The resilient enterprise: overcoming vulnerability for competitive advantage

353 Pages·2007·1.016 MB·English

by  Sheffi, Yosef

The Resilient Enterprise

The Resilient Enterprise
Overcoming Vulnerability for Competitive
Advantage
Yossi Sheffi
The MIT Press
Cambridge, Massachusetts
London, England
Additional material can be found at www.theresiliententerprise.com
©2005 Massachusetts Institute of Technology
All rights reserved. No part of this book may be reproduced in any form by any
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This book was set in Sabon by SNP Best-set Typesetter Ltd., Hong Kong
Printed and bound in the United States of America.
Library of Congress Cataloging-in-Publication Data
Sheffi, Yosef, 1948–
The resilient enterprise : overcoming vulnerability for competitive advantage
/ Yossi Sheffi.
p. cm.
Includes bibliographical references and index.
ISBN 0-262-19537-2 (alk. paper)
1. Business logistics—Management. 2. Strategic planning. 3. Competition.
I. Title.
HD38.5.S547 2005
658.7—dc22
2005040875
10 9 8 7 6 5 4 3 2 1
To Anat

Contents
Preface ix
Acknowledgments xi
I When Things Go Wrong: Disruptions and Vulnerability 1
1 Big Lessons from Small Disruptions 3
2 Understanding Vulnerability 17
3 Anticipating Disruptions and Assessing Their
Likelihood 35
4 Effects of Disruptions 57
II Supply Chain Management—A Primer 75
5 Basic Supply Chain Management 77
6 Demand-Responsive Supply Chains 93
III Reducing Vulnerability 113
7 Reducing the Likelihood of Intentional
Disruptions 115
8 Collaboration for Security 137
9 Detecting Disruptions 155
10 Resilience through Redundancy 171
IV Building in Flexibility 181
11 Flexibility through Interchangeability 183
12 Postponement for Flexibility 195
viii Contents
13 Strategies for Flexible Supply 209
14 Customer Relations Management 225
15 Building a Culture of Flexibility 243
V Resilience for Competitive Advantage 267
16 Moving Ahead 269
Notes 287
Index 317
Preface
This book examines the ways in which companies can recover from
high-impact disruptions. The focus is on the actions they should
take to lower their vulnerability and increase their resilience. A
notion borrowed from the materials sciences, resilience represents
the ability of a material to recover its original shape following a
deformation. For companies, it measures their ability to, and the
speed at which they can, return to their normal performance level
following a high-impact/low-probability disruption.
After 9/11, governments around the world elevated the fight
against terrorism to the top of their agendas. The U.S. government
reorganized its defense and intelligence agencies and adjusted its
foreign policy for that mission. 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 overtook most terror worries.
Yet in the United States, and increasingly in Europe, most of the
economic infrastructure, such as transportation, energy, retail,
manufacturing, and finance, is 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 discussions to address the rising concerns about terrorist
disruptions. It quickly became apparent that there are no clear
management guidelines, models, or theories for corporate security
and resilience. These discussions spawned a three-year research
effort that culminated in this book.
As the research progressed, it became clear that the study
needed to expand to include different kinds of disruptions. Many