Blog: It’s not the (supply chain) disruptions; it’s how we “think” about them!
In the past two years alone, the management of supply chain flows has meant having to deal with trade wars, logistics breakdowns, labor shortages, demand shocks, natural disasters, and unprecedented regulatory turbulence—oftentimes concurrently. Considering the persistence of this context, can anyone blame supply chain managers for having come to accept a disruption-laden operating environment as some sort of perverted new normal?
One of the key tenets of stoicism is crystallized in Epictetus’ famous maxim, “It's not what happens to you, but how you react to it that matters.” Had he been born in the present and observing the current environment in which most organizations are being called to manage their supply chains, this Greek slave turned philosopher would have made a great coach to contemporary supply chain managers. In the past two years alone, the management of supply chain flows has meant having to deal with trade wars, logistics breakdowns, labor shortages, demand shocks, natural disasters, and unprecedented regulatory turbulence—oftentimes concurrently.
Considering the persistence of this context, can anyone blame supply chain managers for having come to accept a disruption-laden operating environment as some sort of perverted new normal? Could we fault them for pepping themselves and their staff up with a fresh fix of Epictetus at least once a day?
Indeed, dear reader, I hope your answer to both questions is an emphatic “no!” because it is quite safe to assume that the volatility and uncertainty levels of late are here to stay. This means that, despite the benefits of investing in sophisticated risk management practices, organizations will have to remain reactive to the inevitable occurrence of challenging supply chain disruptions. Luckily, two decades of solid research and practice have delivered an effective toolkit for the development of reactive resilience capabilities based on redundancies, process flexibility, and supply chain collaboration. Guided by these foundations, supply chains have proven resilient through any reasonable assessments of long-term performance. Notwithstanding the frequent occurrence of impactful disruptions of varying degrees, we have kept, for the most part, getting cheaper, faster, better, and more various goods and services. Life is good.
However, the pandemic brought forth singular challenges. Since January 2020, the pace, geographical reach, multiplicity, and magnitude of demand shifts, supply failures, or infrastructural obstacles have been unparalleled, so much so that structural remedies provided by redundancies, flexibility, and formal collaboration were often insufficient to ensure the continuity of operations or even organizational survival. What good is a backup supplier when the demand for your product or service disappears overnight? What use is multipurpose production machinery if their operators are mandated to shelter in place for weeks at a time? What benefit do you obtain from having an inventory information-sharing platform with your partners when your managers’ decision-making ability is impaired by burnout or exhaustion? The vulnerabilities generated by the pandemic, together with the levels of volatility and uncertainty they have heralded, require us to complement our existing resilience toolkit with even more sophisticated instruments.
Consider the various heartwarming stories of organizations that were able to repurpose their supply chains to simultaneously generate revenues from unused capacity and meet urgent social needs. The presence of redundancies, flexibilities, and collaborative relationships in and of themselves cannot explain the adaptability manifested by distilleries manufacturing hand sanitizers, textile companies producing facemasks, or automotive assembly lines churning out ventilators. Even though redundancies, flexibilities, and collaboration are certainly part of these stories, they are not the main characters. In fact, the main characters of these stories are, perhaps unsuspectedly, channeling a bit of Epictetus. Far from being hung up on the burden of disruption(s), the managers of these organizations have reacted positively and creatively. They have demonstrated resourcefulness in marshalling the available redundancies, flexibilities, and collaborative relationships for an effective and socially useful pivot. Likewise, the personnel carrying out their decisions did not concede to their troubles by dwelling on the miseries brought forth by disruption(s). They reacted assuredly to acquire and develop the expertise required to execute modified tasks.
As turbulence becomes the norm in a post-COVID world, our current resilience toolkit requires updating in at least two aspects.
First, it is critical to venture back to the roots of the resilience concept in psychology and connect supply chain resilience research and practice with the study of why some individuals and groups react more positively to adversities than others. This will help us understand the extent to which resilient organizations and supply chains need to be operated by resilient people and how resilient people can be developed for different kinds of disruptions.
Second, it is important to continue building on the insights provided by exploratory empirical studies and recurring anecdotal evidence. Reactive resilience capabilities require organizations to quickly map their existing material, relational, and knowledge resources and reconfigure them into effective responses to each disruption.
In this sense, we must further our understanding of how individuals at different levels of organizations and at different stages of the supply chain can use their social capital to engage in organizational problem-solving. In a world of chronic supply chain disruptions, the main characters of reactive resilience capabilities are the actors who reason and mobilize available expertise to design and execute responses to frequent yet unique challenges. In a world of chronic supply chain disruptions, it is not what happens to us that matters, but how we think about it.
 In a study I recently published (open access), my co-author and I found that in manufacturing firms, they can problem-solve through a combination of individual and managerial levers. In the article, we also offer a brief review of what we currently know about these capabilities. Cotta, D., and Salvador, F. (2020), "Exploring the antecedents of organizational resilience practices – A transactive memory systems approach," International Journal of Operations & Production Management, vol. 40, no. 9, pp. 1531–1559. https://doi.org/10.1108/IJOPM-12-2019-0827