instructor Hood's Key Ideas from Strong Supply Chains Through Resilient Operations
by Suketu Gandhi, Michael F. Strohmer, Marc Lakner, Tiffany Hickerson, Sherri He

“We are experiencing the biggest remaking of the global economy since the end of World War II.”

Watch for indicators of change that could affect any stage of your operations, and quickly modify your strategy to contend with new circumstances. The strategic choices you make now will help you build resilient operations. Start with your relationship with your suppliers.

Work with your suppliers to establish a relationship that benefits everyone. Rather than concentrating on exacting price concessions from them, refine shared strategies that strengthen both your company and your suppliers. 

To avoid supply shortages, reduce dependence on single source. Seek out quality alternative suppliers as backups. To facilitate the use of multiple sources, arrive at design decisions that make your product easier to obtain by using specifications several suppliers can meet.

“Your suppliers are a source of value, and you need to maximize that value, not minimize the cost.”

“Those capable of rewriting the rules of assortment, allocation, pricing, promotion, and fulfillment will be better able to adapt to whatever the future holds.”

To implement this strategy, the fast-fashion companies replaced their cost-conscious globalized supply chains with quick-response operations. For example, instead of outsourcing sewing work to low-cost labor in Asia, Zara prioritized speed and decided to use workers based near its headquarters.

This involves four strategies:

1. Institute outcome-based work – Pay for results rather than time. Workers increase their skill levels to become more efficient and garner more rewards.
2. Leverage global expertise – hire one global operations expert to supervise the entire network.
3. Promote perennial learning – When you encourage and enable employees to learn new skills and burnish existing ones, your organization will be more adaptable and resilient.
4. Plan for the skills of the future – Determine necessary skills for your company’s success in the future, and create plans for developing them.​​​​

“Learning organizations are resilient: They see crises as opportunities to grow, on both the individual and corporate levels.”

Apply a mix of artificial and human intelligence to foster a culture of continual learning. Such a culture will give your workers the agility and know-how to handle crises, pivot in response to shifts in customer preferences, and make the most of innovations.

“Many potential ‘supply shocks’ could be better classified as environmental, social, and governance (ESG) risks.”

Sustainability is no longer a purely political concern. 

Embrace it for strategic advantage. 

For example, you can frame sustainability as one way of minimizing waste.

Consider product design as an aspect of your sustainability effort.

“Resilience is the ability to withstand risks.”

Resilience elements for future challenges:

• Transparency – Have a full view of your operations throughout the entire value chain.
• Data – Acquiring, sharing, and analyzing data helps maintain transparency, better understand your customers, and make wise investments.
• Customer value – Value for customers can take the form of sustainability and a more agile supply chain.
• A proactive attitude – Don’t wait for change. Continually question everything about your products.
• People – Make sure you have the right people on the job, and empower them with purpose.