Supply Chain Resiliency: Make Your Own Luck

If you weren’t significantly impacted by the Japan earthquake, or any other recent supply chain disruption, was it luck or preparation?

This was one of the key questions Bindiya Vakil raised in her presentation “Supply Chain Crisis Prevention & Preparation,” which she gave a couple of weeks ago at the CSCMP New England Roundtable Executive Breakfast.

Ms. Vakil is the Founder and President of Resilinc, a software-as-a-service solution provider focused on supply chain resiliency. Her background is in the high tech industry, where she was a supply chain practitioner for eleven years at companies such as Solectron (now Flextronics) and Cisco, where she led the company’s product resiliency, component risk mitigation and risk analytics efforts.

My key takeaway from the presentation and group discussion is that when it comes to supply chain resiliency, you have to make your own luck.

This reminded me of the book “The Luck Factor” by Dr. Richard Wiseman, a psychologist based at the University of Hertfordshire in the UK. In a 2003 article published in Fast Company, Dr. Wiseman was interviewed by Daniel H. Pink (a best-selling author himself) about the book and his research findings related to luck. Here is an excerpt of their conversation that caught my attention:

Isn’t there a distinction between chance and luck?

There’s a big distinction. Chance events are like winning the lottery. They’re events over which we have no control, other than buying a ticket. They don’t consistently happen to the same person. They may be formative events in people’s lives, but they’re not frequent. When people say that they consistently experience good fortune, I think that, by definition, it has to be because of something they are doing [emphasis mine].

In other words, they make their own luck.

That’s right. What I’m arguing is that we have far more control over events than we thought previously. You might say, “Fifty percent of my life is due to chance events.” No, it’s not. Maybe 10% is. That other 40% that you think you’re having no influence over at all is actually defined by the way you think.

More than likely, if you’ve emerged relatively unscathed from a supply chain disruption, it’s because you’ve taken action ahead of time to eliminate the risk, minimize the impact, or ensure a rapid and effective response.

I outlined some of these proactive actions in “The Japan Earthquake and Supply Chain Risk Management” published last month:

The least impacted companies [in the aftermath of the earthquake] will be those that have been (among other things)…

  • sourcing critical parts from multiple suppliers, manufactured in multiple factories, located in multiple geographic regions;
  • using widely-available, standard components instead of proprietary, custom-built parts;
  • keeping excess manufacturing capacity in their factories;
  • designing and equipping their factories to build a wide portfolio of products;
  • implementing redundant IT systems and data centers;
  • using multiple modes of transportation, and working with multiple logistics partners.

My other key takeaway from the breakfast meeting is that supply chain resiliency, just like sustainability, begins at the design stage, both product design and supply chain network design.

A key challenge, however, is that many companies lack the necessary information, resources, and organizational alignment to “make their own luck” with regards to supply chain resiliency. And that is what prompted Ms. Vakil to launch Resilinc last year.

I spoke with Bindiya again a few days ago to learn more about her company. I won’t go into all the details here, but in a nutshell, Resilinc offers a business intelligence and analytics platform designed from a risk and resiliency perspective. For example, the solution provides companies with “vulnerability maps” of their suppliers, sites, and parts. Click on a supplier manufacturing site on a map and you’ll get a summary of the risks associated with that site (i.e., high location risk based on a risk score), as well as the number of parts manufactured there and the revenue impact should that site shut down.

After our conversation, it occurred to me that software-as-a-service, coupled with managed services, is the ideal model for a supply chain resiliency solution. SaaS is best suited for business processes that involve the ongoing exchange of information between many different external partners and where curated information (“content”) plays a key role. This is why, for example, many companies opt to deploy SaaS global trade management solutions (see “Beyond Software: The Role of Content and Connectivity in Global Trade Management”). These same attributes apply in supply chain resiliency.

But software alone is not enough. Many companies lack the internal expertise, or they don’t have the time or enough resources, to effectively implement and manage supply chain resiliency on an ongoing basis. That is why bundling managed services with a SaaS solution makes a lot of sense to me. To paraphrase what I wrote in “Buying Supply Chain Outcomes, Not Software,” companies do not want software, they want outcomes—in this case, more resilient supply chains. The ideal solution provider, therefore, must not only provide the tools, but also the experts (“human IP”) who can connect all the pieces together—software, process changes, metrics, best practices, continuous improvement, etc.—to deliver business value.

The bottom line: Luck happens or you make it happen. Supply chain leaders should always opt for the latter.