How supply chain resilience and antifragility intertwine to optimize for survival

Resilience has become a popular term after all the major events happened throughout the world last five years. These events have had a lot of indirect effects within economies and thus impacted the playground for almost all companies. It has pushed the need for resilience on the agendas on board level and more specifically have become targets for supply chain professionals. Nevertheless, we see companies struggle with moving from target to action in the domain of supply chain resilience.  

In this article I aim to deepen out the concepts of supply chain resilience as I first draw a parallel with important ideas on antifragility. Further I will move towards organisational aspects and will outline our supply chain resilience model and how it can guide companies for the right setup. I will end on the difficulty of implementing resilience and the importance of c level decisions as becoming a resilient organization is strategy at its finest.  

Becoming Antifragile 

The concept of “a black swan event” has become key in supply chain resilience since the publication of the so-called book “the black swan” from Nassim Nicholas Taleb ​[1]​. It has effectively showed why it is fundamentally difficult to “forecast” certain events with an extreme impact on supply chain operations. While the book nicely showed how biases in human thinking combined with the real-world complexity cause such events, it did not directly provide clear guidance on what to do next. His subsequent book “Antifragile” did provide this guidance ​[2]​, while in an indirect manner, to companies. Moreover, becoming antifragile as a company is increasingly becoming a stated goal within the supply chain resilience domain.  

Growing while being under stress 

With the term antifragile Taleb literally meant being anti – fragile. This is not the same as being robust, where you don’t break, but by growing while being under stress. Natural systems that survive on the long run have the tendency to be antifragile. Primarily because their aim is to survive. Natural systems can have quite different characters, consider for instance the human body, but also the restaurant industry as a whole can be considered.

Learning organisation 

To survive in complex environments, it is essential to learn from events such that the next time you encounter those events you know how to deal with them. This is not necessarily an intellectual exercise. In natural systems, it often works like in natural selection. Those parts of the systems/organism that cannot handle the situation will disappear (bad restaurants!) leaving a stronger base behind which is able to deal with or not affected by the situation. In organizations this is more difficult, but a lesson here is to implement learning processes and dare to relieve the organization of harmful activities in stressful events. 

Five resilience capabilities 

As stated, antifragile systems that survive in complex environments have a clear objective: Survival. This is an important notion because the system will organise itself for survival and therefore it is not necessarily an optimized efficient system. Such systems have natural buffers. Think of a giraffe which require at a minimum a 1.5-meter neck to survive, the average neck will be longer than this 1.5-meter. The difference between the minimum and the average neck in this case can be considered as a buffer. A general rule which we can apply from a resilience perspective is that being efficient is being fragile.

The need for buffers within your supply chain is thus essential in supply chain resilience. Together with the university of Groningen and the university of Windesheim developed the resilience scan ​[3]​ in which it is possible to assess the supply chain resilience capabilities. In short, our resilience model consists of five pillars: Redundancy, Collaboration, Flexibility, Visibility & Agility. For all these pillars appropriate measures are available to increase resilience in your supply chain.

As stated earlier, antifragile systems in general like volatility because they grow while being under stress. This is fully in line with our resilience model where we indicate that a fundamental part of resilience is the ability to learn and grow. Moreover, we therefore assume an aggressive position towards disruptions because, if handled accurately, that possess great opportunities to outperform your competitor.  

Dealing with different environmental contexts 

Supply chains are often very industry and even company specific. This results in physical limitations in improving in one of the specified pillars. Sometimes additional inventories are inappropriate. In such a case, increasing your resilience in other domains can be the path towards supply chain resilience. One can even pose that inventory buffers are often used as a quick fix without looking more fundamental to alternative pillars to improve resilience. 

What’s more, a key lesson is that being resilient should be based on your own organisational capabilities and set up. It should therefore not be based on “predicting” the future. Because if you are wrong you have a clear problem after all. Being able to handle different environmental contexts is the key for being more resilient. Evaluating your supply chain based on the resilience model is an excellent step towards more internal supply chain resilience.  

C-level on the steering wheel 

Implementing resilience in your supply chain largely comes down to strategic decisions and is therefore a board room discussion. Accepting buffers and more measures in you supply chain at the right places is an intrinsic part of becoming more resilient. However, this directly confronts with the organisational need to have an efficient supply chain.  

Companies are often pressured to stay efficient in order to increase the return on investment. This limits the long-term commitment to resilience. It is easy to make it a strategic pillar in the short term but keep it in mind in the long-term perspective is a different ball game. This might explain to some extent why family-owned companies have a higher survival rate than their peers. They have a higher focus on survival then on short term gains. Resilience often comes at a cost, but this cost can actually make sure you live another day. 

Conclusion 

While the ideas on antifragility and our supply chain resilience model are much more layered and diverse than discussed here, we do see clear symbiosis between them. Both are focussing on survival and like organic systems allow inefficiencies to act as buffers in case of serious events. Moreover, both approach events like opportunities to improve market positions. You never know when these opportunities arise which therefore require deliberate preparation such that when they do arise advantage can be gained.  

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