Resilience in textile enterprises and supply chains

Resilience, in an organizational sense meaning the ability to withstand crises and disturbances, is associated with risk and crisis management and business continuity planning, but it also allows for new perspectives and insights into the conditions for doing business. Applied to the whole supply chain it also provides tools for managing and aligning the logistics flows in an appropriate way.In a recent investigation on textile-related SME that have withstood the recent economic crises but faced major threats to their financial performance and survival, it became clear that economic resilience is a property to be cultivated. Resilience is to be considered a discriminating factor between successful and surviving firms and those that fail. Research today on organisational resilience typically addresses its attributes, formative elements and framework, or ways and indicators to measure it. In this overview, recent research on critical success factors and properties supporting resilience development in the textile sector is discussed out of four angles, a three-dimensional concurrent engineering perspective, measuring and quantifying resilience, key enablers of resilience in textile firms and strategic planning for resilience.Capabilities and competences, based on three dimensional concurrent engineering perspectives and complementary value systems, can create several critical success factors for organizations. Current research demonstrates that most of the key success factors are created and sustained through 3-DCE designing. It also highlights the necessity to incorporate intangible value propositions into the 3-DCE model to generate an extended framework for conveying operational performance and so organizational success.For the quantification of resilience, financial statements (1989 to 2009) of 20 companies related to textile, clothing and fashion were analysed to draw the appropriate conclusions. The study used Altman’s Z-score as an indicator of business health, which includes discriminant ratios related to both short-term and long-term goals of a firm. The findings support that there is a relation between the levels of organizational resilience and business health. It is therefore proposed that a business health transition profile (of Z-score) and systematic encoding are effective to differentiate firms in terms of resilience level. The contributions of critical financial ratios to the resilience level in different periods were also assessed for those organisations. For example, in case of two analysed firms the higher liquidity, leverage and solvency, compared to the other studied firms, resulted in maintaining a healthy state, while for two other firms liquidity, profitability and capital-turnover contributed to their resilience development.To find key enablers and antecedents of resilience, a further investigation was conducted in textile and clothing SME, based on a previously developed conceptual resilience framework. Annual reports provided a detailed account of the financial performances of these firms. Findings provide insight as to how the responding firms considered resourcefulness, viz. cash flow and investment finance, relational networks and material assets, along with ‘dynamic competitiveness’ through strategic and operational flexibility, to be key enablers of resilience and financial performance, mostly through generating profitability, liquidity and sales-turnover. Responses also highlighted the indirect influence of the ‘soft’ learning and cultural aspects, like attentive leadership and collectiveness. Other process initiatives (growth and continuity strategies) were also emergent patterns to properly utilize and direct the antecedents for resilience development. Thus firms can develop their resilience potential by tuning their strategic assets and capabilities. For the investigated SME the key variables among them are: a) investment finance and cash flow, b) material assets and networking, c) strategic and operational flexibility, and d) attentive leadership.With regard to strategic planning for resilience, a categorization of resilient and less resilient enterprises in terms of their financial performance was assessed, while identifying their shortcomings in crises and the differentiating strategic initiatives underlying their respective response repertoire. A majority of the case firms identified a decrease in order volume as the major problem during crises. In terms of key strategic initiatives the resilient firms showed better short-term crisis management strategies, due to higher operational flexibility with regard to various cost-cutting measures, such as retrenchment, reduced fixed overhead costs or decreasing customer and supplier base, and an ability to ramp down production when necessary, while the less resilient firms lacked strategic readiness due to resource scarcity. Almost none of the firms could develop any crisis-based growth strategy. The resilient firms differed from the less resilient ones, the most in terms of long-term strategic initiatives showing long-term continuity planning by unique initiatives to improve cost-effectiveness, such as delocalization of manufacturing, continuous improvement and lean management, and in terms of growth strategies as well, like market penetration by increasing sales and product ranges, long-term diversification strategies through market expansion, and long-term transformational initiatives by focusing more on acquisitions and production outsourcing.Such multiple strategic initiatives are essential for developing a model for crisis strategic planning categorizing firms along four difference types of resilience, viz. latent, planned, adaptive and dynamic, and along two dimensions characterized by low and high degrees of planning and adaptation, respectively. It was observed that resilient SME mostly showed planned resilience in financial crises, through long-term continuity plans and growth initiatives. Creation of financial, material, relational and conceptual slack through cost minimization techniques and implementation of growth initiatives were the keys towards development of an organized response repertoire in resilient organizations, as compared to the less resilient ones. A short-term crisis management strategy – cutting costs – was observable in most of the firms. Almost all of them tried to retrench staff and diminish customer base, but the resilient firms also sought legal union’s support to decrease the salary and working hours, so that they can retain competence even in crises. Delocalising production, adjustment of the product pyramid to invest in extension of product range, as well as cost-effective process management were also measures considered by resilient firms to retain operational excellence. The resilient firms also used more flexible production systems along with value adding products in their range, some of them shifting from high volume-low margin products to very specific core products. Furthermore, resilient firms concentrated on increasing sales by extending the product ranges through cross selling and add-on products and services. This registers as sufficient degrees of innovation in the resilient firms. Thus co-management of innovation and excellence provides the right dynamic balance for creating slackness for utilization during strategy formulation.Det är sammanfattningen som återfinns i konferenspublikationen