The Power of Resilience
Learning to manage unforeseen events
Over the last few decades, globalisation has enabled companies to perfect their production and distribution chains, involving many suppliers all over the world. If on the one hand, this practice has facilitated the improvement of many processes, on the other, it has made the entire system more fragile. In The Power of Resilience, Yossi Sheffi shows us how companies can, and must, prepare themselves to deal with the effects of a short term crisis, so that they do not fall victim to events which they are simply unable to predict.
Many useful tips to:
- Guide those in charge of risk management.
- Learn to manage complex distribution chains.
- Think about the importance of prior planning in response to extraordinary and unpredictable events.
A distribution chain that is more efficient but also more exposed to risks
The global market is an extremely complex system and companies that operate in it are using increasingly more detailed distribution chains, with an increasing number of suppliers, who in turn rely on other suppliers, and so on. The transport of goods has seen exponential growth over the last 30 years, and increasingly intricate management systems mean that less and less goods are kept in warehouses as inventory.
By analysing a distribution chain, we can identify five aspects to consider:
- Raw materials and product components.
- The suppliers that produce these components.
- The geographical location of these suppliers.
- The flow of goods, information and money.
- Inventories and stocks of goods that are present in the chain at any given time.
If, on the one hand, this complexity allows us to reduce cost and management times, on the other, it creates extremely delicate balances that are not always easy to maintain. However, a company rarely knows its own distribution chain inside out, and therefore is at risk of having to deal with serious consequences; a snag at any point in the chain risks creating a domino effect, with global repercussions.
The possible problems are numerous, from unexpected breakdowns of machinery to natural disasters, to acts of sabotage or even terrorism. It is not enough to adopt strict risk prevention protocols, because the origin of the glitch is often external, and so obscure, that it is literally impossible to predict.
The key ideas of "The Power of Resilience "
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