Five principles for resilient operations

What does “resilient operations” mean? How do companies move from rigid to resilient to regenerative? How can resilience simultaneously avert crises, reduce costs, and spur new growth? When we’re asked questions like these, we turn to five principles.

Resilience is about responding to any kind of disruption: extreme weather events, pandemics, economic shifts, terrorism and war, humanitarian crises, or even sudden shifts in customer preferences. We may crave “back to normal,” but in the new business reality, there is no normal—only continual disruptions. The volatility in today’s world is not changing. Speed is more important than ever. To manage that speed, and maintain agility in the face of changing directions, businesses must design supply chains for both short-term execution and long-term value.

Disruptions mean risks, and these principles build resilience against those risks.

1.?Build resilience against supply shocks by empowering your supply base

Rather than seeing your supply chain as something you construct out of interchangeable links, envision your suppliers as partners. They’re a source of value, not just a source of potential cost optimization. The more you emphasize visibility and collaboration with your supply chain partners, and the more you build trusting rather than transactional relationships, the more your suppliers can help you through crises.

Indeed, we prefer to talk not about supply chains but supplier ecosystems. A chain is only as strong as its weakest link. An ecosystem is filled with productive interdependencies. The more you can empower that ecosystem, the more options you will have to respond to disruptions.

2.?Build resilience against demand shocks by using your operations to create customer value

Customers are fickle, perhaps increasingly so. But when you’re resilient, a sudden change in customer preferences can quickly ripple through your operations. Why? Because you know what drives customer value. You have the customer relationships, customer data, and customer intimacy—in short, you’re a good creative listener. Furthermore, you employ a design-to-value approach so that your products and services are meeting genuine customer needs.

The danger is complexity, which can frustrate consumers. But as you seek to increase resilience through complexity reduction, you can’t just hide the complexity. You have to eliminate it from operations, where it drives up costs. In other words, complexity reduction is not just simplifying stock-keeping units (SKUs). It’s simplifying supply chains, processes, tech stacks, and IT systems.

3.?Create resilient teams by leaning into new ways of working and the benefits of diversity

Your operations are always made up of people, and recent crises have demonstrated the value of having teams that are resilient. Whatever your company does, resilience-wise, your people will do it. So you need people skilled in resilience—people who will choose resilient options instead of just cheap ones. You also need people to be resilient, to be calm and wise in a crisis. And you need resilient teams.

Needless to say, diverse teams are more resilient, so you should hire for diverse backgrounds and skills. Furthermore, purpose and joy build resilience. Is your company purpose-activated? Have you implemented purpose in your operations? Do your employees feel as fulfilled at work as your bosses? When they do, they’ll be resilient in a crisis.

4.?Enable resilience through technology by combining human judgment with artificial intelligence

Automation can be useful, but a fully automated operation isn’t resilient. Instead, the resilient organization is constantly learning. Technology can assist in such learning. But it’s people who learn how to respond to crises, adapt to changing customer preferences, and profit from innovations.

Technology can provide new vehicles for transparency and customer intimacy, new ways to augment or ease human labor, and new types of products and business models. Technologies such as artificial intelligence (AI) are incredibly powerful tools. But the most successful builder isn’t the one with the biggest box of hammers—it’s the one who puts the right hammers in the hands of the right craftspeople.

5.?Ensure long-term resilience by embracing sustainability

The changing climate is creating risks to your operations (floods, hurricanes, dust storms, and so on). Meanwhile, customers, employees, and funders care about climate impacts and about social responsibility. Regulations are increasing and may develop in unpredictable ways. Thus embracing sustainability will build long-term resilience.

When you drive the sustainable deep into your organization’s values, the resulting strategy will sustain you through wildfires and other climate events, through human-trafficking scandals, social unrest, and political nightmares. A sustainability strategy is a form of resilience—being ready to mitigate and adapt to uncertain risks.

The five principles interact, of course. They affect each other, and build on each other, in ways unique to your industry and situation. But when you can implement them holistically, you’re poised for sustainable, profitable growth, even—or especially—amid disruptions.

This article was drawn from the new book by Suketu, Michael, Marc, Tiffany, and Sherri, Strong Supply Chains through Resilient Operations ,?and sent as part of a monthly perspective that Kearney shares with our clients on the bigger trends unfolding across the operations landscape.

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Learn more about the authors of Strong Supply Chains Through Resilient Operations: Suketu Gandhi, Michael Strohmer, Marc Lakner, Tiffany Hickerson, and Sherri He