Reinforcing Supply Networks

The question at hand for most organizations now is how to restart, to reconstitute your operations back towards what will surely be a new normal.  If your company is working as part of a critical network to satisfy heightened demand for PPE, food, medical, sanitizing suppliers – your challenge is different than those firms operating at significantly reduced capacity. Let’s focus on those organizations that are not part of the critical network as this is the majority of firms and their challenge entails the more uncertain and perilous path.

Companies ought to be using their once-a-year scenario planning exercise as a weekly process now to assess different scenarios over a 3- and 6-month horizon.  This ought to outline the extreme possibilities as well as the most likely path given the latest information – keeping a healthy suspicion about the accuracy of the information, and also knowing that the situation can and will change dramatically, just as we have seen. Consider possible regulations that may constrain your (or your suppliers, customers) ability to operate. Yes, it is hard to plan in this kind of situation, but that it the task at hand.

Critical areas to consider your people, suppliers, and cash management.

Start with your people – ensuring a safe and healthy environment that has new requirements for workplace spacing, sanitizing, and personnel flows (e.g. one-way walkways perhaps). Expect lower levels of productivity and more sick time – the stress levels are high and that affects people’s ability to focus.  Emphasize safety over productivity – and walk that talk – and your employees will have your back.

If you have not been keeping updated with your suppliers – you’re already behind. Find out their status – personnel, capacity, cash position – and keep checking on them.  Help them prepare for recovery. You won’t survive without your suppliers. Keep them informed about your plans.  To the extent that you can, extend upstream to your tier 2 and 3 suppliers – they are part of your network too. Make sure they have the personnel, parts, people and cash required to remain viable. 

There are obviously many other important actions and tasks to undertake restart an operation or increase capacity and restore normalcy. These include coordinating with customers, demand and supply forecasting, preparing contingencies. Good operations managers know how to do this work and can make it happen. But as leaders, you will need to identify restart principles and focus attention on the critical.  People, suppliers, cash.

James B. Rice, Jr., Deputy Director, Center for Transportation and Logistics, Massachusetts Institute of Technology