Resilience is the new normal

By Marzena Reska

The global pandemic has put resiliency on the agenda of every company in the world. As they cope with the seismic changes brought about by COVID-19, businesses of all sizes and types have needed to adapt to remote work, reconfigured physical workspaces, and revised logistics and supply networks. They’ve also changed operating procedures to cope with the pandemic’s risks and effects.

But what do companies do now?

The reality is that supply chain shocks are usually impossible to predict but happen with frustrating regularity. That means real value is at stake.

The promising news is that organisations can both protect against downside risks, such as pandemics, and gain substantial economic returns from increased output and productivity. 

The successful organisations  today, and in the years ahead, will redesign their operations and their supply chains to protect against a wider and more acute range of potential shocks and disruptive events. Thus, there is a need for increased visibility on both the demand and supply side.

Supply chain digitization can enable organisations to have visibility across the whole value chain—from the production of raw materials to the end customer—and better meet the needs of their customers. A bonus: it improves the agility and responsiveness of operations without increasing costs. In fact, research by the World Economic Forum, in collaboration with McKinsey, shows that companies often achieve significant and simultaneous improvements in multiple performance measures when they integrate advanced digital technologies across the value chain.

Marzena Reska
Marzena Reska

Before the coronavirus hit, most companies were already accelerating the digital transformation of their customer journeys and value chains. The expectation is digital technologies to be at the core of the new normal, enabling organisations to better meet the needs of their customers, and improving the agility and responsiveness of operations without increasing their costs. Companies often achieve significant and simultaneous improvements across multiple performance measures when they integrate advanced digital technologies across the value chain. This  also allows them to build  resilience which is an internal trait, but the disciplines and strategies that support it can also have a far wider reach.

During the crisis, many businesses have been able to overcome staff shortages by automating processes or developing self-service systems for customers. These approaches can accelerate workflows and reduce errors—and customers often prefer them. 

Digital approaches can transform customer experience and significantly boost enterprise value when applied end to end.

Also, technology-enabled methodologies can significantly accelerate cost-transparency work, compressing months of effort into weeks or days. These digital approaches include procurement-spending analysis and clean-sheeting, end-to-end inventory rebalancing, and capital-spend diagnostics and portfolio rationalization.  However, the businesses will need to be smart and careful in their approach. Leading organisations are adopting increasingly sophisticated techniques in their strategic planning, assessing each resource and opportunity very carefully as the environment changes and new data emerge.

Now, with the likelihood of prolonged uncertainty over supply, demand, and the availability of resources COVID-19  represents the trigger for operations functions to adopt an agile approach to transformation.

Useful articles

‘’Risk, Resilience, and rebalancing in global value chains’’, (2020), S. Lund; J. Manyika; J. Wotzel, E. Barribal; B. Krishnan; A. Knut; M.

https://www.mckinsey.com/featured-insights/coronavirus-leading-through-the-crisis

Where will we work post-Covid?

by Vanessa Oakes,Course Director

As we move through the Government’s Roadmap to ‘normality’ over the next few months, employers will be starting to consider what this may mean for staff returning to office environments. Many staff who have been able to work from home throughout the pandemic have reported increased productivity, better work life balance, saving time and money through the elimination of the commute, as well as many other benefits.

There have been some drawbacks, particularly where staff have had to juggle home-schooling and caring responsibilities, but as these staff become able to return to a normal working routine, it is likely that they will start to experience some of the same benefits as their colleagues

A recent YouGov survey showed that 91% of respondents surveyed who have been able to work from home during the pandemic, want to continue to do so at least some of the time. This pressure from employees (who have proved that they can successfully work from home), should be a catalyst for most organisations to make changes to the levels of flexibility they will allow. If organisations choose not to offer greater levels of flexibility in WHERE staff work, they may see their employees move to a competitor who IS willing this. More and more frequently ‘working from home’ can be found on job advertisements for professionals, allowing these organisations to take advantage of the changing demands of employees, and  opening their vacancies to a much wider talent pool, giving them more choice in their chosen candidate.

Of course, organisations in some sectors have always been prepared to offer high levels of flexibility of working hours and location and have found the transition to working from home a case of ‘business as usual’. At least a third of the workforce pre-Covid had some access to homeworking, but anecdotes suggest remote working was reserved for management, those who were highly valued or those who had sympathetic managers.

What the ‘mass working from home experiment’ over the last year has taught us is that everyone in our organisations can benefit from a level of flexibility, and the organisation will benefit in return through higher levels of engagement and commitment. Consider another benefit to increasing flexibility, the ability to truly open vacancies to more diverse candidates, from those with disabilities for whom homeworking would be much easier, to increasing the number of women in the workforce (and in senior roles) through allowing more flexibility around WHEN the work can be done.

Vanessa Oakes
Vanessa Oakes

One of the main challenges to remote working has been around managing (or monitoring) performance. This link between presence and performance has been prevalent in sectors where a judgement about performance is not based on measurable KPIs, rather about the complexity of work and behaviours demonstrated in performing it. This could provide challenges to organisations who are willing to improve the flexibility which they offer. This raises a series of questions for managers and leaders:

  • What does ‘good’ work look like? This will be a question that needs to be answered by each manager as they attempt to define what their performance expectations are within the new parameters of work.
  • Are managers communicating their expectations clearly enough?
  • Are they making themselves available, but not inserting themselves unnecessarily into the working day of their teams?
  • And most importantly, are they developing relationships built on trust with each of their team members? It is these relationships that will determine the success of the flexible working strategy and will allow the organisation to take advantage of the many financial and intangible benefits of a flexible workforce for the foreseeable future.

We are now recruiting for cohort 5 of the Small Business Leadership Programme (free and starting 30th March) and Vanessa will be covering this topic in more depth on this course.

Vanessa Oakes on linkedin,Email Vanessa.Oakes@staffs.ac.uk

Which to use: Quick Ratio or Current Ratio for Liquidity Measurement in business

Status

Mayowa AKINBOTE

Just as businesses are adapting to the shock of Brexit, the global pandemic presents another disruption to businesses. These two events have created huge uncertainty for most small businesses while some have benefited . The striving small businesses are revaluating their strengths with financial metrics to enhance their sustainability as the new markets are emerging. Financial metrics present small businesses with the opportunities to increase efficiency in their operations, liquidity, profitability and stability during uncertainty period. Some commentators argue that inadequate liquidity is the major reason small businesses collapse during the uncertainty period.

The quick ratio helps the business managers to evaluate their businesses financial liquidity. This informs the business managers of how current assets excluding inventories can be quickly converted to cash to meet their current liabilities. This ignores inventory because it is not easily converted to cash. Unlike the current ratio which considers inventory value, the quick ratio is generally viewed as the conservative evaluation of business liquidity as it’s based on the business most liquid assets. For instance, a business has current assets worth £40,000 of which inventory is £10,000, and £15,000 worth of current liabilities thus the business has a 2:1 quick ratio. This indicates that the business can afford to meet the short-term liabilities twice with the short-term assets.

Money

Businesses with a 1:1 or lower quick ratio could be at risk of becoming a going concern. Thus, small businesses with limited access to funds might fire sale their non-current assets to meet the current liabilities.

Many businesses have already closed due to Brexit and the global pandemic and it has been estimated that a further approximately, 98,000 small businesses might not survive the current pandemic. Thus, small business managers that are currently struggling to survive should pay attention to their financial metrics especially the quick ratio.

Unlike the quick ratio, many commentators argue that the current ratio cannot accurately evaluate some businesses short-term liquidity power. For instance, a retail business that targets seasonal customers will stock up inventory for the season. Thus, toward this period the current ratio rises and fall after the seasonal sales. Hence, the quick ratio would be best to evaluation the liquidity ability of such businesses as it ignores the inventory value.

However, other commentators argue that excluding the inventory value from the current assets could be an inefficient way of evaluating liquidity ability for some businesses. For instance, small business such as corner shops that a large percentage of their current assets are fast-moving inventory. Thus, excluding the inventory from the current asset would relatively inflate the current liability. Hence, the quick ratio will present an inaccurate picture of the business to cover their current liability with their most liquid assets.

In conclusion, business managers need to consider both the quick ratio and current ratio, especially during the uncertainty period. This would provide a more accurate measurement of their business ability to pay their short-term liabilities without being forced to fire sale their non-current asset.

Business managers need to ensure that the quick ratio and current ratio is not too excessive compared to other competitors in their sector as this could indicate poor control of working capital. This might suggest that the business is not turning over its inventory quickly enough or is carrying slow-moving or obsolete inventory and has poor credit control practices resulting in their customers delaying payments beyond the agreed terms.

STOP PRESS: We are now recruiting for cohort 5 of the Small Business Leadership Programme (free starts 30th March).

Mayowa Akinbote FCCA
Lecturer in Accounting and Finance
Staffordshire Business School
Staff Page: https://www.staffs.ac.uk/people/mayowa-akinbote
LinkedIn: http://linkedin.com/in/mayowa-akinbote-33448895

Innovation to survive and thrive Part 2

By Tanya Hemphill

Part 1 of Tanya’s article can be found here

STAGE TWO

Once you have used these initial basic filters to find the strongest ideas, the next stage is to use a more in-depth filter to make decisions on the remaining ideas. Day (2007) recommends using a risk matrix. The R-W-W matrix is based to three key questions:

  • Is it Real?
  • Can we Win?
  • Is it Worth doing?

This is expanded into the following set of questions:


Is it
real?

Is the market real?
Is there a need or desire
for the product?
Can the customer buy it?
Is the size of the
potential market
adequate?
Will the customer buy the
product?

Is the product real?
Is there a clear concept?
Can the product be made?
Will the final product satisfy
the market?

Can we
win?

Can the product be
competitive?

Does it have a competitive
advantage?
Can the advantage be
sustainable?
How will competitors
respond?

Can our company be
competitive?

Do we have superior
resources?
Do we have appropriate
management?
Can we understand and
respond to the market?

Is it worth doing?

Will the product be
profitable at an
acceptable risk?

Are forecasted returns
greater than costs?
Are the risks acceptable?

Does launching the product
make strategic sense?

Does the product fit our
overall growth strategy?
Will top management
support it?

STAGE THREE

Once a few viable marketing innovation ideas remain, the next stage is to consider the risks even further. This is where conducting a pre-mortem is a useful tool. This helps organisations identify the possible failures of a project before they happen and mitigate risk by pre-planning so that those failures don’t occur.

The following pre-mortem exercise has been adapted from Gray et al. (2010).

Activity
Step 1Imagine we are two years in the future.
Things have gone completely wrong.
What could have caused this? Generate a list of all the reassons failure occurred.

Step 2List all concerns and rank them to
deterimine priority
Step 3Address the 2 or 3 items of greatest
concern and list what actions you would
need to take to stop the issues
happening.

The list of risks and actions that need to be taken to mitigate the risk can be used as Critical Success Factors (CSFs) for an innovation or project launch.

Hopefully, this article has helped you think about the different types of innovation you can potentially pursue and how to evaluate the best route forward, using a systematic filtering process.

STOP PRESS -We are now recruting for cohort 5 of the Small Business Leadership Programme (free starts 30th March)

References

Day, G. (2007) Is it real? Can we win? Is it worth doing? Managing Risk and Reward in an Innovation Portfolio. [Online] Harvard Business Review. Available at: https://hbr.org/2007/12/is-it-real-can-we-win-is-it-worth-doing-managing-risk-and-reward-in-an-innovation-portfolio (Accessed 11 February 2021).

Fisk, P. (2017). Gamechangers: Are you ready to change the World? Creating Innovative Strategies for Business and Brands. West Sussex: John Wiley and Sons Ltd.

Gower, L. (2015) The Innovation Workout. Harlow: Pearson Education Limited.

Gray, D., Brown, S. & Macanufo, J. (2010) Game Storming: A Playbook for Inovators, Rulebreakers, an Changemakers. Sebastopol: O’Reilly Media, Inc.

Keeley, L., Pikkel, R., Quinn, B. and Walters, H. (2013). Ten Types of Innovation: The Discipline of Building Breakthroughs. New Jersey: John Wiley & Sons, Inc.

Osterwalder, A. and Pigneur, Y. (2010). Business Model Generation: A Handbook for Visionaries, Game Changers and Challengers. New Jersey: John Wiley & Sons, Inc.

Free Small Business Leadership Programme – starts end of March

Supporting SME leaders to create resilience and manage uncertainty in 2021 and beyond

Access free ideas, guidance, peer & 121 support to help your business to manage the uncertainty of steering through the pandemic and impacts of Brexit for up to TWO leaders in your business.

Staffordshire Business School is supporting regional business by delivering free training in leadership and management to provide exactly what business needs most to build a resilient future.

This is cohort 5 of the SBLP and the positive impacts of previous cohorts are being felt across the region. Here is what Rhys from XP VR thought of the course

Why choose to be part of the Small Business Leadership Programme?
▪ Make your business more resilient
▪ Boost business performance and growth
▪ Create an innovative and agile organisation
▪ Recover from the impact of COVID-19
▪ Find solutions to the impact of Brexit
▪ Build leadership skills, confidence and effectiveness
▪ Plan for a solid future for your business
▪ Build lasting relationships with small business leaders
▪ Improve risk management and efficiency

When does the course start?
Tuesday the 30th March 2021 (1st webinar at 3pm)

If you would like to have a chat about the course then please email one of our experienced Entrepreneurs in Residence with your phone number and they will call you back,

Jane Pallister – Jane.Pallister@staffs.ac.uk
Emily Whitehead – emily@staffs.ac.uk
Jonathan Westlake – j.c.westlake@staffs.ac.uk

Here’s what another business thought of the course: Geoff Barton, General Manager of Canalside Farm in Great Haywood near Stafford said: “It’s allowed me to connect with other businesses, and I’ve learned much and managed to strengthen a few knowledge gaps and boost my handling of the business during these unique times.”

What’s involved?
Eligibility requirements
▪ Your business must be a Small or Medium-sized Enterprise (SME) based in England.
▪ Your business needs to employ between 5 and 249 people and have been operational for at least one year
▪ The participant should be a decision maker or member of the senior management team within the business with at least one person reporting directly to them.
▪ The participant must be able to commit to attending the full programme


Time commitment
The programme is designed to be manageable alongside full-time work and furloughed staff can join the programme.

Participants will attend 8×90- minute webinars across ten weeks, and complete up to 2 hours of independent development and peer-supported engagement per week.

Places are fully funded by the Government to support the resilience,
recovery and growth of SMEs during and after COVID-19. The programme
is completely free to attend but places are strictly limited.

Register Now
There are two ways to register.

  1. Email one of the Entrepreneurs in Residence as listed above and they
    will talk you through the process.
  2. Follow the simple instructions below (this takes 3 minutes) and we will
    be in touch:
    • Go to https://smallbusinesscharter.org/sblp-registration/
    • Choose ‘West Midlands’ from the pink vertical menu on the left
    • Scroll through the list of centres until you find Staffordshire University
    (start date 30th march) & click register

PLEASE NOTE: Your business can send up to two eligible delegates to this programme and delegates can be furloughed. Please do one registration for each person.

Innovation to Survive & Thrive: Part 1

By Tanya Hemphill, Senior Lecturer

Over the last few months we have been running a module on ‘Innovation, Value and Markets’ to over 70 Staffordshire business people, as part of our Small Business Leadership Programme.

During the workshops it was very clear that most small businesses have had to rethink their business model to adapt to massive shifts in consumer behaviour (and supply chains) because of Covid. The UK Government defines innovation as: The successful exploitation of new ideas. Innovation may involve an organisation’s:

  • Products and services
  • Processes (e.g. exploiting new technologies)
  • Business model (e.g. new income sources/ improved supply chain)

 Business Model Innovation

According to Fisk (2021) although there are an infinite number of potential business models some of the most common formats (applicable to nearly every type of business) are:

  • Advertising-based models. Services are free to users, whilst advertisers pay to engage with the audience attracted, e.g. Google, Facebook.
  • Razor-and-blades models. The facilitating item, like a razor, is sold cheaply, then accessories, like blades, at a premium, e.g. HP, Nespresso.
  • Added-value models. The facilitating item, like an iPad, is sold at a premium, then accessories, like apps, sold cheaply, e.g. Apple.
  • One-of-one models. The company donates a product to a charity, or person in need, for every product sold, e.g. Toms, Warby Parker.
  • Cashflow models. High volumes are generated at low margins, payments received quickly from customers, paid slowly to suppliers, e.g. Amazon, Dell.
  • Platform-based models. These bring buyers and suppliers together, typically charging both of them to connect and transact, e.g. Airbnb, Uber.
  • Subscription-based models. These charge a regular, e.g. monthly, fee for unlimited use of a product or service, e.g. Netflix, Zipcar.
  • Freemium models. These encourage trial or a basic level of usage for free, but charge for additional or premium options, e.g. Spotify, Fornite.
  • Direct to consumer models. Products which in the past would have been sold through intermediaries are sold direct, e.g. Allbirds, Casper.

 

10 Types of Innovation

If we want to expand the UK Government’s three categories of innovation, recent research has identified ten main types of innovation (Keeley et al., 2013):

  1. Profit Model: The way you make money (e.g. Netflix changed the video rental industry by implementing a subscription model)
  2. Network: Connections with others to create value (e.g. Target works with renowned designers to differentiate itself)
  3. Structure: Alignment of your talent assets (e.g. Whole Foods has built a robust feedback system for internal teams)
  4. Process: Signature of superior methods for doing your work (e.g. Zara’s ‘fast fashion’ strategy moves its clothing from sketch to shelf in record time)
  5. Product Performance: Distinguishing features and functionality (e.g. OXO Good Grips costs a premium but its ‘universal design’ has a loyal following)
  6. Product System: Complementary products and services (e.g. Nike+ partnered shoes, sensors, apps and devices into a sport lifestyle suite)
  7. Service: Support and enhancements that surround your offerings (e.g. Zappos “deliver WOW through service” is their #1 internal core value)
  8. Channel: How your offerings are delivered to customers and users (e.g. Nespresso locks in customers with its useful members only club)
  9. Brand: Representation of your offerings and business (e.g. Virgin extends its brand into sectors ranging from soft drinks to space travel)
  10. Customer Engagement: Distinctive interactions you foster (e.g. Wii’s experience draws more from the interactions in the room than from on-screen)

This framework is expanded further by list of possible tactics, which can be found here: https://doblin.com/dist/images/uploads/TenTypesInnovation.pdf

The ‘Business Model Canvas’ is one of the most used templates in business to map a business model (Osterwalder and Pigneur, 2010). This is a useful tool for rethinking the whole business, seeing connections and then innovating the business.

You can download a copy of the Business Model Canvas and view an overview video of the tool at https://www.strategyzer.com/canvas/business-model-canvas

Sign up to the next cohort of the Small Business Leadership Programme here – starts 30th March

References

Fisk, P. (2017). Gamechangers: Are you ready to change the World? Creating Innovative Strategies for Business and Brands. West Sussex: John Wiley and Sons Ltd.

Keeley, L., Pikkel, R., Quinn, B. and Walters, H. (2013). Ten Types of Innovation: The Discipline of Building Breakthroughs. New Jersey: John Wiley & Sons, Inc.

Osterwalder, A. and Pigneur, Y. (2010). Business Model Generation: A Handbook for Visionaries, Game Changers and Challengers. New Jersey: John Wiley & Sons, Inc.

Author

Tanya Hemphill can be found on twitter @DigitalTanya she has recently joined Staffordshire Business School. She teaches on the MSc in Digital Marketing Management which includes a credited workplacement.

Tanya Hemphill
Tanya Hemphill

Part 2 of this article will shortly be available

Free Leadership Programme to help businesses in 2021

Are you looking for free support, ideas and a team to talk to that will help your business through the pandemic, Brexit and beyond?

Staffordshire Business School is now delivering free training in leadership and management to help you and your business exactly when you need it most.

When does the course start?

We have two starting dates either:

 Tue 12th January 2021 starting at 3pm

Wed 13th January 2021 starting at 3pm

If you would like to have a chat about the course then please email one of our experienced Entrepreneurs in Residence with your phone number and they will call you back,

Jane Pallister email Jane.Pallister@staffs.ac.uk

Emily Whitehead email emily@staffs.ac.uk

Jonathan Westlake email j.c.westlake@staffs.ac.uk

Jonathan Westlake, Jane Pallister and Emily Whitehead ar ethree of our Entrepreneurs in Residence
Jonathan Westlake, Jane Pallister and Emily Whitehead are three of our Entrepreneurs in Residence

Two cohorts of business have already gone through the programme and here is what Kevin O’Mara of Advanced Journey Chauffeuring thought of the training

Why choose the Small Business Leadership Programme?

  • Make your business more resilient
  • Boost business performance and growth
  • Create an innovative and agile organisation
  • Recover from the impact of COVID-19
  • Build leadership confidence and effectiveness
  • Plan for the future of your business
  • Build lasting relationships with small business leaders
  • Improve risk management and efficiency

Eligibility requirements

To join the Small Business Leadership Programme:

  • Your business must be a Small or Medium-sized Enterprise (SME) based in England.
  • Your business needs to employ between 5 and 249 people and have been operational for at least one year
  • The participant should be a decision maker or member of the senior management team within the business with at least one person reporting directly to them.
  • The participant must be able to commit to attending the full programme

Your commitment

The programme is designed to be manageable alongside full-time work. Participants will attend eight 90-minute webinars across ten weeks, and complete up to two hours of independent study and peer-supported learning per week.Places are fully funded by the Government to support the resilience, recovery and growth of SMEs during and after COVID-19. The programme is free to attend, and places are limited.

Register Now

There are two ways to register. Either email one of the Entrepreneurs in Residence as listed above or follow the simple instructions below (this takes 3 minutes) and we will be in touch:

Go to https://smallbusinesscharter.org/sblp-registration/

Choose either North West (for 13th January start) OR West Midlands (for 12th January start) from the pink vertical menu on the left.

Scroll through the list of centres until you find Staffordshire University and the date you prefer & click register. There are some screen grabs in the document below if you need them

PLEASE NOTE: Your business can send up to two eligible delegates to this programme. Simply apply for each person.

Coronavirus: The Battle Axe

The coronavirus started in China and spread to Europe and America in the first quarter of 2020 with a “battle axe” on businesses. The leadership of the most affected countries have become Santa Claus with their supports to the households and businesses. Many industries have experienced the offensive side of the coronavirus battle axe while other industries benefited from the defensive opportunities it created.

Industries such as Aviation, Road haulage, Ferries, Steel, Horticulture have all taken the pain of the offensive side of the battle axe. For instance, many of the affected developed countries economies are shut down and consumers are under stay at home policy. These have serious negative impacts on these industries revenue and sustainability investments. To complicate the pain emergency loans support from financial institutions have dried up thus, there are fewer chances of survival without taxpayers interventions. Some commentators are of the view that greener pastures are not guaranteed for the industries that will survive the pain as the new world of doing business will emerge. 

The likes of the e-commerce marketplace (Amazon); pharmaceutical companies (AstraZeneca and Pfizer); video conferencing (Zoom, Teams and Skype) and entertainment streaming (Netflix) industries benefit from the defence of this deadly axe. The longer the stay at home policy takes more people and businesses start thinking of a different way to sustain their livelihood and businesses from home. Another innovative business opportunity created is the products that many governments make mandatory to be worn everywhere. Although some of these products are reusable, few concerns have been raised about the materials used in the production and the ability to recycle these materials.

This pandemic has brought difficult business operating environment. Many business leaders are worried about how to sustain productivity to increase growth by adapting to the new business environment that the pandemic created. Businesses should protect the workforce with physical and emotional support, empathetic communication, training and retraining of employees in readiness for recovery. They should review their supply chains and possibly arrange alternative sources of raw materials or services. Also, businesses should frequently review the impact of the worst-case situation on the business cash flow and the governments’ tax relief provisions and other supports. Finally, business leaders should consider their business digital transformations by increasing IT infrastructure and digital upskilling.

The Small Business Leadership Programme is provided by Staffordshire Business School and is fully funded (free). Participants will develop strategic leadership skills and the confidence to boost business performance.

The course lasts ten weeks and the next two cohort start dates are
West Midlands 12th January 3.00 – 4.30 pm
North West 13th January 3.00 – 4.30 pm

Register here https://smallbusinesscharter.org/sblp-registration

For more details see the website
https://smallbusinesscharter.org/small-business-leadership-programme/

Mayowa Akinbote FCCA
Lecturer in Accounting and Finance
Staffordshire Business School
Staff Page: https://www.staffs.ac.uk/people/mayowa-akinbote
LinkedIn: http://linkedin.com/in/mayowa-akinbote-33448895

Understanding the supply chain to build resiliency and manage risk

Marzena Reszka, Lecturer, Staffordshire Business School

Marzena Reska

Fast forward to the coronavirus crisis, whose humanitarian and human-livelihood costs are still rising, even as it also reveals supply-chain vulnerabilities that many small and medium businesses didn’t realize they had. As a result, building flexibility and resilience in operations has gone from one priority among many to business-critical. In this context, organisations need a new approach to manage supply-chain risk and build resiliency.

In the short term, the concern has focused on the shortages of critical goods or services.  In the long term many anticipate a renewed focus on better quantifying risks, with a mindset similar to buying insurance—by using probabilistic approaches, such as discrete-event simulation, and by redesigning business cases to include potential losses from a lack of resiliency measures. These responses represent a shift in business strategy, with companies showing more willingness to weigh the benefits of investments to navigate future risks against the potential fallout from failing to do so.

The current situations shows that there is need to a much deeper view of the supply-chain vulnerability and exposure to create effective mitigation and business-continuity plans.

Thus, there is a need to work more closely with suppliers to build more transparency through collaboration. However, collaboration is often viewed as a fraught territory, with supplier networks viewed as proprietary, and to create a more cooperative working environment can involve or require a deep change of mind-set. There is no need to disclose every detail to their suppliers, but to effectively perform network planning consider:

  • transparency of inventory levels,
  • capacity,
  • and flexibility

these can give a lens into potential bottleneck issues. The research suggests organisations should begin to tackle issues in a structured way, cataloguing and addressing known risks while improving the organisation’s resilience for the inevitable unknown risks that can become a problem in the future.

Supply-chain resilience requires a risk-aware culture to help an organisation establish and maintain strong defensive layers against unknown risks, as well as respond more quickly in the event of a severe crisis or operational threat. As COVID19 brought to light vulnerabilities in companies supply chains, building resiliency is not only a matter of awareness, but of setting an intent across the organisation, clearly communicating to the entire workforce, and taking tangible action to address the immediate and long-term risks.

Risk mitigation often has an associated incremental cost, and so it is important to align on which risks need to be mitigated and which can be borne by the organisation.

  Supply chain and risk are just some of the topics we are covering on a free course – the Small business Leadership Programme – sign up now.

The Small Business Leadership Programme is provided by Staffordshire Business School and is fully funded (free). Participants will develop strategic leadership skills and the confidence to boost business performance.

The course lasts ten weeks and the next two cohort start dates are

West Midlands 12th January  3.00-4.30pm

North West 13th January  3.00-4.30 pm

Register here https://smallbusinesscharter.org/sblp-registration

For more details see the website https://smallbusinesscharter.org/small-business-leadership-programme/

Contact Kat Mitchell if you would like a chat Kathryn.Mitchell@staffs.ac.uk


Sources:

‘’Supplying resilience through assessing diversity of responses to disruption’’, (2019), H.Kahiluoto, H. Makinen. (2019). https://www.emerald.com/insight/0144-3577.htm

‘’Supply chain resilience: the whole is not the sum of the parts’’, (2019),  M. Martins se Sa; P. Laczynska de Souza Miguel . www.emeraldinsight.com/0144-3577.htm

‘’Resetting Supply Chains for the next normal’’   2020  
A. Knut; R. Gupta; V. Trautwein                                                    

  ‘’Risk, Resilience, and rebalancing in global value chains’’, (2020), S. Lund; J. Manyika; J. Wotzel, E. Barribal; B. Krishnan; A. Knut; M.