For the last few posts, we have been mostly discussing what to do in order to prevent potentially career limiting supply disasters.
Now, what if you just didn’t have enough time to put all the solutions in place and disaster is imminent or has already struck?
During moments like this, abandoning ship looks attractive, but actually it’s not! Have you heard the famous Stoic saying ‘the obstacle is the way?’
This means we arm ourselves and charge towards challenges knowing that these challenges have valuable lessons to teach us!
Here’s where your personal leadership is critical! A supply chain disaster is your opportunity to truly showcase your leadership acumen and the sheer awesomeness of your team. (Of course, that’s once you’ve slain the proverbial dragon.)
Perhaps you could even rise like a phoenix from the ashes, like Boeing. They have moved from supply chain disaster to leadership in a matter of a few years:
When Boeing launched production of the twin-engined 787 in 2007, it vowed to set record production times. Within months the mission was in tatters. Tiny glitches held up the first phase of construction. Some were truly minuscule, like running out of fasteners. Boeing resorted to buying more at Home Depot. The small delays escalated into a revised timeline amounting to years.
Is it really pure coincidence that we then find Boeing now working with supplier Norsk Titanium in achieving the very first 3D printing of FAA-certified components? I don’t think so!
Boeing Co hired Norsk Titanium AS to print the first structural titanium parts for its 787 Dreamliner, a shift that the Norwegian 3D printing company said would eventually shave US$2 million to US$3 million off the cost of each plane.
That’s extraordinary isn’t it? Here’s an example of a company that has publicly failed and is now leading it’s industry. It’s source of weakness is now it’s source of strength!
If it’s possible for Boeing, then it can be possible for the rest of us. It only takes one to be successful to show the rest that it can be done!
That said, we must also first tackle what went wrong with Boeing’s supply chain management and what can we learn from them. Here’s another take on it:
To put it simply: Boeing badly wanted to do more than it could handle, and they failed to assess the risks properly as they charged ahead. They attempted to rapidly change the assembly process and the supply chain simultaneously — and too quickly — with disastrous results.
Aerospace-Technology.com made these observations about the debacle:
Changing the supply chain and the assembly process all at once is probably two steps too far too soon. “Boeing probably underestimated the size of the risks involved,” says Robin Jackson, chief executive at ADR International.
In the same report, an analyst cautioned companies to be careful about how quickly you introduce innovations: “If Boeing mismanaged anything, it is that they have tried to introduce an innovation in their supply systems at the same time they have innovated in product and assembly.”
So effectively, their supply chain really wasn’t ready yet. But they charged ahead anyway.
Can you think of any other companies that have been able to go along like this?
There are, but these are still few and far between. Perhaps Walmart might be a contender:
Their RFID saga went on for 6 years and it certainly moved the technology forward but the drama required significant investment in time and dollars for Wal-Mart and many of its suppliers that can’t possibly have delivered a payback. The program still seems confused, and Wal-Mart clearly forgot the axiom about avoiding over-promising and under-delivering.
Yet, they are still pushing forward with new technology trials like blockchain. Whether it’s getting mangoes from Mexico or pork from China, they are still actively working with their top ten largest food manufacturers and suppliers to keep going.
That said, what does supply chain leadership have to look like to deliver turnarounds like Boeing and possibly Walmart? It goes without saying that it still needs hands-on affinity for today’s IT tools (like inventory and warehouse management software). The problem is that it assumes these form the bulk of such skills. In truth, it is not going to be sufficient to deliver the turnarounds these companies have delivered. You will need to do more on a continuing basis to survive the supply chain disasters of the future.
Let’s break these down in the following list:
1. Determine if you are playing above or below the line.
The first decision you need to make is whether you should play above the line or below the line.
If you are playing above the line, you will take ownership, accountability and responsibility.
If you are playing below the line, you will find it easier to deny, put blame and make excuses.
It’s a very serious question: Where are you going to be playing vis-a-vis your own supply chain disaster?
It’s clear that Boeing played above the line. They determined the root cause of the issue and admitted it openly.
They had announced that the timeline for the Dreamliner would be a record. However, not all of us deal with the 24-hour news cycle, or the quarterly stock exchange cycle reporting on our supply chain ‘failures’ even if it was their own creation.
2. Understand the specific skills will you bring to the fore.
In addition to your usual strategic and general supply chain leadership skills, you need to be able to drill down deep into operational territory when necessary!
You will need:
Sensitivity to bottom-line costs.
While there are consumers who cringe at the term ‘bottom-line,’ being aware of it is still crucial for sustainability. On the other hand, this same awareness should also extend to customer dissatisfaction and poor or uninventive means of service.
Plenty of supply chain disasters occur because a large majority of customers have simply gone up and moved on to someone more able to provide the services they expect. Some of the most well-known supply chain disasters in history resulted in no recovery and a permanent hit to the bottom line.
Consumer backlash and excessive confidence in one’s own product does happen. A common culprit is that the leaders have their gaze looking too high up and too far out into the long-term and they are not in touch with what’s happening in their markets and their companies right now!
Knowledge of new mindsets versus the old.
The world has changed – once upon a time, it was smart to wait for the new technology to prove itself and then you could adopt Version 10 because all of the bugs had been taken out of the first nine versions. The poor suckers who adopted early paid for it with lost time, frustration and productivity. These were the golden days where patience was truly a virtue because there was no other means to have things swiftly delivered at reasonable costs.
But today, technology has changed expectations and patience is not an excuse for outdated delivery or business models.
Investing in automated solutions and the right intelligence.
This can make the difference between meeting revenue goals versus missing a quarter and taking a stock price hit.
Such were the words of Bindiya Vakil, founder and CEO of Resilinc, after presenting an annual report indicating that supply chain disruptions nearly doubled in 2017.
One must first tackle mindsets still stuck in the past in order to properly address the insistence on old methodologies. But unless you are in the business of wine and aged cheese, oftentimes it is better to show just how the mindsets of new customers differ these days. The sooner leaders can accept these market realities, the better!
We all know this to be true. Take, for example, the slowness of our supply chains to digitize and move to predictive analytic capabilities. This was already a thing back in the 1980s and yet there is still relative slowness among supply chains in grasping big data’s potential for profit centres.
Readiness to plan on-the-go
It is good to have a plan. However, a supply chain disaster is always an event where the original plan is going awry. Good leadership should understand (and relay) that plans are never perfect. Promoting a culture that encourages flexibility, agility and contingency eliminates the constant need to save face when things aren’t going as well as expected. Accepting failure as a learning experience also protects us all from those times when our challenges and obstacles are deep and difficult.
For example, if there has been a delay in SCM software implementation, then you should still push forward by changing the mindset that keeps the organisation stuck in old processes (as described earlier). And even in the event that there is already decent IT infrastructure in place, flexibility still extends to your capacity to be hands-on when using the technology to make urgent and impactful decisions in real-time. (How many companies do you know with the systems in place but not being used? Or systems partially installed, but with critical items not yet in place?)
Negotiating prowess
When disaster strikes, tensions can run high and tempers can get short. Often an unwanted outcome of this is that suppliers part ways with your business. In order to retain them (or at least be quick to recover any potential loss of suppliers), leaders should be quick to process and systemize challenges. Such changes require the ability to negotiate expertly and when they least expect to. Always look for the hidden opportunity in this to reset the suppliers’ expectations or even change them completely.
Whether it is disputes, protests or just a complaint that hasn’t been addressed for a very long time, it is important for leaders to re-assess the stakes of your supply chain partners. Understand what it is they are losing in the face of a supply chain disaster and how your business can make up for such deficits without creating additional deficits. Look for the win-win even in the face of disaster!
Understanding of each individual’s role
Whether you are running your own manufacturing plant or reviewing your supply chain network, a supply chain disaster is the ultimate test of how well you know the role of individual parties. It helps you spot the main cause of a disruption. It lets you know how it can impact the performance of others, it lets you see how they handle disruptions and you can use this as a learning experience.
Finally, knowing how these dots connect can help you keep the problem from escalating while also isolating the cause. For example, if you are a restaurant chain and a logistics problem has suddenly locked down much of your food supplies en route, you would still have an alternative supplier in mind to make the necessary shipments. (That is if you have done your emergency contingency planning.)
While I cannot stress enough about the need to technologically innovate your supply chain, leaders should also make sure their professional skills are held to a high standard. In the face of supply chain disasters, there is little you can do with highly adaptive technology when you do not have an even more adaptive mindset to go with it!
People skills
The truth is that you still need a good knowledge of how to handle people and personalities. That not only goes for handling employees but also understanding the market dynamics of consumer behaviour.
3. Identify clearly the root cause of the disaster without laying blame.
This is very effective if you have an intimate knowledge of how your supply chain actually works. And in some companies, there is no one person with this knowledge which makes root cause identification itself fraught with politics!
You must conduct supply chain systemization, map out the processes, and even out your network redesigns. to the degree that everyone clearly understands. Disseminated knowledge of how the supply chain actually works is key to avoiding the issues which manifest as the result of a silo’d mentality. Aren’t you tired of employees simply blaming the functions (and people) immediately up or down stream from them? Or in the 3PL? Or the 4 PL?
It’s also helpful if you have included in your supply chain processes the clear accountabilities and responsibilities for each team member. You will need all functions involved represented, along with supply chain teams. This includes relevant third parties such as outsourced location representatives, contractors, distributors, agents and suppliers They all need to agree on the root cause!
4. Address the root cause and fix the haemorrhaging.
This should let your supply chain get on with what it’s supposed to be doing! After implementing the last three steps, you now need to work out how to fix this issue. Depending on the type of issue, you may need some of the teams mentioned above or even all of them.
This step is aimed at addressing the root cause as quickly as possible and stem the haemorrhaging to ensure that the collateral damage is minimized. Think of this other major disaster-turned-opportunity: Nando’s Chicken.
They ran out of chicken in the midst of a New Year holiday but it turned that reputational disaster into a PR comeback by emphasizing on their brand’s message about fresh food. (Who wants old chicken that has been stored in inventory for days anyway?) Such stories are just fine proof that someone’s disaster is potentially someone else’s PR success.
5. Suck up the ‘public humiliation’ and re- frame the disaster as a learning experience.
Looking for the silver lining – there’s always a silver lining and some of this could be the learning experiences we have just had. In the worst case, you at least become a story that can teach others so that no one else has the same problem. Write it up as a case and become the one that speaks about keeping your global supply chains safe from disaster!
6. Identify and learn the lesson.
There will for sure be a learning experience in this. What’s the lesson that you and your organization needed to learn and have now learned? If you think there’s no lesson, then go back and look at it again – there is always a lesson to be learned. Find as many as possible to keep the organization alert and thinking about what to do differently and better in case another occurs.
7. Make sure the appropriate remedial actions are put in place to ensure that this doesn’t ever happen again.
How well have you put in place the necessary remedial actions to ensure that the same disaster doesn’t happen again? Because in supply chain, one thing is for certain: if you have missed putting the remedial actions in place that are needed, the disaster will come back bigger and better next time!
Go all out to find a solution, new technology or anything else that just knocks it out of the park! – The Boeing deal with Norsk is just one of many extraordinary and outstanding examples. If others can do it, why can’t you?
8. Debrief, feedback and critique.
Once all the drama starts to settle down, and you can see light at the end of the tunnel. Hold a debriefing session and ask for feedback and commentary. What did we do well, but what could we have done differently or better that would have delivered an improved outcome?
Be open to hearing what others are saying. You don’t need to adopt all of the feedback, just pick a few things that you can relatively easily do and demonstrate that your colleagues have been heard. Pick enough to model this behavior for your teams, so that when it comes to your feedback to them, they will remember and follow your lead.
To summarize these steps:
Whilst we all agree it’s quite impossible to prepare for supply chain disasters, here are some things that we might consider doing in the times when we are NOT dealing with a disaster!
A supply chain tragedy or disaster isn’t something that just happens. Warning signs are there. They just haven’t been interpreted as such by the many people in the supply chain who could have interpreted these signals. Have you evaluated your supply chain for unnecessary complexity and hence, risk?
In the interests of having intimate knowledge of one’s own supply chain, let’s go back to the Resilinc and its Supply Chain Disruptions Report. Its CEO has also suggested that:
It might be sensible to evaluate your current resiliency practices and answer some basic questions including:
- Where are my suppliers actually operating worldwide?
- Which countries do my parts actually touch?
- Which of my highest revenue products are dependent on the highest risk regions of the world?
- What event may happen today that could potentially impact the supply chain in the coming weeks or months?’
Review the areas above in conjunction with your global supply chain and make sure that you have alerts and/or leading indicators that can pick up these risks.
The Resilinc 2017 EventWatch Supply Chain Disruption Annual Report gives us glimpses of what we can expect going forward. There are many key areas of supply chain disruption which could spiral into supply chain disasters today. Here are some that Resilinc recommend staying on top of:
- Geopolitical developments in North Korea.
- China’s response to pollution and its impact on manufacturing.
- Cyber-attacks, which increased significantly last year, and cybersecurity.
- NAND flash chip shortages.
- Increased volatility of storms and natural disasters.
They go further on and state that the automotive industry was the most disrupted segment, recording an increase of 30 percent in Resilinc’s published bulletins. However, all industries experienced increases of around 300 bulletins or greater in 2017, according to the report.
In the same analysis, they also reveal that factory fire/explosions were the most common disruption in 2017, generating 18 percent of EventWatch bulletins. This was followed by mergers and acquisitions, business sale or spin-off, and factory disruption/shutdown.
“This should be a wake-up call for business leaders around the globe,” said Vakil. “2017 was a turbulent year for US companies and their supply chains, causing a hidden drag that must be addressed. With 32 percent of S&P 500 companies potentially impacted (by supply chain disruptions), that is a staggering figure.”
Afflink’s Michael Wilson has also his own list of prominent 2017 disasters and states that our local supply chains are plagued by problems within larger international supply chains. These ranged from the logistical to unethical, including Puerto Rico Aid, Apple’s iPhone X and several more involving human rights violations. He suggests considering the following:
If a natural disaster strikes, will your supply chain stay intact if other countries can’t intervene quickly? As a popular company, do you have enough suppliers to fulfill orders? Or, are you following ethical sourcing and manufacturing methods?
Finally, Supply Chain @MIT has reported more companies are now recognizing the need to understand their underlying vulnerabilities in order to proactively prepare for service interruptions. They presented the case of Toyota and how they developed information networks covering about 4000 auto parts in the aftermath of the 2011 Tohoku earthquake. As such when the 2016 Kumamoto earthquake occurred, Toyota was better prepared, able to identify which suppliers were affected in a matter of hours. This enabled them to quickly shift parts production to alternative suppliers.
Can you ever be completely prepared for the supply chain disaster or tragedy? Can you ever have predictive capability that is 100% accurate? You cannot.
However, you can certainly take all of the actions above. In the end, you can only do your best, and trust that’s enough. You must continue to invest in yourself, in your own education and learning and in the development of your team. You must learn to do this to the extent that you can trust their decision-making and action-taking to be consistent with the values you have modelled throughout your time as their leader and then lead them through it!
Let’s make sure that an increasing willingness to better understand the past, and a further emphasis on building resilience in our people, processes, technology and supply chains will steel future supply chains against adversity beyond 2018. It is up to us to turn supply chain tragedies into extraordinary supply chain triumphs!
If you would like to talk more about this subject in light of your own company’s unique challenges, please book a complimentary consultation here.
By the way… Ever heard about what happened to strong brand KFC? If you want to avert that kind of disaster for your business – God forbid – Click HERE. Don’t worry, it’s totally FREE.
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