Katherine Dei CasExecutive Vice President, Global Head of Delivery Systems and Services and Specialty Gases at EMD Electronics.
Over the past year, have you felt like your team was reacting to yet another supply chain crisis rather than spending time on strategic activities? I guess most of us in the tech industry could sheepishly answer yes here.
Disruption and uncertainty are part of our new daily reality. A quick Google search for “supply chain news” over the past month shows constant geopolitical shifts, climate pressures, and bad actors taking advantage of the chaos. During UNCTAD16At the 16th United Nations Conference on Trade and Development in Geneva, participants discussed how “fragile logistics networks deepen inequalities and threaten progress on sustainable development.”
It’s very difficult to ignore a fire burning right in front of you. But if unpredictability is the norm, a reactive approach won’t help. CEOs view supply chain as one of the top risks to their business, according to KPMG 2024 CEO Outlook Survey…and I agree. I would go even further and say that supply chain resilience must be at the heart of any proactive risk management program.
Reaction versus resilience
Being reactionary means scrambling to react only after a disruption has already caused damage, often resulting in wasted time, higher costs, and missed opportunities. In contrast, resilience is about preparing before challenges arise, in order to minimize the impact and recover more quickly. The difference is putting out fires or confidently navigating uncertainty with a plan.
But what does “resilience” actually look like when it comes to protecting our global supply chain? GOOD, The IBM definition is a good place to start: resilience is “the ability of a supply chain to anticipate, adapt and recover from disruptions.” These can be external or internal, planned or unexpected, and the key is to be flexible enough to continue operating and providing services to customers.
Organizations are very good at adapting and recovering, but these are generally reactive strategies. Where we often struggle is anticipating disruption, the essential proactive element. It’s not a “nice to have.” THE “a world of relative stability and open, predictable shipping lanes” is over. You want to control your own destiny and not be at the mercy of your suppliers. Supply chain disruptions impact your ability to supply your own customers, and having to deal with these types of shortages increases inefficiency and costs if you haven’t planned and prepared for them properly.
For a more recent example, look no further than how water levels in the Panama Canal have impacted global trade or how chip shortages have affected the semiconductor industry. Anticipating disruptions and developing contingency plans requires a mindset shift. This requires truly understanding what drives your business, what drives your supply chain, and what your unique points of failure are.
In my first Forbes blogI discussed the importance of authentic leadership and why you should always challenge yourself to think differently about business problems. It’s the same with your supply chain. You need to look at all angles and take a customer-first approach. What is important to them? What types of processes and systems should you put in place now to enable you to respond quickly in the event of a disruption?
When anticipating the multitude of risks, a good analogy is to look at employee safety programs. These are extremely important in the semiconductor industry, but they are not just about safety procedures. These are multifaceted approaches focused on driving behavior.
We ask people to think about gaps in processes and technologies, to think about safety at home, to think about safety in everything they do, and to find creative solutions to fill the gaps. These programs ask employees to think about security in the context of risks to themselves and the company.
The same goes for supply chain risks. It’s not just about ensuring the product gets to the customer: it’s also about fostering a culture of proactive risk awareness and shared responsibility at all levels. By encouraging everyone to seek out potential challenges and express their ideas, we create a safer and more resilient organization overall. This mindset ultimately benefits both our people and our business, helping us face uncertainty with more confidence and caution.
The role of the leader
I want to recognize that the intensity and speed of the technology industry makes such planning extremely difficult. And one challenge after another gets worse over time, making it extremely difficult to step back and understand what happened or how to prevent it from happening again. But this is where we, as leaders, must step up and continue to look forward. We need to anticipate problems and essentially create opportunities so that these fires don’t start.
The best risk management plans are often the ones that go unnoticed. Our role is to allow our teams to focus on more strategic issues. Recognize members of your team who think differently about supply chain risks. Focus on rewarding and recognizing people who provide long-term stability, rather than just encouraging people who solve tactical problems. Explore ways to get people to think differently and, if things aren’t working, let people voice their concerns. It’s up to us to be responsive to new ideas.
Building resilience
Encouraging people to think about risk in everything they do gives them the opportunity to truly understand their role in the business and how it impacts everything from their own satisfaction to organizational flexibility. When we focus only on current issues and fail to anticipate what might happen in the future, we do ourselves and our clients a disservice. But when we understand which levers are most important and can be flexible and creative in our thinking, we are able to be responsive and resilient for our customers.
Building a resilient supply chain is a mindset that allows teams to adapt and thrive in the face of change. Integrating proactive risk management into our daily culture helps us ensure our long-term success, regardless of the challenges that come our way.
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