The Need for Organisational Resilience Chapter-6

effect through the supply-chain. The aim of increasing production without any additional costs to

Boeing ultimately produced the opposite outcome, enticing suppliers to operate to the lowest

common denominator in the entire supply chain.

Managing suppliers instead of delegating risk

Logistical dependence on external suppliers is a matter of relationship. Demanding variable

“continuous” logistics from a supplier for the sake of reducing one’s own inventory, necessitates

a collaborative relationship. The main factor in a relationship is trust, a mutual belief in the

logistical capabilities and limitations of a partner. Hence, planning must include consideration of

uncertainty and the ability of all parties to provide continuous logistics. Nevertheless, continuous

logistics come at a price. At Boeing, costs should not have been unilaterally delegated down the

supply chain, with any imperfection in adapting to uncertain events being penalised. Instead,

suppliers need to be incentivised as well as penalised with modern gain/pain sharing

agreements. Given the power of incentives, on-time delivery should enable a supplier to

maximise his profits (within reason).

Trust is driven by belief and manifested in an appropriate contractual agreement. Beyond,

continuous logistics require cross-functional/organisational teams that enable social interaction

and thus partnering. These cross-functional/organisational teams thrive under conditions of

openness, visibility and transparency. Although there might be conflicting objectives and ways of

working, such conflict can be turned into critical reflection on how continuous logistics are

enabled and also constrained by the suppliers and clients involved.

In the Boeing 787 Dreamliner project, the following alternative strategies for mitigating risk

were suggested (see Table 6.3):

Risk Factor

Proactive Actions

Supply Chain Visibility

Use IT to ensure transparency of entire

supply chain

Strategic partner selection and relationship

Use proper vetting of all strategic partners to

determine their capability of completing tasks

Management

Establish proper working teams with expertise

in supply chain logistics

Labour

Reach out and communicate with union

heads about sourcing strategies

Demand (customer)

Treat customers as partners and ensure

better communication of the potential for

missing delivery deadlines

Table 6.3: Alternative strategies for mitigating program risks (Tang and Zimmerman 2009, 82)

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