This week, two very well-known companies, from two different industries, made headlines for a major event that occurred within their organizations.
One, Delta Air Lines, experienced a massive digital disruption that impacted its business operations and the other, Macy's, Inc., announced it would be shutting down at least 100 of its store locations. And both of these hold valuable lessons for supply chain managers across the globe to learn from when it comes to preparing for the future.
Preparing for growth
One of the core goals of any business is to grow and expand as time goes on. To do this, there needs to be a sound strategy in place, clear objectives and constant performance assessments. Macy's recently said that it would be closing at least 100 of its stores by next year - an announcement that came following its second quarter earnings report. At first glance, this might be perceived as negative, a sign that the company is in trouble. There have been a handful of major retail brands consolidating stores or going out of business. And it is no news that many supply chain managers are facing difficulties in their attempts to restructure operations and business models to better serve the online shopper and e-commerce market.
However, as the company explained in its press release, this decision is a strategic one; it allows it to focus only on keeping the best-performing locations in America open, while investing the rest of its spend and resources on improving the online and mobile app shopping experience - which is doubtless becoming the future of retail.
"We believe that this reduction of 100 locations in the short term will result in a more appropriate store portfolio for Macy's in the longer term and help us to accelerate our progress in building a vibrant omnichannel brand experience," Macy's President Jeff Gennette explained in the announcement. "With this strategy, we will be able to reinvest in a more energized shopping experience in our remaining stores and elevate our total customer experience across all methods of shopping."
This approach is one that supply chain leaders across the globe can learn from because it highlights the necessity of businesses, especially in this highly digitalized and ever-evolving world of technology, to be willing to adapt alongside changing consumer preferences and market trends. Furthermore, it exemplifies the reality that, sometimes, in order to ensure long-term sustainability and growth, an organization needs to be okay with making some immediate sacrifices and experiencing some setbacks. At the very least, it underscores the importance of knowing which areas of the supply chain are financial pitfalls and what aspects are no longer profitable.
Preparing for disruption
All business leaders expect success and growth to be in their future. The smart ones plan and strategically prepare for it, thoroughly, adamantly and persistently addressing each challenge as it comes. However, what many companies obviously don't want, expect or often plan for is for a major disruption to occur - whether that is a natural disaster, cyberattack or another vehicle of damage.
Earlier this week, Delta Air Lines experienced a computer system failure that forced it to cancel approximately 1,500 flights within 24 hours. The outage lasted about six hours before the issue was resolved; however the time frame was enough to cause massive chaos and inconvenience to many of its customers. According to Business Insider, the problem was that when the computers shut down, the back-up systems did not work properly.
"Delta likely built a disaster-recovery plan into the system, but it was not properly configured to back up everything that failed," explained Gil Hecht, an expert in disaster recovery, to the source. "It's possible they didn't make changes to the backup system for it to mirror the main system."
However, although Delta handled the situation particularly well, the disruption, as well as others like it that have happened to other air lines over the past few years, point to a bigger, underlying issue of outdated infrastructures and equipment.
Cybersecurity has become a critical priority for organizations across the globe, at all levels. For supply chain leaders, the importance of incident response planning cannot be understated. But it is also imperative to realize that simply putting policies in place is not enough. They must also make the technological and financial investments needed to properly ensure the success of risk mitigation and disaster recovery operations.