqman’s research by completing this short survey on developing viable supply chains.
What is a viable supply chain?
“Viability” refers to the ability of an organisation's supply chain operation to maintain itself and survive amid changing and challenging conditions.
A viable supply chain is one designed not just for efficiency, but for endurance – one that can withstand disruptions, have its structure adapted as needed, and continue providing goods or services over the long term. In essence, viability is a higher-order property of a supply chain that spans multiple dimensions: it encompasses agility to seize new opportunities, resilience to absorb shocks, and sustainability to thrive in the long run.
The concept’s origins trace back to systems theory and ecology. The idea builds on the Viable System Model from organisational cybernetics (pioneered by Stafford Beer in the 1980s) and ecological models of survival, which emphasise adaptation to environmental change.
However, the specific term “viable supply chain” gained prominence in academic literature around the late 2010s and early 2020s, especially in response to the COVID-19 crisis. Researchers like Professor Dmitry Ivanov introduced viability as a new lens during the pandemic, noting that firms needed more than short-term resilience, they required the capacity to continually adapt and survive unprecedented, long-duration disruptions, and dynamically reinvent and sustain itself under stress, a concept rooted in earlier systems thinking but brought to the forefront by recent global supply chain upheavals.
What is the distinction between a 'viable' and a 'resilient' supply chain?
Viability and resilience are closely related, but they differ in scope and time frame. “Resilience" in supply chains traditionally refers to the ability to resist and recover from disruptions and bounce back to normal operations after a shock. For example, if a natural disaster shuts down a supplier, a resilient supply chain can find alternative sources or use buffer stock to meet demand and then restore its original state once the disruption passes. It’s about recovery to a prior performance level (“the old normal”) as quickly as possible.
“Viability” in supply chain takes it a step further than just the capacity to recover, but to also survive and evolve in the face of long-term or fundamental changes by undergoing structural adjustments; such as reconfigure its network, shift sourcing strategies, or redesign processes, in order to continue operating under new conditions rather than simply returning to the previous state.
If an organisation is resilient, it only has the ability to withstand shocks and recover, while with the broader capability of viability it has the learning capability to continuously adapt and persist in a changing environment.
In other words, resilience is a component of viability (you must be resilient to be viable), but viability encompasses a broader, long-term adaptability. During the COVID-19 pandemic, this distinction became clear: resilience was about keeping things running despite short-term disruptions, whereas viability meant adapting to a “new normal” – for instance, repurposing production lines, developing new supplier relationships, or altering product mix – to ensure the business could survive prolonged upheaval. This implies that the supply chain is constantly going through a strategic evolution.
How does a 'viability' mindset change how procurement and supply chain professionals assess suppliers, categories, or sourcing regions?
Adopting a 'viability' mindset fundamentally broadens the criteria and perspective used in procurement decisions. Traditionally, procurement might focus on cost, quality, and delivery performance when assessing suppliers or sourcing options. With a viability mindset, risk, adaptability, and long-term continuity become just as important. A viability mindset leads procurement to judge suppliers not only on immediate performance and cost, but on their resilience, flexibility, and strategic fit within a supply network built for the long haul. Professionals start valuing things like a supplier’s geographic diversification, their transparency and data-sharing (for visibility), and their commitment to sustainability and risk management, because all of these contribute to the supply chain’s ability to keep running come what may.
Professionals start asking questions like: Can this supplier survive a major disruption? Does this region pose geopolitical or climate risks? How easily can we re-route or repurpose this supply if conditions change? For example, instead of single-sourcing a critical component from the lowest-cost supplier in one country, a viability-focused approach might favor a more diversified supply base; even if it’s slightly more expensive, to avoid a single point of failure. We saw this shift in the automotive sector after the semiconductor shortages: many automakers are now qualifying multiple chip suppliers in different regions and forging closer partnerships, rather than relying on one distant supplier for all their needs.
In practical terms, procurement teams are increasingly stress-testing their supplier base and category strategies, assessing whether key suppliers have business continuity plans, financial strength, and the flexibility to scale or pivot production in an emergency. Categories of spend are segmented not just by spend volume, but by criticality and exposure to disruption where a seemingly low-cost commodity item might receive special attention if it could halt production.
Sourcing regions are evaluated through the lens of viability; factors like political stability, regulatory environment, infrastructure resilience, and even the likelihood of natural disasters or pandemics in the region come into play. Industry practice is reflecting this shift.
A recent Gartner study found that 63% of procurement leaders plan to diversify their supply base and 77% are increasing collaboration with key suppliers – these steps indicate a more viability-oriented approach, emphasizing multi-sourcing and strategic partnerships to bolster the network’s robustness. Another study on the global automotive industry’s pandemic response noted that companies improved viability by rethinking sourcing strategy and building more intertwined supply networks, such as partnering with alternative suppliers and even competitors to ensure critical supplies.
How will supply chain viability impact the role of procurement as a function in the future?
Surveys show that forward-looking companies view procurement as a “key competitive advantage” and a driver of innovation, resilience and sustainability strategic directives. As viability thinking takes hold, procurement will be tasked with balancing the classic objectives (cost, quality, delivery) with newer ones (resilience, sustainability, agility), leading to changing in operational back-office business support procurement scorecards and KPIs to ones that are closer alignment with project and operational planning and corporate strategy. Ultimately, transforming the procurement and supply chain organisation within a firm into one of supply network stewardship, with the strategic objective of ensuring that the network of suppliers and partners is not only efficient but also adaptable, value adding, ethically sound, and robust against shocks. This makes procurement a critical strategic partner for the business, directly contributing to competitive advantage by building a supply chain operation that can weather storms and seize opportunities in a volatile world.
Embracing supply chain viability will significantly elevate and broaden the role of procurement by evolving from a tactical, cost-focused function into a strategic orchestrator of supply networks. So, procurement is not just about negotiating the best price, but through viability considerations has become about securing the long-term health and continuity of the supply ecosystem, requiring procurement leaders will be more deeply involved in paradoxical strategic decisions such as network design, make-or-buy choices, and risk management initiatives.
For example, decisions about dual sourcing or regionalising supply chains to avoid disruptions involve procurement at the highest levels, working alongside operations, engineering and even R&D to balance cost, risk, and innovation. Here, procurement’s mandate expands to actively manage risk and resilience. Thus, ensuring supply continuity and robustness becomes as critical as delivering cost savings, and shifting procurement’s role toward being a guardian of the company’s supply chain viability that includes scanning the horizon for risks from geopolitical changes to supplier financial distress, developing mitigation plans like securing alternative suppliers or raw material substitutes, and coordinating cross-functional responses to disruptions.
It is anticipated that in many industries procurement will be taking the lead role in building strategic collaborative and innovative relationships, as these partnerships can improve collective resilience and delivering sustainability objectives. We can already see this in the consumer electronics sector, where procurement is spearheading collaborative initiatives with key suppliers to co-develop contingency plans or share data for better visibility. We can also see this in the pharmaceutical industry, where procurement is becoming central to consortiums or public-private partnerships that ensure critical supplies collaborate to boost vaccine supply chains viability.
Organisationally, procurement is gaining a stronger voice in the C-suite leadership structures with the emergence of executive strategic roles titles like chief supply chain officer or chief procurement officer reporting directly to CEOs, reflecting how vital supply chain viability is to business success.