The Resilient Enterprise
A resilient company will change the way it operates, and thus increase its competitiveness. But how? In 2005 Yossi Sheffi published the book The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage and this article serves as an executive summary of the highlights in his book. If you don’t have access to the book, this article is an excellent substitute.
The Disruption Profile
Vulnerability Assessment
Market position and responsiveness
Redundancy and Flexibilty
Redundancy is the familiar concept of keeping some resources or safety stock in reserve to be used in case of a disruption. However, there is significantly more leverage in making supply chains flexible than there is in adding redundancy. Flexibility is building organic capabilities that can sense threats and respond to them quickly.
Five Facets of Flexibility
Gauging the magnitude of a large disruption early requires a mindset that continuously questions prevailing wisdom and a culture that allows “maverick” information to be heard, understood and acted upon.
Conclusion
I am not sure I follow Sheffi’s and Rice’s thoughts to the full, since we appear to have a different view on key terms such as robustness, flexibility and resilience, which I have attempted to clarify in my recent article, that also includes agility, where I try to de-confuse these four terms:
Sheffi sees flexibility as a way to achieve resilience, stating that instead of relying solely on supply chain redundancy, a well-managed firm should develop resilience, by building flexibility that can be used to ‘bounce back’ from disruptions. To me, that would rather be agility than flexibility.
Differences in semantics aside, the important issue, and I agree with Sheffi here, is that flexibility garners benefits and operational efficiencies also in the normal course of business. In that respect the article makes a brilliant argument for why flexibility should be part of business operations planning.
Reference
Shefi, Y., & Rice, J.B. (2005). A Supply Chain View of the Resilient Enterprise MIT Sloan Management Review, 47 (1), 41-48
Author links
- linkedin.com: James B Rice
- linkedin.com: Yossi Sheffi
Download
- Read the full article: A Supply Chain View of the Resilient Enterprise (pdf)
Related
- husdal.com: Book Review – The Resilient Enterprise
- husdal.com: Robustness, Resilience, Flexibility and Agility