The Resilient Enterprise: remarks delivered at the Forum by Yossi Sheffi.

Remarks delivered at NDTA's 2005 Forum by Professor Yossi Sheffi, author of "The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage" and Director of MIT's Center for Logistics, were right on target. Sheffi outlined elements that characterize a strong supply-chain structure, one that can not only provide competitive edge, but also survive serious disruption. His comments came just weeks after Hurricane Katrina hit the Gulf coast.

Communication is the most critical element in recovering the supply chain. Employees, especially those on "the front lines," should be completely informed and continually updated so they can evaluate needs, address the challenge, and implement recovery quickly and confidently. Good communication lines, however, should not wait until disaster strikes; they should be in place from the beginning. Sheffi also noted that companies where continual improvement is stressed have a better chance at survival.

Eighty-five percent of our Nation's infrastructure is currently controlled by the private sector. Consequently, government and commercial business must carefully evaluate capabilities within the private sector at overcoming supply chain disruptions. Katrina reminds us that our ability to recover the supply chain operations contributes not only to business recovery, but to national resiliency as well.

Professor Sheffi described elements that signal problems in the supply-chain: security, layering, balancing, profiling, collaboration, and culture. He shared several case studies including a factory fire that halted production of cell phone chips intended for Nokia and Erickson. Nokia quickly responded by working with existing suppliers to assure that Nokia operations would continue with minimal interruption. Erickson reacted six weeks later, when their supply chain was affected, and lost market share to Nokia.

A resilient enterprise can exist through safety stock, though redundancy is expensive. Supply chain agility is more cost efficient. Interchangeability of plants, parts, and people allows for reallocation and resources that are more prudently allocated when disaster strikes. A Southwest case study demonstrated enterprise agility when suppliers were requested to produce the same cockpit for its fleet. The decision allowed any pilot to fly any plane, and provided Southwest with competitive edge and resilient advantage.

Supplier relationships are key. If a business depends solely on a single supplier, the relationship must be deep. Conversely, dependence on multiple suppliers means superficial relationships as it is a more costly venture.