In the last twenty years, we have seen a wide variety of global and local events that have pushed us into the unknown: earthquakes, forest fires, tsunamis, floods, financial crises, geopolitical issues, and now, a global pandemic. If all that showed us anything, is that a resilient supply chain is a strategic priority. People can be resilient and so can organizations. Resilience is being able to bounce back from a disruption. The first response’s effectiveness and rapidity will be the key drivers for preparing a speedy recovery and coming out of it, not only unscathed, but stronger.
Many articles have been written in 2020 about supply chain resiliency. It is easy to understand why, especially with the challenges that we all faced last year and are still handling into 2021. There are even several mentions that the new normal will continue to be filled with disruptions, so managing or anticipating disturbances will become the norm. Resiliency is what can help organizations ensure business sustainability.
The supply chain is an integral part of the organization. For it to be resilient, there needs to be the right approaches in the organization first. In this series of four articles that will be published weekly, we will address the four pillars that leaders need to work on to increase the organization’s resiliency: culture, people, technology and processes, and risk management.
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Organizational culture is important to set the tone of the mission and values of the firm which will lead people to see what is important in their day-to-day activities. Communication, strategy alignment and the right metrics will also guide people’s behaviours and approaches to reach the common objectives. That makes culture and strategy an imperative for creating a resilient organization.
Communication is a fundamental part of culture. It is not only how we share ideas, but it can also be how we shut down initiatives. Ensuring that communication is two-way and open creates an environment where transparency is promoted. On one hand, leaders share their vision of the future to insight employees to strive towards. And on the other hand, it is balanced by all employees, regardless of their role, sharing their thoughts for innovation and improvements. The more diversity we have in our team, the more varied the proposals will be. This approach also encourages the dissidents to voice their disagreements, in a way that it creates positive confrontations, which is required to generate new views and to think outside the box. This communication and exchange of ideas must take place within the entire organization, and not just among a few services, and with all parties involved. Having a wide array of people engaged in these exchanges and from various departments provides better opportunities to develop a holistic view of the firm. In turn, this holistic approach and understanding will help better manage the business and its associated risk factors.
In terms of strategy, there is a new clear distinction that emerges due to the pandemic between efficiency and resiliency. Efficiency’s objectives are to reduce cost and optimize processes. Resiliency requires flexibility, or slack, to be able to react to what the world throws at us. But it’s not an either-or scenario. It’s rather a question of how much of one do we want or can tolerate versus the other? Once that strategy is decided, then the culture, the language used, the people management approach will pretty much dictate how resiliency will be achieved.
The metrics that an organization puts in place need to be aligned to the strategy. They need to reflect what is important, promote the behaviours that are desired, and they need to stimulate resiliency. It’s not only about walking the talk, but also about rewarding the right behaviours and immediately reacting to and stopping the behaviours that do not reflect the values of the organization. An example of a metric for resiliency is capacity utilization, to what extent are we fully using the warehouse, the production equipment, team member working hours and productive hours. Because resiliency needs to have flexibility, we must establish the percentage at which we can operate that leaves us the capacity to react to disturbances and that number may differ per type of activity so it’s important to understand the impact that it will have throughout the supply chain.
Lastly, an organization is a citizen in its environment. It has neighbours, a community of people and their families, other businesses nearby, local retailers and restaurants. Whatever resilient structure the organization has, it is only as strong as the community that surrounds it. We are reminded of the floods that occurred in the Montreal area in 2017 and 2019 where so many people’s homes and families were affected. Organizations can be prepared and can be able to face these disruptions. But if their employees and their neighbours can’t get to work because it’s a matter of security and family safety, whatever plans were laid out were unusable. Leaders need to recognize that organizations are corporate citizens and must also be part of creating resiliency in their communities.
“Business leaders must recognize that the organization’s resilience depends on supporting resilient communities.” (Unruh, 2016)
Next week, we will continue the series discussing how we can help our people to develop and strengthen their resiliency within the organisation. To receive all the articles, please register for our newsletter.
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