Analyst Insight: Executives managing global supply chains are feeling the impacts of Washington’s aggressive changes to international trade. Challenges include increased import costs, concern over a handful of originating countries, safety stock levels, figuring out where to expand and contract globally, managing increased costs, labor concerns and regulatory changes. Executives must develop resilience strategies to deal successfully with disruption.

Resilience in a global supply chain allows you to adapt, recover and rebound from economic shocks and disruptions, whether they are specific to a single supplier or systemic. It involves building an effective system through strategies like flexibility, diversified sourcing, visibility, contingency planning and collaboration, to minimize negative impacts and maintain operational performance. 

To achieve true resilience, senior managers must show an intensity of leadership in the face of disruption. Be positive and upbeat, but realistic. Show optimism for solutions and adopt a things-will-get-better mindset. And lead discussions with the team that invite their participation and collaboratively come up with viable solutions. Hopefully, senior management has already created a culture where a team can survive and do well in the face of disruption.

Planning proactively is another element of disruption survival, and allows you to create opportunity in the face of global disruptions. In the military, regular war games can lead to combat ready effectiveness. Though in commercial terms, we may not need to be as intense, proactively creating potential disruptive and unexpected events and then coming up with effective mitigation strategies will lead to preparedness for when disruption such as what we are facing now actually occurs.

We also need to know when to handle something on our own and when to delegate. Doing the latter can act as a form of training to evaluate a colleague’s capability. But at the end of the day, we must be able to disperse our responsibilities in a disruption to have the best chance of emerging from it quickly and successfully.

The key areas we need to pay attention to are procurement, logistics, demand planning, manufacturing and distribution. There are costs in all these areas that can greatly impact your operational effectiveness and the ability to protect margins.

Disruption raises the bar of senior management oversight of operations on a more regular and intense basis, as the consequences of problems may be much more impactful. Employee oversight can be direct, respectful and handled responsibly, but necessary to be able to “right the ship” as quickly as possible.

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Outlook: Senior management must lead the company out of the negative impacts of disruptive events. Leadership qualities must be both intense and robust. A culture of positiveness, discipline, integrity and responsible behavior is not accomplished overnight but created over time through best practices, openness and exercising leadership qualities continually.