Agile enterprises create smart value chains within which to operate, thereby minimizing the chance of disruptive events, whether they be catastrophic or day to day. The key discussion is to know what to be prepared for and then understand how to manage the change as proactively as possible. This relies heavily on a business’ absorptive, adaptive, and transformative capacities to develop a robust disruption management program, and is now the raison d’etre for many value and supply chain managers. This endeavor has its own maturity curve, within which a company must develop and perfect a multi-pronged approach to value chain risk management and power that process with E2E data transparency. While it’s impossible to be prepared for all contingencies, experienced systems learn to focus on the critical weak links which contribute the majority of potential disruption to business strategy execution.
Disruption Management: The High-Level View
Disruption can occur in any part of a value chain network and causes undesired impacts on the achievement of an enterprises’ objectives and performance. To mitigate their impact, agile enterprises establish formal relationships within their value chain network that act as eyes to perceive threats to business health and stability. A structured process, referred to here simply as a disruption management system, can be developed and made as part of an organization’s DNA. From this point forward, such a program is then purposely evolved to increased levels of efficiency and effectiveness through operational excellence measures to enable steadily improving perception and response capabilities.
Business resilience to disruption is the ability to: 1) absorb the impact of change; 2) adapt (e.g., change in an agile manner) to new circumstances; and 3) transform or evolve to a different mode of operation or new business strategy in a transformed or new business environment. The 16-page white paper (available by download below) discusses the five essential competencies required to be successful in this venture and the business processes and technology enablers needed to manage and continuously improve the system.
Figure 1 illustrates the conceptual model of prevention, mitigation, and continuous learning & improvement. Every business either purposefully or organically develops a series of processes designed to perform three essential functions: 1) detect and avoid, through countermeasures if possible, any negative consequences of abnormal situations before they occur (e.g., the blue arrow); 2) quickly develop corrective actions (the “Δt” in the Countermeasures band) to disruptions as require; and 3) solve and learn from the disruption event to make detection and response ever more robust in the future (e.g., the red arrow).