The Resilient Enterprise

The Resilient Enterprise : Overcoming Vulnerability for Competitive Advantage by Yossi Sheffi was a gift from Rebecca Kane Dow of ConnStep to thank me for a Lean Six Sigma presentation Ken Branco, Bill Southward, and I made at the Connecticut Shingo Conference in Hartford on November 16th. Several days on the beach in Key West during Christmas week was enough to polish this one off. Sheffi’s view is that resilient companies have a corporate culture that pushes decision making to the periphery. In Toyota anybody on the production line can stop the line if they find a problem. This culture of responsiveness and responsibility runs from the top to the bottom. “People in resilient organizations know that when disruption is evident there is no time to go through the bureaucratic processes.”To develop an effective supply chain the author describes three major areas of management initiatives:First, focus carefully on understanding the company’s supply chain vulnerabilities. This includes analyzing the types of disruptions that can occur, assessing their likelihood, and estimating their probable effects. Managers need to know what the new states might look like before they can design techniques, processes, and systems to manage them.  Second, create a concrete program to reduce the company’s vulnerability. Ways to do this range from reducing the likelihood of intentional disruptions, to intercompany and private-public collaboration for security, to systematic detection of disruptions, to resilience through redundancy. Third, vulnerability reduction is not enough; supply chain flexibility comes from process and structural changes achieved through interchangeability of parts and production facilities, through postponement, which customizes the product late in the production process, through flexible supply, and through customer relations management. These elements are critical because they allow a company to improve its resilience without simply adding costly inventory and capacity. Sheffi goes on to explain the importance of culture where he identifies six key cultural traits: (1) continuous communications among informed employees; (2) deference to expertise; (3) distributed power, which allows employees to take timely action; (4) knowledgeable, experienced management involved with the operations; (5) passionate employees who can be entrusted with the power to act; and (6) organizations conditioned to be innovative and flexible through frequent and continuous “small” challenges. Sheffi underscores the importance of company culture. “Company culture may be the real secret to the business success of the companies discussed in this book. . . . Day in and day out, this culture allows them to respond quickly and effectively to fluctuations in demand, small supply disruptions, and manufacturing woes.”