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Did the drive for higher efficiencies make the system less resilient?

To create a balance will be to widen the thought process towards a more global efficiency across interacting systems rather than very localized efficiencies.

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I was thinking of some of the management concepts to which I was introduced when I was working in the factory. That was long time back, I left manufacturing in 2002. I was the TPM coordinator in the factory I worked. Total Productive Maintenance (TPM), 5S, Kaizen, Small Group Activity (SGA), Just in time (JIT) etc were the management mantras at that time.  I then learned that Lean, Six Sigma etc entered as successors into the manufacturing.

The recent discussions around business disruptions due to supply chain challenges prompted me to look into whether there is a compromise between the drive to efficiency and system resilience. The more I think, I am sure they are not opposites, but there is a compromise.  Focusing only on efficiency did result into lesser resilience in systems. JIT is a classic example that was put to test in the past decade in multiple events even before COVID -19.

Many of the management topics that I grew up with did encourage specialists and during that time there was quite a number of repetitive jobs handled by workers. But now with the advent of robots and AI, much of that work is redundant. Also with a very straight jacketed approach to specialization, you are increasing your risk to a disruption emerging external to the system.  In the natural eco system, you can compare this to the impacts of a monoculture.

A well-oiled machinery lacks frictions. I relate this to the situation when my cousins visit India once a while and how their kids used to get ill.  A flue once a while can help improve your immune system. But in the quest for the perfect frictionless system, we were creating a less immune system that was vulnerable.

Apart from all this there is a bigger question on super efficiency tilting towards limited competition (the race to supremacy) and the potential social impact. The Darwin theory around business is tested here. As I started reading more about this, an article in HBR titled “Rethinking Efficiency” by Roger L. Martin came to my notice. In the article he states;

“An excessive focus on efficiency can produce startlingly negative effects, to the extent that superefficient businesses create the potential for social disorder. This happens because the rewards arising from efficiency get more and more unequal as that efficiency improves, creating a high degree of specialization and conferring an ever-growing market power on the most-efficient competitors. The resulting business environment is extremely risky, with high returns going to an increasingly limited number of companies and people—an outcome that is clearly unsustainable. The remedy, I believe, is for business, government, and education to focus more strongly on a less immediate source of competitive advantage: resilience.”

The current crisis has brought the focus on “resilience” like never before. We saw the run for toilet papers and personal protective equipment. Supply chain management is definitely ready to trade good points from efficiency to resilience.  I am sure there will be new management mantra that will emerge out of the current situation. To create a balance will  be to widen the thought process towards a more global efficiency across interacting systems rather than very localized efficiencies.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Resilient resilient india

Santhosh Jayaram

Sustainability and CSR Advisory, KPMG

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