Is becoming more agile, flexible, and responsive the answer to weathering and managing crises in your business? In short: yes. As we discussed in an earlier blog post, while you can’t always anticipate each crisis, you can expect and, to some extent, prepare for them. How you respond to a crisis is almost half the battle.
As Professor Omera Khan articulates: “Responsiveness needs to filter right through the supply chain – and agility supports our ability to be more responsive to the unpredictable and uncertain climate that we’re operating within. Agility could enable us from being wiped out.”
An agile strategy is one that anticipates fluctuation and changes in the marketplace, a sensible approach considering the volatility and uncertainty we’ve already seen in the market. Omera Khan cuts to the point of the issue when she identifies: “The crux of almost every business's challenge is that they’re not getting the product to the market quick enough, or more specifically the right product to the market quick enough, and this market is very unpredictable and formidable. We’re competing in an on-demand economy.”
After all, wasn’t a lack of agility to blame for the hit that Ericsson’s mobile phone business took back in 2000? In a classic case of supply chain disruption, the Phillips microchip plant was ravaged by a fire. But while Nokia was agile enough to fall back on its suppliers in China to avoid risking production stalling, Ericsson dragged its feet and, ultimately, could not resume production.
An agile approach helped Nokia react to an immediate crisis, but you can also proactively choose to adopt agile strategies, as Mike Gansser-Potts, Interim MD, observes. He credits an agile approach for the success – not just surviving in the market, but thriving – of one of the businesses he worked for in the private sector. “The company took the leap and committed to be more agile. By focusing on rapid turnaround, agility, and low lead time, rather than cost, the company was able to grow its revenue and its margins as well.”
Many leading industry experts, including Omera Khan, stress that businesses should at least consider building an agile supply chain. “People say they can’t afford to be agile because they are focusing on lean,” Professor Khan explains. “But you can also build hybrid supply chain design that combine lean and agility to be efficient and effective – just look at the likes of Dell and Ikea.”
So how can you better manage crises with agile? The answer is simple – by getting the business to adopt an agile approach in advance. But, while agility is a strategy for adapting to change, it is, in itself, also a change. It can be hard for people to embrace. It can even be actively resisted by those in the business who don’t want to make adjustments until they are absolutely necessary.
This is where external expertise is invaluable. Just as you might not always have the right internal capability or expertise to deal with every crisis that impacts your supply chain, you also might not necessarily have the required knowledge or support in-house to change strategies in the first place.
For example, during our research project into the status of supply chain in 2019, we asked leading industry players whether their organisation would have the skill sets necessary to implement and manage a new organisational structure. Only 40% of respondents thought their team had the required skills; the majority thought they were lacking.
This is where external expertise plays its part: whether it’s reaching out to external consultancies or hiring interims who are experienced in supply chain transformation. Whatever your approach, guidance is key. Reassuring the business that you will have the assistance of a seasoned professional as you make any sort of transition can make all the difference – and will often help you get buy-in from the business.
Furthermore, the challenge in any industry or function going through change is managing business as usual. Bringing in external talent means that internal staff can still manage the core competencies of the supply chain during the change process. This approach also future proofs the business as it can help build internal capability, meaning that the team will be better prepared the next time they are faced with a similar challenge.
As Mike Gansser-Potts explains: “The issue is that people are busy getting on with their day job. So to suddenly try and make a big change without some initial help from an external expert is probably a mistake. These experts know exactly what they are doing, what benchmarks to achieve, and how quickly it will be possible. They can be extremely helpful for a short period of time to get things going and to set up a system that can be perpetuated within the business.”
Setting up solid systems, offering guidance and reassurance from experienced experts, and easing into transitions are all of vital importance when it comes to managing crises or preparing for them. The key to adopting or utilising an agile strategy is support – without it, change is almost impossible.