Operational resilience is an organisation’s ability to continue to deliver critical business services after facing one or more disruptive events. It also covers the ability to predict and prevent disruptive events and better control and recover from them, should they occur. The COVID-19 pandemic, for example, was a real-world test for many organisations globally, with Australian retailers among the many groups that were heavily impacted.
With sudden lockdowns, border closures, and working from home, retailers had to rapidly employ technologies to move their business online and digitise their processes, which normally would have taken years to implement. Coupled with recent bushfires and floods across Australia, retail supply chains and workforce resourcing have been placed under severe stress.
The current state of business resilience in retail
Protecht recently surveyed risk professionals to determine their organisations’ operational resilience understanding and requirements. The results clearly showed that most respondents value the idea, but implementation remains limited. Nearly all surveyed (96 per cent) believe operational resilience should be an important priority for their organisations, but only under half (46 per cent) currently rate their organisation’s operational resilience capacity as “high/very high”.
After the COVID-19 pandemic exposed the sector’s vulnerabilities, retailers quickly learned that regardless of their size, operational resilience can be the difference between the success and failure of their business. With a high probability of major disruptive events expected in the future, building operational resilience is more important than ever. Here is how to get started.
Identify the risk areas for your business
The first step toward building an operational resilience framework is identifying your critical operations. For retailers, these would include supply chains, distribution, payments, and customer support. Next, you need to identify the key resources for those critical operations – –hardware, software, locations such as warehouses and stores, and people.
Once you understand what your customers need and the resources required to deliver those, you can more clearly think about the events that would cause disruption to your business. For example, if a key distribution warehouse is in Northern NSW, how would you recover from a flood that prevented access to that warehouse? Similarly, how do you recover in stores if a key electronic payments network is unavailable. Scenario planning is a critical step to lower the probability of disruptive events occurring, and to recover from them more effectively if they occur.
Using technology to support resilience
Trying to manage operational resilience in spreadsheets and Word documents is difficult due to the volume of resources and interdependencies of connected processes. At Protecht, we support our customers in the resilience journey by providing world class technology to support better visualisation of the resilience building blocks. Best practice for operational resilience requires robust visualisation of end-to-end processes and possible points of failure in either critical support operations or supply chains.
As important as it is to build operational resilience, it is also crucial to keep up with innovation in the space and learn from leading businesses in the sector. Retailers across industries are innovating to enhance customer experience while building operational resilience to survive future events like the COVID-19 pandemic, bushfires and floods. Smaller retailers who take note and keep up with these innovations will find it easier to thrive in today’s uncertain economy than those who don’t focus on building resilience.
David Bergmark is CEO of Protecht Group.