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Manufacturing involves diverse activities, including design, analysis, sourcing, supplier management, fabrication, costing, change management, supply chain management, sales, after sales support, etc. A highly complex set of integrated activities that depends on each are to available and functioning when needed.
Today’s operating environment is very different environment than that of a number of years ago. Once it was possible to manufacture a product from centralized locations, to be near your customers, and to have resources near at hand. Things are different today. Now there is competition for resources, supply chains are lengthy and complex, customers are global, and expect constantly improving products.
Today’s world is one of rapid and continuous change. Constantly changing regulations have to be followed; interruptions to the supply chain seem to occur on a daily basis, and the speed of technical advancement is constantly increasing. Organizations have to be able to react, adapt, and grow within this constantly environment.
The organizations have to be resilient.
- Merriam-Webster defines resilient as: Capable of withstanding shock without permanent deformation or rupture; tending to recover from or adjust easily to misfortune or change.
In psychology resilience refers to an individual’s tendency to cope with stress and adversity. This coping may result in the person “bouncing back” to the original state, or by using the new experience to function better.
Thus a resilient organization should combine both of these ideas: a resilient organization is one that is capable of withstanding shock without permanent disrupture, and as a result of the disrupture, either returns to the previous state, or, as a result of the experience emerges as an improved organization. All areas of an organization must be able to deal with interruptions and shocks in such a way that minimizes or eliminates any resulting disruption.
Practically speaking, organizations have to accept that shocks and disruptions will occur whether due to errors, imperfect systems, and processes, or other outside influences. The size of the disruption, both monetary and non-monetary that a company is prepared to accept, determines their appetite for perational risk and the ability to mitigate them. These disruptions are accepted because the cost of planning for, or accounting for, the disruption by improving the system, processes, or building in redundancy is disproportionate to the benefit of the correction and this recognition is part of an organizations appetite for risk.
As an example, developing mitigation strategies for a 100 year flood ( a flood of a size that is expected to occur once every 100 years), that allows the organization to continue to operate, are vastly different than one that accounts for a 10 year flood, both in costs, materials, and processes. Those trying to build a resilient organization must understand the organizations risk acceptance and keep the risks within their risk appetite (that is the amount of risk that is acceptable in the pursuit of their business objectives
A manufacturing organization is supported by network of collaborative services and utilities that manage parts of the manufacturing
value chain (see Figure 1).
Figure 1Manufacturing Network
To develop, and maintain, a resilient organization each part of the network must also be resilient. After all is does no one any good if you are capable of operating, but you cannot receive, nor ship goods, because your transportation provider is incapacitated.
There are many issues surrounding an organization in its drive to become a resilient organization. The main issue for manufacturing organizations is whether or not their facilities can efficiently respond to changes or adverse circumstances. This should drive manufactures to consider a variety of influencing factors (e.g. what capacity should they own, where to locate, lengths of supply chains, availability and skills of the work force, and whether or not processes should be internal or provided by outside suppliers, and sub-contractors, etc.). This is followed by the need for same resilience in all their partners.
In a lot of ways the drive for resilience is similar to the drive for Total Quality, as a company became organized around the Total Quality principles and concepts; it became rapidly apparent that the same principles and concepts needed to be driven into the partner network. The same is occurring with the drive for resilience. Partners need to be involved as well.
Becoming a resilient organization is all about identifying those things that could possible cause a disruption, determining the risks to the business, deciding on the response to the risks, and setting in place plans and procedures that aim to resolved the disruption.
In order for an organization to be resilient, the whole supporting network needs to be resilient. This series of blogs will cover some of the aspects concerning people, products, operations, and finance that need to be considered in developing a resilient manufacturing organization.
Please join me in a continuing series of blogs on Resilient manufacturing.
Do you think your organization as a reisilient manufacturing organization?