"The Resilient Enterprise".

Professor Yossi Sheffi, special guest speaker at our San Diego Forum, will discuss themes in his new book, The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage scheduled for public release in October 2005. NDTA Forum-goers are especially fortunate for this advance opportunity to join the discussion.

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Professor Sheffi will examine the ways in which companies can recover from significant disruptions, specifically actions they should take to lower vulnerability and increase resilience. The notion is borrowed from the physical sciences where "resilience" represents the ability of a material to recover its original shape following deformation. In the business world, "resiliency" means how well a company can return to normal performance levels following a high-impact/low-probability disruption, and the speed at which it can bounce back.

After 9/11, governments around the world made the fight against terrorism their top priority. The US government reorganized its defense and intelligence agencies, and adjusted its foreign policy. In contrast, the private sector quickly went back to business. The daily pressures to perform--worrying about yields, supplier performance, machine up-time, customer requirements, product launches and market response--quickly overshadowed most terror concerns.

Yet in the US, and increasingly in Europe, most of the economic infrastructure, such as transportation, energy, retail, manufacturing, and finance, fall in the hands of the private sector. In early 2002, a group of researchers and several corporate members of MIT's Supply Chain Exchange program began a series of deliberations to address the rising concerns about terrorist disruptions. It was soon apparent that there are no clear management guidelines, models or theories for corporate security and resiliency. Their discussions spawned a three-year research effort that culminated with The Resilient Enterprise.

As research progressed, the study was expanded to include different kinds of disruptions. Many random phenomena, such as earthquakes, floods and accidents, have just as much impact on a company as a terrorist action. Furthermore, the high frequency of general disruptions provided more much data for consideration.

Questions raised as part of this research effort, include the following:

* How should companies define and prioritize threats?

* What are the common characteristics of all high-impact disruptions?

* Can companies prepare without knowing the type of disruptions they may face?

* How should companies maintain lean operations, which aim to reduce redundancy, without increasing vulnerability?

* Are intentional disruptions fundamentally different from accidents and random phenomena?

* How can disruptions be detected when so many simultaneous events are taking place in the normal course of commerce?

* How can a company build in flexibility so that it can be resilient?

* Should companies always prefer multiple suppliers to single-sourcing?

* What new risks and rewards affect collaboration in this new world?

* What is the role of corporate culture in resilience?

* How can security investments support the main mission of the enterprise? Can they be cost-justified?

Professor Sheffi will shed light on these questions and more by recapping actual experiences of Toyota, Nokia, General Motors, Zara, British Telecom, Land Rover, Chiquita, Aisin Seiki, Southwest Airlines, UPS, Johnson and Johnson, Intel, Amazon.com, and the US Navy; some did well in the face of disruptions and some faltered. And since companies function as "citizens" within their own individual supply chains, Professor Sheffi's discussion will emphasize the extended enterprise--the web of suppliers, manufacturers, distributors, retailers, transportation carriers and the other participants in the process of bringing products to markets.

Yossi Sheffi, an international expert in supply chain management, is Professor of Engineering Systems at MIT and Director of the MIT Center for Transportation and Logistics. He has worked with leading manufacturers around the world on operations strategy issues and is an active entrepreneur, having founded five successful companies since 1987.

Dr. Kent N. Gourdin

REMINDER: Professor Yossi Sheffi will speak to Forum attendees on September 13th (Tuesday) from 10:30am to 11:30am. The Resilient Enterprise will be available for sale. NDTA also thanks Professor Sheffi for providing complimentary copies of his book as Forum prizes.