LOOK DEEPER IN THE WAKE OF COVID, as companies stocked more inventory as a hedge against disruption, it looked like “just in time,” a key component of lean manufacturing was being replaced by “just in case.” But post Covid in 2021, Toyota, the creator of the lean approach surpassed GM to become the top auto seller in the U.S. Toyota took the time to thoroughly map its supply chains, forecast lead times sometimes down to the minute and identify where the chains were most vulnerable. They are not customers to their suppliers; they are partners. “Most think that supply chains are linear, but they’re not, they’re messy and complex,” says Jen Blackhurst, Harbert Professor of Supply Chain Management. “I was working with a heavy equipment manufacturer and when the tsunami hit Japan, they immediately got in touch with their supplier and breathed a sigh of relief. All okay. But it wasn’t. Their immediate supplier was unharmed, but that supplier’s supplier was in trouble and that collapsed the supply chain. To mitigate risk, you’ve got to map your supply chains and not just the tier one suppliers, but their suppliers and their suppliers. You may not be able to stop the disruption, but you can be better prepared for the risk.” Toyota learned a lot from that same tsunami. A plant that furnished critical microcontrollers was damaged. Toyota helped rebuild the plant and learned about the fragility of the manufacturing process. Accordingly, they adjusted their estimate of lead time and revised the amount of inventory they carried, building a safety stock that takes risk into account. That strategic approach gave them a competitive edge ten years before most other automakers. JEN BLACKHURST HCOB Professor, Jen Blackhurst is the McWane Chair in Supply Chain Management. Her work, highly cited by academics and utilized by industry, broadly examines supply chain risk and how to handle supply chain disruptions.
generic brand. Customers may adopt a “good enough” mentality, become more willing to accept a lower-quality product or service if the price is significantly lower, as the desire for durability and premium features getting overshadowed by the immediate need for savings. B2B and B2C environments aren’t exempt either, where you may find customers likely to want to negotiate price or payment terms. If you’re in a service industry the risks are perhaps less tangible but heightened nonetheless—and also provide the key to making sure your customers stay your customers. When money’s tight consumers can be less forgiving, and a single negative service experience can be enough to drive customers to a competitor. Especially in the age of social media, a poor service experience can be amplified quickly, deterring a great number of potential customers who are already hesitant to spend. Brand loyalty can become more tenuous, ironically just as your business may be facing cuts in customer support staff, training or technology. This can result in longer wait times, less effective problem resolution and an even greater decline in overall customer satisfaction. And the party favor of all that—a hard to miss dip in the amount of cash coming in the door. But interestingly, companies who pride themselves on providing great service and exceptional quality, are the same companies that survive and even thrive when the going gets tough. Meeting and exceeding customer expectations when it’s difficult to do so, creates a noticeable differentiation in the market from companies that don’t or won’t. Smart, client-centric companies also know that it doesn’t necessarily take larger budgets or more complex systems to make their customers feel understood, it takes the human part—time, effort and the ability to listen. If you can show that you understand, yes even care about, the situation your customers are in and do your level best to meet their needs, chances are you’ll be remembered and rewarded in the brighter days ahead. So as distracting and difficult as global dynamics can be for corporate management, if you create a culture of resourcefulness, adaptability and customer service, even as you build in the mechanics to adjust systems and work well with partners as situations evolve—then the one thing you likely won’t have to worry about is cash flow, the lifeblood that keeps you in the game. HM
Harbert Magazine 45
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