June - August 2004 www.criticaleye.net 24 Today’s global supply chains are, in effect, highly complex networks. They are increasingly vulnerable to disruption which can have significant impact on profitability and shareholder value. Recent research at Cranfield School of Management has highlighted where the sources of risk in supply chains might lie and how that risk might be mitigated and managed by the application of ‘Six Sigma’ philosophies and procedures. Creating Supply Chain Resilience Through Agile Six Sigma By Professor Martin Christopher & Christine Rutherford Re-synchronise Stabilise Shift Fig 1. The Responsiveness of Robust Supply Chain Processes A s Supply Chain networks increase in complexity as a result of market volatility, outsourcing, globalisation and single point sourcing, so too has the risk of disruption. Networks are becoming more vulnerable as supply chains become longer and leaner. Cost-reduction and efficiency are now key business goals and, as a result, networks become increasingly vulnerable to events that previously may have caused only minor local disruptions. Whilst the continued search for efficiency improvements is essential in a fiercely competitive marketplace, the challenge is to find ways in which vulnerability can be contained and managed. Recent research (1) has highlighted how the risk of supply chain disruption has grown and how great the consequences of that disruption might be. Whilst there are many obvious sources of risk external to the supply chain e.g. terrorist attacks, floods, earthquakes and the like, it is our contention that a growing source of risk lies within the supply chain itself and that, once recognised, that risk can be mitigated or even removed. Since supply chains comprise the linked processes of the different entities in a network, it is appropriate to focus on ways in which process risk can be managed. ROBUST VERSUS RESILIENT Central to the debate on process risk are the notions of robustness and resilience. Instinctively we would argue that a risk management strategy should aim to create and maintain a supply chain that is both robust and resilient. But what exactly does this mean? Often used interchangeably, in the context of supply chains ‘robust’ and ‘resilient’ have quite different meanings. Based on dictionary definitions ‘robust’ is understood to mean ‘strong, and sturdy: constitutionally healthy’. Thus a robust process might reasonably be expected to produce consistent results with very little variation in output; i.e. a healthy reliable process. The design and maintenance of robust processes makes good business sense and the popular tenets of lean thinking drive us in this direction. However, how resilient is a supply chain comprising a network of robust processes? Resilience is the ‘ability of a system to return to its original (or desired) state after being disturbed’. In the context of business today, a resilient supply chain must also be adaptable, as the desired state may be different from the original. ‘Robust’ processes may be strong but they are not by definition adaptable, hence a supply chain of robust processes is not necessarily going to be resilient. Table 1. provides a comparison between the