The Relevance of Supply Chain Preparedness on the Long-Term Sustainability of SMEs

Introduction

A supply chain is a whole system of creating and delivering a product or service from the initial step of acquiring raw materials through the ultimate delivery of the product or service to end-users The management of the movement of goods and services is referred to as supply chain management, and it encompasses all procedures that transform raw materials into finished items. It entails actively simplifying a company's supply-side processes in order to increase customer value and achieve a competitive advantage in the market. The increasing sophistication of managing supply chains and meeting ever-increasing customer demands has made businesses more conscious of their economic and operational vulnerability to dangers from the macro environment: every economic activity carries the risk of unanticipated disruptions, which can result in financial liabilities and, in some cases, firm closure. Terrorist attacks, pandemics, natural catastrophes, and regional power outages in recent years have all revealed numerous firms' lack of supply chain preparedness. Market disruptions and supply chain threats are at an all-time high, the COVID-19 pandemic is, of course, the most well-known of these. According to a poll conducted by the Institute for Supply Management in April 2020, 95 percent of businesses have faced operational issues because of the epidemic. Business executives all around the world believe that if they want to be more robust and competitive in the present market, they will need to modernize and make significant changes to their supply chain operations. Consequently, improving supply chain preparedness is essential, and a significant component of a supply chain disruption management strategy which may be required in periods of catastrophe. In a highly unpredictable environment, firms require proactive supply chain resilience methods to get ready for potential changes, detect changes, and adapt to actual changes in ways that generates value.

The contemporary business environment has been plagued by ever-increasing uncertainties and vulnerabilities; as a result, supply chain (SC) risk mitigation techniques and associated SC capabilities, known as SC resilience, have become increasingly important. SCs' resilience has been widely recognized as a key dynamic trait. The goal of SC resilience is to get operations back to an optimal or better state after a disruption, Thus, instead of adapting to changes through disruptions, SCs can survive disruptions while retaining connection and stability across processes through SC preparedness which refers to firms' ability to withstand the effects of potential changes (Bellow, 2016). Businesses' ability to innovate, manage their staff and customers, and recoup their initial investment are all indicators of a SME's sustainability (Pratiwi, 2018). This demonstrates that they are growth-oriented and continually explore opportunities to innovate. Cost savings, consumer demand, risk mitigation, leadership, tax incentives, staff retention, brand reputation, limited resources, sustaining competitiveness, and new profit prospects are just a few important strategies to accomplish business sustainability (Pratiwi, 2018). However, more than 50% of SMEs worldwide faced a slowdown because of the Covid-19 epidemic (International Trade Center, 2020). Considering SMEs make up 73 percent of all businesses in the globe; this is a considerable percentage (ILO, 2020), and the Covid-19 significantly affects their major lifeline, which is income. Thus, SMEs have been having difficulty sustaining growth, surviving the market, and achieving sustainability for the past two years.