Video Player

The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage

Yossi Sheffi SM '77, PhD '78: November 1, 2005; Running Time: 1:02:55

About the Lecture

About the Lecture

Yossi Sheffi fires a shot across the bow of business owners who, even after 9/11 and Hurricane Katrina, still have not assessed their organizations’ vulnerability to catastrophe. Sheffi piles on examples of organizations that simply did not have the appropriate mechanisms in place when disaster struck or evolved undetected.

He describes cell-phone maker Ericsson’s sluggish response when a vital chip supplier suffered a fire that stopped production. Rival Nokia quickly sought other chip sources, so when Ericsson “woke up… it was too late,” says Sheffi – “the world-wide supply of chips was gone,” and Sony took over manufacturing Ericsson phones.

Vigilance helps firms anticipate and survive a crisis, says Sheffi. “An organization can be taught to know things faster,” he says, by deploying better detection methods, including statistical process control; and creating layers of defense, as in the airline industry. And corporations must also develop system-wide redundancy and agility, so they “can spring back into action” in case of a shake-up. For instance, says Sheffi, all Intel plants are identical, so people can move effortlessly into production elsewhere if one plant shuts down. Sheffi recalls that when a snowstorm paralyzed a UPS hub at the Louisville Airport, preventing local workers from driving to work, UPS flew other workers in from the rest of the system.

Companies must generate what Sheffi calls “a flexibility culture” in order to get through a disruption. He calls for continuous communications; empowering workers up and down the organization to take responsibility; and “conditioning” employees for dramatic change. In fact, he believes nimble corporations will not merely ride out a major storm, but will have increased opportunities to expand market share, since “an ability to respond quickly to disruption also allows for speed in responding to the market.”

Lecture Details

Location: Stata 32-141

“Companies that routinely look at all their processes get improved and tightened….Building in flexibility is the real competitive advantage, because if you build in the ability to respond quickly to disruption you build in the ability to, whether you like it or not, to respond quickly to the marketplace. …Companies that reacted faster increased their market share even if they suffered disruption, because their competitors were not that nimble.”

Yossi Sheffi

About the Speaker

Yossi Sheffi SM '77, PhD '78

Director, Engineering Systems Division
Professor of Civil and Environmental Engineering and Engineering Systems
Director, MIT Center for Transportation and Logistics

Yossi Sheffi is an expert in systems optimization, risk analysis and supply chain management. He is the founder and the director of MIT’s Master of Engineering in Logistics degree. In 2003 he launched the MIT-Zaragoza program, building a new logistics university in Spain based on a unique international academia, government and industry partnership.

Sheffi has authored many journal publications and two books, including The Resilient Enterprise:Overcoming Vulnerability for Competitive Advantage (MIT Press, October 2005).

He obtained his B.Sc. from the Technion in Israel in 1975, his S.M. from MIT in 1977, and Ph.D. from MIT in 1978.