Big picture: Resilience diagnosis and prescription

[Update Below] Resilience implies problems. We spring back from adversity. The more rapid and complete a recovery from hard hits, the more resilient a system’s character. In recent years there have been plenty of serious supply chain problems. In most cases and places, supply chains have demonstrated significant resilience.

The Coronavirus Pandemic continues to stress global networks of demand and supply. Thirty months of disruption (and counting) demonstrate that concentrated push capacity plus pull patterns plus distance matter most. The war in Ukraine has reinforced these insights (here and here and here).

When pull — demand — can be effectively expressed, push is persistent and creative in response (e.g., US grocery sector). When and where pull is silenced or diminished or comparatively disadvantaged, push will rapidly dwindle (e.g., Lebanon or Sri Lanka or low income US neighborhoods).

High volume, high velocity, affordable push typically depends on highly concentrated sources and channels. We build purposeful bottlenecks (e.g., processing plants and ports and Distribution Centers and roadways) sized and organized to serve existing and predicted pull. During the pandemic most of these concentrations have adapted more effectively than I expected given dramatic shifts in demand. Except when destruction, disruption, or congestion seriously complicated preexisting flow (e.g., decommissioned power plants, blockaded Black Sea ports, cramming more than is discharged into almost anyplace). The best bottlenecks can quickly become dangerous chokepoints.

The more distance between concentrated demand and concentrated supply, the more risk of push not matching pull. Early in the pandemic most of the planet’s Personal Protective Equipment was (still is) made in a comparatively few facilities 5000 to 7000 miles away from significant concentrations of demand. Production and shipping capacity was constrained (see prior paragraph) and distance amplifies any mismatch of supply with demand. Today the price and availability of non-Russian natural gas in Europe is impacted by this distance amplifier (more and more and more).

The pandemic has also demonstrated the fantastic potential of private-public partnerships to create new production capacity to fulfill new demand (e.g., vaccinations, especially mRNA vaccines). The public sector essentially expressed persuasive demand and private sector small-batch innovations were rapidly scaled.

All in all, a pretty positive big picture, right? Could certainly be worse.

And… there is cause for concern. The pandemic has been a slow-onset catastrophe. The war in Ukraine has been a slow-onset crisis. Climate-related disasters seem to be accelerating, but have been predicted for at least half my long life. I am concerned there is a tendency to discount the difference between slow and fast onset catastrophes.

I am also concerned we discount the difference between destructive events and disruptive events. The pandemic has been very disruptive, but the power grid and communications and fuel supplies and road networks and other key infrastructures have continued to function.

I am concerned that many of our most valuable pandemic lessons are poorly calibrated with fast-onset, destructive risks, such as very high magnitude/intensity earthquakes or any high energy kinetic force (e.g., hurricane, tsunami, flood, fire, nuclear… ) that hits the right (wrong) concentration. A Category 5 hurricane with storm surge whipsawing the northwest Gulf of Mexico next month could cut off US LNG exports to Europe preparing for war-time winter. The East Coast could lose almost half of its ordinary supply of refined product flowing through the Colonial and Plantation pipelines. One-fifth to one-third of US fuel capacity might be offline for weeks. Talk about a mismatch of push and pull. Talk about supply-driven inflation. How much food or pharma or other crucial flows might just stop?

The pandemic’s non-destructive, comparatively slow-onset character has reinforced perceptions of potential control that are not well-suited for fast-onset, destructive events (and tend to discount crucial failures of pandemic response as well). In mid-February 2020, we could confidently predict there was at least five weeks before trans-Pacific flows to the United States would be seriously impacted by the epidemic then sweeping China. (I don’t think we did much with that insight, but the prediction was accurate.)

In the aftermath of a worst-case Cascadia or San Andreas earthquake, millions of survivors will suddenly be separated from moments-before sources of water, food, fuel, and much more. Major freight corridors will be down for the count and alternative sources of supply will be far away. Rather than five weeks, the impact will be immediate. A workable solution will be needed inside five days.

This “workable solution” cannot be planned in any detail. Precisely how a catastrophic kinetic event will unfold is beyond prediction.

As a result, effective responses are more likely to emerge from exploratory adaptations than centrally directed instructions. It was tough enough to deliver millions of doses of vaccines from known points of origin to well-communicated points of destination even with a few months of stand-up time. How do you facilitate creative emergence in the absence of grid power, telecommunications, and several bridges?

A strategic capacity for an effective rapid response is enhanced by a meaningful comprehension of core functions of preexisting demand and supply networks. Knowing the principal places and players for a high proportion of preexisting flows can inform quick and helpful after-impact assessments and potential mitigation measures. Many details of preexisting flows will not survive a catastrophic hit. But recognizing which major concentrations did or did not survive tees-up real-time options and choices.

Even more important are effective collaborative relationships between owners/operators of these core functions and between these owners/operators and emergency management. These players’ actions will decide the network’s resilience (or not). This kind of preparedness — very much focused on relationship-building, conversation, and discovery learning — puts in place the potential for creative problem-solving between preexisting competitors and between the private and public sectors.

But rather than “meaningful comprehension”, I see recurring attempts to trace and direct black-sky flows with greater detail and fidelity than most large scale blue-sky systems. Rather than authentic questions and conversations, I encounter instructional workshops. Rather than discovery learning there is a proliferation of command-and-control frameworks and pre-scripted task orders and DPA rated-orders.

I am slack-jawed and often silent because I do not second-guess the good intentions and hard work involved, but I am reminded of the admonition, “vanity of vanities, all is vanity.” Complex networks are tough enough to track on the best days. Effective flow depends on myriad independent agents each doing their part — often more than their part — to midwife the network’s potential emergence. Especially on the worst days, humility, risk-taking, encouragement, trusting, and cooperation become very practical virtues. One-hundred plus page plans and almost-as-many PowerPoint screens do not cultivate these virtues. Such outputs often distract from building real relationships.

A few weeks ago I was in conversation with some leading US food and freight providers. In case of a fast onset, wide-area, time-extended catastrophe these key players said that their ability to keep flows going would be enhanced by receiving the following “Big Picture” from a credible, competent source:

  • Infrastructure status including grid and telecommunications recovery timelines
  • Transportation networks including bottlenecks, chokepoints, availability of trucks, vans, pallets, and related assets
  • Fuel networks including availability, accessibility, transaction capabilities, and resupply
  • Labor availability including approved access (e.g., in case of perimeters or curfews), priority access to fuel when necessary, and support for non-local supplementary personnel
  • Demand dynamics including where purchases are (and are not) happening, how purchases are being transacted, comparative flow, and identification of most vulnerable places.

For more than a decade I have heard similar folks ask for similar help. In Southern California, San Francisco Bay Area, Pacific Northwest, Florida, and the mid-Atlantic, the biggest providers of food, fuel, pharmaceuticals, and other crucial freight have identified the same essential needs. Again and again, I hear them saying, “We know ourselves and our capabilities pretty well. But we need help with the Big Picture, especially when the Big Picture has suddenly changed. Give us confidence in the Big Picture and we will be creative finding solutions.” They offered to contribute their local observations to constructing the Big Picture. They also want to have a speed-dial connection for intergovernmental troubleshooting in case of conflicting priorities.

But there is — so far — no sustained effort to provide these owners/operators with the strategic insight they have requested. There is no sustained effort to organize the key players that are the usual suspects for up to 80 percent of total flows for food and fuel in large risk-prone regions. There is small-talk at conferences and workshops. There are irregular tactical encounters. There is no continuity to foster ongoing, purposeful, operationally meaningful, strategically effective relationships.

Why not?

Because humans discount catastrophic risk. Because we prefer delusions of control rather than realities of randomness. Because we are already busy with the pressing demands of today. Because we are easily distracted from long-term investments by near-term activity traps. Because choosing between priorities involves uncertain rewards and possible penalties. Because relationships are hard and dependent relationships are especially difficult. Because in a catastrophic context our interdependencies loom large. Because crises highlight our shared limitations and vulnerabilities. Because most of us are reluctant to depend on the competence and care of others. Because many — most? — humans dislike uncertainty.

If this is an accurate diagnosis, then the therapeutic response is clear enough. But as the pandemic (and more) has demonstrated, many are ready to neglect or even reject their medicine.


August 24 Update: About the same time as I was posting what’s above, a team at McKinsey & Company published a meaningful contrast. Two days later (this morning) I received a link to: The History and Future of US Crisis Management. The McKinsey team is focused on disasters, I am focused on catastrophes. They give some attention to private sector roles, but clearly conceive the public sector as being in the lead. In regard to Supply Chain Resilience, I argue the private sector is the only source with capacity to serve millions of survivors. The McKinsey essay describes crisis management in the United States as it is or aspires to become. I am complaining that these aspirations will not be sufficient when the predictable surprise of a worst day arrives.