Conversion strategy builds supply chain resilience during the COVID-19 pandemic: A typology and research directions

This study proposes a novel typology of adaptation to hazards—a conversion strategy as a countermeasure to manage risks in interconnected supply chains. Conversion strategies are intended to transform one or multiple supply chain functions for a different one to manage the changing environment. Supply chain disruptions due to natural hazards have been researched in key manufacturing-based economies like Thailand, the US, Japan, and China. Limited studies, however, have looked at the nature of interconnected risks and its effective countermeasures that arise when the COVID-19 pandemic disrupt supply chains. Here, we examine systemic risks by contrasting supply chain disruptions caused by natural hazards and the pandemic. Our study investigates whether businesses can manage systemic risks brought on by the pandemic by learning from dealing with disruptions caused by natural hazards. We offer a typology of conversion strategies to demonstrate how conversion strategies can be a successful response to pandemic scenarios. Specifically, we propose six conversion types: production location, production line, storage, usage, distributional channel, and workforce skill set. Then, we conclude with the future research directions as well as the kinds of policy supports required to assist businesses in implementing conversion measures by drawing on prior work addressing natural hazards.


Introduction
The COVID-19 pandemic has had a profound and detrimental effect on the global economy. The disruptions to countless supply chains have had a cascading impact on various economic sectors [1,2]. However, it has also become apparent that certain businesses possess a greater capacity to mitigate supply chain risks in the face of such crises. The crucial question here is how to effectively respond to and adapt to the unprecedented challenges presented by the pandemic. Through interconnected supply chains, trade, and lifeline networks, disaster risks can spread, causing systemic risks [3][4][5][6]59]. Supply chain disruptions in the manufacturing sector due to natural hazards have been explored in countries, including China [7], Japan [5], Thailand [8]. Studies are looking at supply chains from the resilience perspective in the context of the COVID-19 pandemic, for instance, in the automotive and airline industries [9], the fashion industry [10], additive manufacturing [11], and others. Not many studies, however, address how the lessons learned from managing supply chain risks brought on by natural hazards can be used to manage risks from the COVID-19 pandemic [12].
Among the limited existing literature, the study by Ivanov [13] stands out as a noteworthy contribution by introducing four adaptation strategiesintertwining, scaling, substitution, and repurposingthat sustain supply chain viability during the pandemic. Among these four approaches, policymakers pay close attention to the private sector's repurposing and conversion strategy 1 as a fix to problems like the global shortfall of personal protective equipment (PPE) and life-saving medical supplies [14][15][16]. For instance, rapid steps taken by the industrial sector to help the health system by conversion plan are highlighted in the policy report by the Economic Commission for Latin America and the Caribbean (ECLAC) [14] (Table 1). Converting their manufacturing to essential commodities has allowed the engaging enterprises to capitalize on the supply deficit and generate financial gains.
Some prior studies argue that the COVID-19 pandemic differs significantly from natural hazards in terms of how they affect the supply chain [17]. However, the COVID-19 pandemic demonstrated a high level of similarity to the natural ones, particularly in terms of responses in the following two reasons. First, the COVID-19 pandemic can be categorized as having a combination of low-disruption probability and severe-consequences, the same as catastrophic events caused by natural hazards. As a result, this kind of incident is consistently underestimated by supply chain managers and is referred to as a significant "blind spot" that could destroy the entire supply chain of the organization and result in incalculable amounts of damage [18][19][20]. Second, interconnected risks through supply chains tend to show the nature of systemic, cascading risks: one point of failure leads to the collapse of an entire system [5,21]. Cascading risks require the flexibility of response, focusing on the common causes of vulnerability rather than on hazards [4].
To learn how to respond, policymakers have already paid attention to the similarities between disruptions due to natural hazards and ones due to the pandemic. For instance, by examining the global and Japanese lessons learned, the World Bank's publications conclude that supply chain disruption management strategies related to pandemics can benefit from the methodology and lessons learned from historical catastrophes due to natural hazards [16,22]. According to these reports, supply chain disruptions brought on by pandemics would be managed with the use of regulatory instruments and lessons learned by the private and public sectors following previous disasters due to natural hazards (e. g., the Resilient Industry Framework by World Bank [16], government continuity plans [58], and Area Business Continuity Management [23]). However, these works touch on the broader context of how to response and prepare for interconnected risks. Few studies analyze and categorize repurposing and conversion strategies invented and implemented during the pandemic and what policy support is demanded. Consequently, the following questions will be addressed in this paper: 1) What existing framework, developed through the examination of past experiences in managing disruptions caused by natural hazards, can be adapted and employed to effectively manage disruptions brought on by pandemics? 2) What kinds of conversion strategies have been successful in practice during the COVID-19 pandemic? 3) What kind of policy assistance is required for businesses to successfully execute conversion strategies?
This paper analyzes the characteristics of systemic risks in supply chains and their remedies by contrasting supply chain interruptions caused by natural hazards and the pandemic. Moreover, the paper suggests a new classification of strategies that arose during the pandemic and propose policy recommendations while discussing challenges and limitations of conversion strategies.

Distinctions between supply chain disruptions caused by natural hazards and the COVID-19 pandemic
There are several similarities between supply chain disruptions due to natural hazards and the pandemic. For instance, small enterprises tend to suffer more if they are more susceptible to supply chain disruptions during both pandemics and disasters due to natural hazards [12]. However, scholars, such as Moritz [17] and Chang, Brown [12], have noted distinctions between disruptions in supply networks due to natural hazards and the COVID-19 pandemic (Table 2). For example, the causes of disruptions differ from one another. Natural hazard-induced disruptions were often caused by a lack of supply, whereas pandemicinduced ones were caused by the mismatch between supply and demand (of goods and labor) [12]. Notably, a surge in demand due to changes in public health regulatory measures and consumer behavior were observed during the pandemic, exceeding the recovery of supply, such as one where consumers had to wait for several months for a brand new car to come to their home in the summer of 2022 in the United  States [12]. In addition to the items outlined by Moritz [17], the impact of supply chain disruptions can be classified as direct, indirect, tangible, and intangible [8]. Table 2 compares the direct and indirect impacts of the two hazards. One of the key distinctions between the two hazards is that natural hazards trigger disruptions that are originally instigated by physical assets' devastation. As a direct impact, natural hazards can disrupt supply chains as factories or warehouses are damaged [24]. Indirect impacts include, for example, workers not being able to commute, or goods and services not being delivered because of the destruction of transportation routes [25].
In contrast, interruptions produced by the COVID-19 pandemic are primarily the result of restrictions on human mobility. Because of nonpharmaceutical interventions (e.g., lockdown and social distancing), workers were unable to commute and consumers could not consume. These effects can be considered as direct effects. Changes in demand owing to constraints on human mobility are examples of indirect damages caused by the pandemic. There are differences between these two hazards, but the measures created to mitigate risks in supply networks due to natural hazards are applicable to the pandemic, as discussed later in Section 3.

Flexibility as an adaptation strategy to address supply chain disruption risks
Based on a systematic assessment of 137 journal papers on resilience, Stone and Rahimifard [26] conclude that flexibility is one of the most frequently reported factor for organizational and supply chain resilience. Flexibility can be utilized at the organizational level in sourcing, production, and distribution [26,27]. At the supply chain level, flexibility is characterized as the capacity to continue operating and adapt successfully to changing surroundings via partnerships [26,28]. This includes the flexibility to changes in supply and demand sides in supply chains. Examining demand is particularly critical in analyzing disruptions during the pandemic, as demand surges in supply chains mainly caused global shortages during the pandemic.
Sheffi and Rice Jr. [18] examined two key approaches for constructing a resilient supply chain: (a) increasing redundancy and (b) building flexibility. They pointed out that: (a) Adding redundancy necessitates securing spare, surplus resources in day-to-day operations, which tend to be quite costly if it is not related to information technology assets. This is because building redundancy implies that businesses must prepare for "just-in-case" concerns by acquiring additional resources in case of failure that are not required for normal operation. Therefore, building redundancy often contributes to robustness [29]. On the other hand, they indicate that (b) making the supply chain more flexible is a far more "leveraged" strategy, given that by doing so, businesses may enjoy a greater degree of supply chain resilience and create or enhance competitive advantage in the market. Practically, discerning between building redundancy and enhancing flexibility is not straightforward because the two processes overlap. A multiple sourcing strategy, for instance, enables businesses to flexibly revert to an alternative source if the original supplier is unable to provide the items. Having two distinct viewpoints, however, will aid supply chain managers in developing an efficacious measure.
Concerning how to build flexibility into enterprise supply chains, Sheffi and Rice Jr. [18] developed the Five Facets Model by analyzing the basic supply chain configuration within businesses and introducing the five fundamental supply chain features: supply, conversion, distribution, control systems, and corporate culture. As indicated in the Introduction, the focus of this article is on conversion flexibility as the conversion strategy provides rapid response [18]. Assigning multiple capacities and functions at each plant location enables flexibility to an entire supply network. It is also less expensive than maintaining duplicate manufacturing lines. In addition to managing the supply and procurement phase, incorporating flexibility into supply chains entails establishing or upgrading a more advanced degree of conversion. In this study, the previous literature's description of the nature of conversion is enlarged to a wider sense [18], and conversion is defined as the utilization of a production or distribution process or labor in a manner distinct from its originally-designed purpose.
In various studies, conversion is discussed during the COVID-19 with various terms. For instance, Van Hoek [30] asserts a balance among global, nearshore, and local sourcing. Ishida [31] finds the automobile sector is transitioning to a centralized operating model by enhancing closeness to the nation of production, but the personal computer sector is transitioning to a more global one while keeping links with local suppliers. As discussed later in this section, these shifts can be considered conversions in production locations. Ivanov [13] also discusses Ford's conversion operations that produced personal protection equipment. In addition, mathematical models for allocating and sharing a vital resource, such as a ventilator, are explored (e.g., Mehrotra, Rahimian [32]).

Examining the cases during the COVID-19 pandemic to categorize different conversion strategies
This section will describe how conversion measures help companies effectually manage risks caused by the pandemic, as well as review industry cases reported in press releases and the media. On the basis of the analysis of cases during the pandemic, we propose a new typology for classifying various conversion strategies (Fig. 1, Table 3).

Production location conversion
Production location conversion is defined as a way of producing products that were originally manufactured in one site by shifting the production site to another less affected site. One of the factories may be unable to operate it due to damaged production sites after a natural hazard or temporarily closed factories during a lockdown imposed during the pandemic. In such a case, it is necessary that production sites or manufacturing lines in the same supply chain (or partnered supply chains) have the competence or can be quickly restructured so as to produce identical final products. Companies with multiple locations for the same production line are more capable of pursuing production location conversion. Manufacturers or suppliers of mass, standardized production rely on multiple production sites so they can relocate production with greater flexibility.
For instance, Samsung Electronics, a company headquartered in South Korea, was not able to keep all of its domestic factories operational during the COVID-19 outbreak because the number of newly confirmed cases of COVID-19 spiked in early 2020. In light of the circumstances, the company moved a portion of its phone manufacturing from South Korea to Vietnam [33]. This instance demonstrates that a company must convert a manufacturing site to continue production supply during pandemics.

Production line conversion
Another pattern of production conversion is production line conversion, also known as production line repurposing, retooling or reengineering [2,13,34]. By reengineering the production line, firms can manufacture distinct goods in high demand or a substantial scarcity by shifting away from the production of the original goods. This strategy is effective in situations where the operations of production facilities remain unimpeded, yet there has been a decrease in demand for their products or an increase in demand for alternative products. During the COVID-19 pandemic, medical PPE, such as face shields, masks, and ventilators, have been in short supply worldwide. Numerous manufacturers voluntarily modified their manufacturing lines in order to produce these life-saving goods. Ford, for instance, produced components for medical PPE, such as face shields, using its in-house 3D printing capabilities [35]. For another example, numerous toilet paper manufacturers in the United States repurposed their commercial-tissue manufacturing capacity to produce consumer-grade toilet paper in response to the soaring demand in shops and the precipitous decline in demand from commercial channels such as offices, hotels, and convention centers. Breweries and distilleries also changed their beer and alcohol production lines to produce hand sanitizer [34]. In this sense, the presence of a multi-channel network affords businesses the opportunity to rapidly transform production capability [36].
A further example is the Chinese textile manufacturer Tianjin Zhenxing. During the pandemic, the number of orders for bath and hand towels fell by 40% owing to a decrease in demand from commercial companies, such as hotels, whose customers' mobility and market demands decreased [37]. The firm required approximately one month to produce new items in compliance with the standards of the Japanese Epidemic Prevention Department after conducting market research. As a result, 10% of the company's manufacturing capacity was modified in order to create the newly certified product. In only three months, approximately 200,000 new items were sold to Japan, generating an anticipated operational revenue of more than 2 million Chinese Yuan. The examples show that companies reacting flexibly to changing demand in different product segments can reap economic benefits from converting their production line to products that are in high demand.

Storage conversion
As we saw during the COVID-19 pandemic, disruptions in supply chains could occur when just-in-time production collapsed because primary materials could not arrive on time at warehouses or goods could not be shipped from storage facilities. Once such risk events occur, a prompt response is necessary. In general, it is usual practice to proactively examine and establish which substitute warehouses may be utilized to organize take-in and bring-out services, followed by regular communication with logistics partners. Even if companies rely on specific goods with a lengthy supply chain, they can overcome a temporary

Table 3
Typology of different conversion measures to manage supply chain disruption risks during the pandemic.

Description
Examples of organization/ companies

Production Location Conversion
To change production locations to produce the same products in a different location.

Production Line Conversion
To re-engineer production lines at the same location to produce different products in high demand.  [37] disruption in the supply chain by utilizing security or consignment warehouses close to their production sites. During the COVID-19 outbreak in China, TTI, a distributor of electronic components, was required by government policy to close its warehouses in China. TTI then took measures to entirely run warehouses in Asia, Europe, and the United States in order to take incoming consignments from contractors and send outbound shipments to clienteles [38]. Without a well-managed operation structure, the company could have been severely impacted by the disruption in its supply chain [38]. As this example demonstrates, storage facilities can be crucial to the efficient operation of supply chains. This was illustrated by cases of disruption during disasters due to natural hazards, such as the Thai floods of 2012 [8].

Usage conversion
Usage conversion is one of the most common forms, particularly during the COVID-19 situation. We define usage conversion as a strategy for changing the primary usage of a supply chain component, such as facilities or transportation modes. For instance, universities are converting their schoolrooms into COVID-19 testing locations, restaurants are operating COVID-19 testing stations, and businesses are converting their conference rooms into temporary testing sites. A university hospital system in the United Kingdom repurposed a afresh constructed warehouse adjacent to a multipurpose space [39]. For example, the hospital's supply chain team seized the storeroom to gather and manage the first surge of anti-pandemic supplies. Then, they installed donation stations inside the facility to gather contributions of medical PPE. All of these flexible use conversion measures have made incalculable contributions to their effectiveness in responding to COVID-19 [39].

Distribution channel conversion
Another form of conversion is the modification of the distribution channel, referred to as "distribution channel conversion." Under this form, a business will modify its distribution channel to consumers or customers in response to their evolving needs. Let's take an example from the consumer beverage industry. The "stay at home" policy during the pandemic has resulted in a significant decline in Starbucks' revenue. However, by promoting mobile applications and other online-mergeroffline initiatives, Starbucks has managed to achieve nearly 90% of Q3 2020 sales volumes flow through the combination of the drive-through and mobile order-and-pay [40].
Additionally, Aokang Group, a leather company that produces shoes and other leather products, implemented an additional distribution conversion method. Aokang introduced a new approach dubbed "Cloud + Marketing" based on the community-sharing economy [41]. On February 9, 2020, after nearly a week of full deployment and six months of planning, the online sales applet was officially launched [41]. With the use of Wechat's first-level traffic portal and Aokang's large traffic networks, offline shopping guides can be instantaneously linked and the resources of over 3000 offline retailers can be merged to establish a cross-regional three-dimensional marketing network [41]. A person functions as a store manager due to this unique sharing mechanism, while a mobile phone functions as a physical store. Through fission marketing, 36,000 cloud stores were launched in less than a month [41].

Workforce conversion
Workforce conversion is one of the strategies implemented by several firms; we define it as a conversion way in which employees remain employed but are retrained to acquire a new skill set in order to adapt to a new type of work in a different section or company which has higher labor demands.
In the United Kingdom, a global provider of instant-on water heaters revealed its cross-training strategy. According to a company manager, there was a need for additional training in the company's shipping and purchasing procedures to account for the absence of employees during the pandemic [39]. Similarly, during the onset of the pandemic, a German manufacturer of respiratory equipment borrowed engineers from the aviation industry who had been placed on temporary assignments in order to increase their production capacity [42]. Workforce conversion proved effective in shifting staff from the travel industry, one of the most severely affected industries by the pandemic. HIS group, a travel agency in Japan, as well as All Nippon Airways and Japan Airlines, two main Japanese airlines, were overstaffed due to business declines during the pandemic [43]. They dispatched overstaffed employees to other companies less impacted by the pandemic, such as a shipping company, a manufacturing company that produces Polymerase Chain Reaction (PCR) test kits, and a medical provider that conducts PCR testing. For example, after a week of training, the air companies dispatched 300 employees to Nojima, an electronic retailer with a labor shortage [43]. In total, both HIS group and Japan Airlines sent 1500 assigned employees at the peak to other companies. By October 2022, when the Japanese government largely mitigated the border control measures, 70% of assigned employees from Air Nippon and 80% of ones from Japan Airlines returned to their companies [44]. Since the airline companies started sending overstaffed employees to other companies in April 2020 [45], it took more than 31 months (i.e., time-to-recovery [46]) to recover 70-80%.

What kinds of policy assistance are necessary to enable conversion strategies in supply chains?
In order to implement conversion strategies, flexible trade policies are necessary. Lessons learned from addressing natural hazards can be applied to the development of policies and measures that facilitate conversion strategies for addressing the pandemic. In the case of previous disasters due to natural hazards, the policy research published by the World Trade Organization indicates that inflexible mechanisms in the trade sector contributed to increased economic losses [47]. Examples include delays in obtaining import license requirements, visas for relief personnel, and the temporary admission of relief equipment [47]. The report concludes that logistics, trade and cross-border service sectors must be resilient and adaptable during and after catastrophes. In addition, the report discusses three issues regarding making trading systems adaptable during disasters based on their examination of cases from Caribbean countries: • to decrease tiresome import license requirements; • to decrease delays in assuring provisional admission of assistance equipment at both entry and exit; and • to avoid delays in obtaining visas and admitting the professional skills of relief personnel.
The first and second points are applicable to the pandemic cases. For instance, it is critical to shape a trade custom system to meet needs in the private sector with great flexibility when firms execute international conversion measures of production locations (1 in Table 3), production lines (2 in Table 3), and storage conversion (3 in Table 3). Trade restrictions may be loosened when businesses change their supply chains to produce goods, especially urgent medical equipment. Conversely, distribution channel conversion may prove difficult during the pandemic because human mobility is severely constrained. However, the visa requirements can be relaxed as a part of workforce skillset conversion so that foreign personnel can be assigned flexibly to distinct functions, enterprises, or supply chains. This relaxing visa for rapid response and recovery was implemented during the 2012 Thai flood. The directly-impacted Japanese companies operating in Thailand brought Thai employees to Japan to participate in alternative manufacturing with government support [48]. By September 2012, 5342 Thai laborers came to Japan through the program [48]. Additionally, the Thai government issued courtesy visas, which allowed Japanese employees to enter Thailand with fewer requirements to participate in recovery efforts at damaged businesses [48].
An additional policy recommendation is to set up a multilateral purchasing platform. African Medical Supply Platform (AMSP) is a prominent example [37]. AMSP aims to create an e-commerce platform similar to Amazon for African nations to address the challenges posed by the pandemic [49]. The platform engages with private sector suppliers in order to preserve competitive pricing and reliable deliveries of key medical equipment and vaccinations. Additionally, a review paper proposes a policy improving the information sharing of natural hazards and the pandemic as one of the policy recommendations [29]. The comprehensive, speedy, accurate information, such as pandemic infection status and weather warning, will help companies promptly convert their supply chains.

Challenges and limitations in implementing conversion strategies and future research directions
Although the COVID-19 pandemic has prompted many companies to critically analyze their supply chain and pursue a resilient strategy against natural hazards, implementation remains a major challenge due to the strong interconnectedness of companies within supply chains. The same is true for the implementation of conversion strategies such as those proposed in this paper. Therefore, we outline in this section some critical challenges in implementing conversion strategies.
The pandemic has clearly shown that the fragmentation of global value chains into small segments involving a large number of independent companies increases the risk of supply chain disruption. At the same time, this architecture also limits the scope for individual companies to implement conversion strategies. This is particularly true for the conversion of production sites and production lines. Global companies have built networks of specialized suppliers located in low-cost countries or with tailored skilled labor with years of experience. Converting production from these locations may result in higher costs and/ or lower quality as the efficiency advantages tend to be lower compared to previously used locations. For example, subsidized reshoring initiatives by the U.S. and British government show that only a small number of manufacturers are interested in moving production back to their home base despite having a lower risk of disruptions due to shortened supply chains (cf. Vanchan, Mulhall [50]). In addition, the suppliers of globally dominant manufacturers are constrained by the manufacturers' market power to convert their production facilities or usage. Through their market power, manufacturers usually take control of their suppliers' business decisions [51].
The options of the conversion strategies should be thought in the complex of all actors involved in the supply chain network. In addition to companies, the role of the state should also be explored in the future research. Especially in the case of products and goods of national interest, companies' freedom of choice in implementing conversion strategies is limited. Regulations and the public interest in protecting intangible know-how or safeguarding jobs, for example, can hinder the conversion of production sites. Moreover, the industry sector should be considered when analyzing appropriate conversion strategies. It is plausible that industries with a less skilled workforce and more standardized production systems can be more easily converted than highly skilled and highly complex ones [52]. This is especially true for "workforce conversion." Without a highly skilled workforce with a diverse skill set, firms may be limited in how they can convert their production. As part of their flexibility, therefore, companies must invest in workforce training.
Realistically, conversion strategies require a long-term commitment from companies facing supply chain disruptions to increase their flexibility and resilience, which could work against cost efficiency. This could be discussed in the context of transilience (i.e., a concept that describes a quick restoration of a system from a disruption with simultaneous transformation of its system [53]) and panarchy theory (i.e., a theory that enables the understanding of how a system tracks the progression of adaptive cycles across dimensions of time, space, and meaning [54,55]). Ultimately, the future research must examine whether companies are more sensitive to robust supply chains or whether short-term cost optimization will remain dominant in the globally connected economy despite the high likelihood of future supply chain disruptions due to disruptive events, such as climate change, trade disputes, and military conflicts.

Summary and conclusions
This article seeks to determine if a framework developed for addressing risks associated with natural hazards can be applied to the management of supply chain disruptions due to the pandemic. First, the paper contrasts supply chain disruptions caused by natural hazards and the pandemic. Damages, both direct and indirect, differ significantly as a result of these hazard types. The majority of direct damages caused by natural hazards are to physical assets, while the majority of direct damages caused by pandemics are to labor.
Second, in an effort to avoid systemic risks, the study suggests a novel taxonomy of conversion techniques in supply chain management. It proposes six types of conversion measures to manage supply chain disruptions caused by the pandemic: production location, production line, storage, usage, distribution channels, and workforce. In addition, the paper argues that policy supports in the trading sector, such as designing a flexible system for labor flows, communication strategies, and trade custom systems from the perspective of transilience, must support the conversion concept. Focusing only on increasing efficiency and reducing redundancies while neglecting flexibility and resilience would cause supply chain disruptions [56,57].
Just recently has knowledge and experiences about how businesses are responding to pandemics begun to accumulate. Resilience to systemic risks should include the understanding of common vulnerabilities to multiple hazards [4,21]. Future research must establish a new framework, building on such theories as panarchy theory and transilience, for analyzing measures and initiatives implemented during the pandemic.

Author contributions
MH and WS designed the research. MH, WS, and TN prepared the manuscript with contributions and feedback from MT.