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Harnessing Crisis as a Change Catalyst in Supply Chain

by James Gherardi on 31 Jul 2019

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Change is inevitable, but it is rarely welcomed or pursued, unless circumstances demand it. After all, why challenge the status quo unless absolutely necessary? However, in today’s rapidly-changing marketplace, the ability to adapt and respond to market changes and both internal and external demands is invaluable. Businesses that are able to be proactive, rather than reactive are more likely to future-proof themselves.

But how is that achieved in practice? Businesses are unlikely to spontaneously embrace structural or procedural change. 'With the best will in the world, even if there’s a bit of creative thinking going on, the impetus for change simply may not be there,' says Mike Gansser-Potts, Interim MD. 'It’s only when the whole business model is changing or being challenged, or perhaps there’s a financial crisis, that you get that willingness to do something differently.'

Therein lies the crux of the issue – a crisis isn’t necessary for change, but it certainly makes an effective catalyst. Especially in today’s business landscape. As Professor Omera Khan articulates: 'Every sector, whether it’s fast-moving consumer goods, aerospace, or the education sector, is facing a crisis of some sort. The difference is in how the businesses involved respond to making changes.'

Anticipation vs. Expectation

We wanted to look at this issue in more detail and so undertook a survey into the status of supply chain in 2019. We found that while businesses can’t anticipate every crisis, they can expect them. Expectation is a powerful weapon in the arsenal of any supply chain business, allowing you to prepare your business to manage a crisis effectively with a focus on agility. You can have processes in place that allow you to manage the team you have and remain open to bringing in external expertise when needed.

After all, a significant number of supply chain professionals are already anticipating change coming down the pipeline in a myriad of different areas. 74% of respondents, for example, believe that a change to the relationship between supply chain and commercial, marketing, and product development in the next three years. Almost three-quarters of those we spoke with, meanwhile, think that cost-cutting exercises could usher in a change to their company’s organisational structure.

Although a crisis makes for an effective – forceful – catalyst for change, organisations are beginning to recognise that they need to be more prepared for these crises. 'While change usually starts with something urgent, immediate, and painful, change needs to be handled in a more controlled fashion in our industry,' says Sudhakar Sinha, former Global Solution Expert at Givaudan. 'Otherwise change becomes a hugely expensive and highly risky prospect. We need to adapt and evolve because the environment, the industry, and the competition are becoming sharper.'

One way to future-proof your business is to embrace agility in your working processes. Why? Because there are crises that you will never see coming. As Gansser-Potts explains: 'However well you try and plan, it’s the thing you haven’t thought about which, in the end, creates the need for quite dramatic change.'

Fostering the ability to react quickly and agilely – as opposed to futilely trying to prepare for every eventuality – in your organisation factors uncertainty into your day-to-day working practices and thus offers you a modicum of insulation.

'It’s one thing to deal with moving from a vertical supply chain to a virtual supply chain. But today’s market is affected by volatility on a daily basis, whether that’s because of Trump’s tweets or the threat of cyber warfare,' says Omera Khan. 'Crises have always been there, but we are more vulnerable to them than ever before. We can’t control and manage these extended lead times as well as we once could. If we look at the amount of change we now need to manage, it’s clear that we have to embrace turbulence and uncertainty.'

Embracing Change

Embracing the possibility of change and uncertainty allows for a more flexible approach that should allow you to weather crises big and small without tremendous upheaval. The risk is that if change is resisted and the status quo cleaved to, then each relatively small crisis forces a more substantial internal change.

Such reactive, rather than proactive approaches can lead to employee fatigue as every small change has the potential to shake their working processes, meaning that the ground under their feet never feels secure. But it’s not just the people involved, it’s the business itself. As Gansser-Potts explains: 'In the supply chain, there’s a lot of installed knowledge, installed capital, and installed equipment that, if there are ridiculously fast changes going on, it just can’t keep up.'

So how do you work within the limits of supply chain and harness the buy-in of your employees when tackling crisis and change? We discuss this in the next blog post in this series, 'Managing Crises with Agile'.

James Gherardi

Written by James Gherardi

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