November 11, 2015

How Can Sun Tzu’s The Art of War Help Your Supply Chain Resiliency Planning?

Neil Shenoi

sun-tzu-supply-chain

Before else, let’s be clear – supply chain resiliency and military engagement are not the same thing. Hundreds of years ago, during times of mass territorial warfare in historic China, Sun Tzu wrote The Art of War as a wise compendium for the keen general on how to better manage an army, outwit an enemy, and minimize casualties on the battlefield. The Art of War preached proactive strategies to most efficiently conquer an enemy and minimize losses. Interestingly enough, much of Sun Tzu’s insights are useful when appropriated to the context of supply chain resiliency. For us supply chain geeks, there are too many nuggets of wisdom related to modern supply chain risk management for a keen business manager to pass up.

So let’s reassemble the context: think of supply chain disruptions as the ‘enemy,’ the global terrain of your supply chain as the ‘battleground,’ and the ‘war’ is establishing supply chain resiliency while anticipating the risks associated with a complex web of materials and services through informed precision. In our context, supply chain resiliency planning is not the process of working through pre-established lists, but the necessity of quick and appropriate responses to changing conditions.

Supply Chain Disruptions are the 'Enemy'

In the text’s first chapter, “Laying Plans,” Sun Tzu lays out the five factors that determine the outcome of any military engagement, and in our case, the success of a resilient supply chain: (1) the Way; (2) heaven; (3) earth; (4) the commander; (5) method and discipline. For our purposes, these five elements can be classified as the unexpected, seasons, terrain, leadership, and management.

That said, think of how the unexpected will always challenge your supply chain resiliency. These unexpected disruptions are akin to ambushes. No matter how well an organization plans in advance, unexpected disruptions are inevitable splinters and can greatly damage operations. Thus, being prepared for disruptions before/as they happen is crucial. Utilizing 24/7 global supply chain event monitoring services can enable swift responses, giving your organization and leadership a competitive advantage by identifying supply chain disruptions as they happen. Similar to the battlefield, proper mitigation strategies can help organizations avoid tremendous capital losses, identify sluggish cogs in their supply chain, and be better prepared for future unexpected disruptions. In short, know the disruption before the disruption knows you.

Beware of Rose-Colored Glasses

In Chapter 4, “Illusion and Reality,” Sun Tzu stresses the importance of identifying weak points in one’s operations, a key concept in supply chain resiliency and supply chain risk management. To achieve high-level supply chain resiliency, there must be transparent structural integrity throughout the organization’s supply chain. To identify these weak points, leadership can’t be afraid of confronting weaknesses in preexisting supply chains. The decision to position a supply chain must be founded on both objective conditions in the physical environment, as well as the subjective understandings of other competitive factors in that environment. Consider the following questions:

  • Is there a region in your supply chain more inherently prone to risks and disruptions?
  • Since most supply chain disruptions are rarely publicized and don’t make it to mass media sources, do you have a way to obtain locally-sourced news related to supply chain disruptions?
  • Does your organization have alternative sources and sites in more stable regions?
  • Is there transparency in your company’s supply chain mapping?
  • Has your organization invested in supply chain resiliency solutions?

Supply Chain Risk Versus Resiliency

The key strategy is understanding the difference between supply chain risks and supply chain resiliency. Dealing with supply chain risks is inherently reactive, while building supply chain resiliency is a proactive process requiring preemption, investigation, and planning. Similar to balancing an army’s attack and defense strategy, knowing how to handle supply chain risks while building a resilient supply chain is a golden balance. To do so, utilizing the proper intelligence is critical to maintaining such an operation.

In The Art of War’s final chapter, “The Use of Spies,” Sun Tzu emphasizes the advantage of spies and intelligence to gather pertinent intelligence so that one can make the right move at the right time. Sly connotations aside, think of supply chain disruption monitoring services as your loyal spies dedicated to providing customized insights and strategies for the health of your company’s supply chain.

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Topics: supply chain resiliency, supply chain risk management, supply chain event monitoring