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Darwinism, Ignatius of Loyala, and SAP in Mongolia: Insights from the SCRC Meeting on Supply Chain Agility

The SCRC meeting on “Creating Agility in a Globally Volatile Environment” provided a broad variety of speakers who shared a number of different perspectives on the approaches that supply chain executives need to consider when building strategies for navigating difficult economic and disruptive minefields. I began with a brief overview of the multiple forms of volatility that exist, from oil prices, currencies, commodities, and disruptive events that are now part of the day to day backdrop against which we operate. In this environment, I advanced the notion of “complex adaptive systems, with roots in the backdrop of Darwinism and “the Origin of Order” treatise developed by Stuart Kauffman, an evolutionary biologist. In this framework, organizations need to begin to think about how to find their way in rugged landscapes, and are reliant on supply chain partners to co-evolve along with them to survive. In terms of actions, this boils down to the core steps of 1) Engaging with stakeholders, 2) Understanding the ecosystem, 3) Developing Scenarios for Planning, 4) Building Relational Contracts, and 5) Enabling Rapid Response and Decision-making. Examples of organizations who have deployed these actions were provided in a supply chain context.

Next, a completely different perspective on organization agility was provided by an expert in “Lessons Learned”, an important element of organizational agility. This dimension refers to the ability of an organization to learn from past experiences, and apply them to new situations that might arise. A formal approach to documenting lessons learned provides knowledge transfer and scenario planning capabilities, an important strategic tool for planning for the unexpected. The Lessons Learned program has its origins in the work of Ignatius of Loyala (1491– July 31, 1556) who founded the Jesuits. Ignatius made a point of conducting after action reviews, and going through every aspect of decision-making that he and his followers made, to learn from prior decisions and see if they worked out.

Next, Tim Cummins from IACCM spoke about relational contracts. In this discussion, he used the example of how “They Don’t Do SAP in Mongolia”. In this situation, he relayed the importance of how corporations often set forth unreasonable demands on small suppliers in global environments. One company, Rio Tinto, was meeting with small companies and setting up microfinance arrangements. In such cases, they often began encounters by providing a a 52 page contractual agreement.

Upon arriving in Mongolia, the executive drove up to the corporate headquarters of one of its new suppliers. In this case, the headquarters happened to be a tent in the desert. At this point, he began to wonder whether a 52 page agreement might not be a good approach! The tent was equipped with sewing machines – and an absence of power supply might also hinder connection to SAP, another prerequisite for becoming a supplier to Rio Tinto.

The owner of this business was an entrepreneur who had previously been running a camel herd and had learned some level of English, running a good operation. The woman was very confused about the relationship. Would it be okay to take a vacation? Was she a supplier or an employee? The executive began to realize how in many cases people who are sitting in corporate headquarters, and who are seeking to drive high levels of consistency, have very little understanding of the conditions they are imposing on suppliers…..perhaps they need to apply some Lessons Learned!

Tune in for more lessons learned!