I had the incredible opportunity to fly in a B-17 bomber this past weekend, a replica of the Memphis Belle that survived 25 tours of duty in Europe. I even got to sit in the front position of the bombardier, in the glass bubble at the front, and look down on the ground below. This experience made me even more aware of the bravery of the men who flew in the “Flying Fortresses”, and how they risked their lives for the better good.
One of the interesting elements that caught my attention was the primitive nature of navigation and accuracy that existed on the B-17. Many of the signals pilots, gunners, and bombardiers relied on were primitive in nature, and the risk of a Messerschmidt dive-bombing them from out of nowhere was always on their minds. In the early stages of their deployment, 80% of B-17 flights never made it home. Everyone on the plane had to operate as a team, and no one was allowed to leave the plane if it was hit without ensuring that all parties were able to escape. I had the chance to chat with some of the old WWII vets who were at the event as well. One of them told me that “Everybody had a role, and every one of us had to be mentally alert, watching in all directions, and communicating with one another constantly.”
For managers to make sense out of different signals in equivocal situations requires effective communication and interconnectivity with others in their environment. Intelligence is a process of interconnectivity or what management guru Karl Weick describes as “heedful interrelating”. A collective mind emerges as a capacity in an on-going activity stream when activities among people are tied together ascontributions that are subordinated to a joint system. An inability to make such connections in periods of high uncertainty can be disastrous.
Weick (2001)notes that an example of “less heedful interrelating” is Winston Churchill’s reconstruction of why he failed to see that Singapore was vulnerable to land invasion in the Second World War. A good illustration of the awareness of multiple causality may be found in Churchill’s response to his horrified discovery that Singapore, rather than being impregnable, proved to be highly vulnerable to a Japanese land invasion (Allinson, 1993). Churchill noted afterward that “I ought to have known. My advisors ought to have known and I ought to have been told, and I ought to have asked”. These four lapses are lapses of interconnection in gathering information about unexpected events (Weick, 2001).
What does this have to do with supply chains? It comes down to paying attention to the signals, and working with your suppliers as a team.
Supplier managers who establish regular risk-based performance reviews with suppliers are more likely to adjust their payment terms to improve cash flow for suppliers facing problems. Examples of communication involve meetings to identify the impact of economic conditions on supplier cash flow, regularly scheduled information sessions to exchange data on a supplier’s financial conditions, discussions on contingency planning and business continuity plans in advance of downward forecasts. In addition, research is needed on emerging technologies that provide real-time event notification through online procure to pay systems, emerging block chain technologies, and joint platforms for collaboration and sharing information.
Although over half of the companies in a research study we just completed were in regular communication with suppliers (60 per cent) and were discussing business continuity contingency planning (53 per cent), less than half were renegotiating contracts (43 per cent). Also, over a third of firms had suppliers requesting improved payment terms, yet most buyers failed to act on these signals.
Our results support the idea that communication flows can lead to a buyer’s improved understanding of their supply network’s financial health, and can also lead to tangible contractual re-negotiation activity that can help counter the effects of financial distress and reduce financial supplier disruption risks. Teamwork, paying attention to signals, and communication are key. Just ask one of the WWII vets who flew in the B-17.
Allinson, R.E. (1993), “Global disasters: inquiries into management ethics”, Business Ethics Quarterly, Prentice Hall, New York,NY.
Weick, K.E. (2001), Making Sense of the Organization, Blackwell Publishers, Malden, MA.