EDITOR’s NOTE: I recently found an article in StrategicRISK by Dawn Tiura, the chief executive of SIG, regarding the US Federal Reserve’s assertion that “fixing global supply disruption is key to avoiding a recession.” The following excerpt is just one of many fascinating insights from the article.
Proactive and reactive resilience
Did the disruption in our supply chains caused by the demand-pull and cost-push lead to inflation, necessitating an interest rate hike that will facilitate a recession?
I am sure we could debate this question for hours without coming to a clear consensus. Yes, while supply chain disruptions – some in hindsight preventable – contributed to our current economic crisis, we must avoid the risk of fighting the last war.
In other words, I don’t believe there is much we can do to avert the consequences of the present crisis because fixing the problems from the past will ultimately benefit us in the future.
Instead, we must first fix the past (reactive resilience) and then improve our response time to future disruptions (proactive resilience).
In a previous article, I discussed the importance of reengineering resilience in our supply chains.
Traditionally, supply chain professionals have taken an engineer’s view of resilience by viewing our supply chains as a “closed system that we could design and control in much the same way an engineer designs and controls a subway network”.
Unfortunately, our supply chains are anything but a closed system. As a result, managing future (and unexpected) risk is, at best, a challenging proposition from a predictive standpoint.
After all, did you or anyone else see the pandemic coming before it was upon us?
Use the following link to access the full article: Can we fix our supply chains?
Ian
July 20, 2022
AN interesting article and maybe I am missing the point, but for me we need both – built in resilience to withstand disruptions to a greater extent (just in case) and a faster bounce-back reaction when we lose the battle. What am I missing?
piblogger
July 20, 2022
You are not missing a thing, Ian, e.g., “Instead, we must first fix the past (reactive resilience) and then improve our response time to future disruptions (proactive resilience).”
It is not an either-or but as you say you must do both.
Thanks for commenting.