IS YOUR PROCESS READY FOR A DISRUPTION?

by Jared Thatcher

In today’s fast-paced world, disruptions are inevitable—whether it's supply chain issues, unexpected equipment failures, cyber-attacks, or a global pandemic (too soon?), we can, and should consider potential risks to our processes. Not having a risk mitigation strategy in place when these disruptions occur can have significant consequences. Without proper contingencies, we might experience prolonged downtime, increased costs, or even a loss of customer trust. Planning for such events is not just about reacting when things go wrong—it's about being proactive and prepared. Just a little bit of effort now, can pay out huge dividends in the long run.

Lean Tools Can Help You Mitigate Risks

So, what can you do to prepare for the unexpected? Keep in mind that unexpected does not equal unforeseeable. Experience and common sense can help you assess the likelihood of a disruption impacting your process. Luckily, Lean principles and tools coupled with other business tools offer practical frameworks that can help your team plan for potential risks and ensure resilience in the face of disruptions. Here are some effective approaches that can help you prepare for the unexpected:

1. RISK IDENTIFICATION & THE RISK REGISTER: This is a great brainstorming activity. Get the team together and think of all the things that could go wrong. Think of this as a séance where you are channeling Murphy’s Law to help you. These could include past experiences, worst-case scenarios, or simple things like too many people out sick, or a machine breaks down. Don’t discount anything. Capture it all. After you have a good list (virtual or physical sticky notes tend to work best), affinitize them into categories. Now you have a list which in project management terms is known as a Risk Register. The format is straightforward: assign each risk a number, provide a brief description, specify the person responsible for implementing the solution, and outline the mitigation plan.

While working at Alaska Airlines on a critical improvement plan with no margin for error, I drew on my project management experience to create a Risk Register with action plans as a precaution. When Murphy’s Law struck and challenges arose, I was able to pull out the Risk Register and show leadership a pre-approved countermeasure that was ready for immediate implementation. This preparation enabled us to address issues swiftly, avoid delays, and successfully deliver the project on time.

It's interesting to note that while I was developing the Risk Register, my VP questioned whether it was a valuable use of my time. However, after its swift and effective implementation during this crisis, she acknowledged that the preparation had not only saved us significant time, but it had also prevented losses amounting to hundreds of thousands of dollars. If you’re not currently accounting for potential risks, challenges, failures, and disruptions to your processes and systems, then you might find yourself constantly putting out fires.

2. PROBABILITY & IMPACT MATRIX: We are all looking to eliminate the waste of putting out fires by getting to the root cause, but how do we proactively stop the fires before they ignite? The answer is to take the time to prioritize those risks we identified and placed in our risk register by using a probability and impact matrix. Companies like Toyota use a form of this matrix in both their risk management and Lean initiatives. By understanding and prioritizing risks effectively, you can develop and implement mitigation strategies proactively, reducing the likelihood and impact of disruptions. The goal is continuous improvement and resilience through being prepared.

3. FMEA (Failure Modes and Effects Analysis): FMEA is a structured approach to identifying potential failure points in a process before they occur. First developed during WWII by the US military to improve reliability in a complex system it is similar to a Risk Matrix which assesses the probability of the risk occurring against the severity of the impact if it happens. The FMEA tool can provide similar clarity for taking preemptive action. By systematically analyzing possible failure point risks and their impact, teams can develop a scoring formula to prioritize where to focus their efforts to proactively prevent or mitigate the impacts of potential issues. This tool is especially useful for preparing for disruptions by helping teams to think critically about what could go wrong and how to mitigate those risks in advance.

While working in the Business Excellence department at Daimler Trucks North America, the IT department faced a recurring issue: they couldn’t secure budget approval for critical system upgrades. Leadership didn’t understand the risks, and IT struggled to convey the impacts and urgency. They asked me for help in solving this problem. I suggested using a modified FMEA tool to help evaluate the likelihood and impact of system failures, while also incorporating the financial implications into our analysis.

We assessed each IT system, estimating downtime duration and associated costs, such as plant shutdowns, lost sales from phone outages, corporate loss of productivity, and consultant fees. By partnering with the controlling department, we quantified these costs for leadership buy-in and compared the price of proactive upgrades versus potential failure scenarios. This data-driven approach prioritized the most critical systems and effectively communicated the financial risk to leadership, which secured for IT the budget they needed to begin the much-needed updates.

4. SCENARIO PLANNING: This tool is less focused on the specific points of failures, but rather focuses on larger macro-level events that could impact the entire value stream. Scenario Planning gained prominence after Royal Dutch Shell used it to rise from the eighth-largest oil company to one of the top three oil companies during the 1973 OPEC oil embargo. Developed in the late 1960s by one of their planners and economists, Pierre Wack. This tool involved creating narrative scenarios for potential disruptions, including the then-unlikely possibility of Arab nations uniting to restrict oil supplies, and then they developed a detailed strategic plan on how to react. When this scenario became a reality, Shell's pre-planned strategy allowed them to respond within weeks, while competitors took nearly a year to react. This foresight gave Shell a competitive advantage and solidified their position as an industry leader. This strategic tool has helped them to maintain that position, and today they are the largest oil company in the world.

Morgan Stanley is another standout example of effective scenario planning. After the failed 1993 World Trade Center bombing, Rick Rescorla, the company’s Vice President of Security, used scenario planning to anticipate future attacks, including planes crashing into the towers. He developed and regularly drilled evacuation procedures based on these scenarios. On 9/11, his preparation saved 2,700 employees. Tragically, Mr. Rescorla lost his life while re-entering the building to assist others. As you can see, dreaming up worst case scenarios and pre-planning responses, can save you precious time in being able to proactively react versus being stuck in a reactionary state losing time trying to decide what course of action to take.

5. PDCA (Plan-Do-Check-Act): PDCA is the core Lean framework for continuous process improvement that allows teams to experiment and learn from their processes in real-time. In the context of risk mitigation, PDCA can be used to create and test contingency plans. By planning a course of action for potential risks (Plan), implementing small-scale tests (Do), analyzing the results (Check), and making adjustments (Act), teams can develop robust strategies for handling disruptions. Much like we practice fire drills in school or at work, we want to be prepared and know how to respond when and if the time ever comes.

Are You Preparing for Potential Disruptions?

Disruptions are inevitable, but their impact doesn’t have to derail your operations. If proactive risk identification and mitigation aren’t already part of your improvement process, now is the time to start. Tools like Risk Registers, Probability & Impact Matrices, FMEA, Scenario Planning, and PDCA can help you anticipate potential challenges and develop effective strategies to address them. By safeguarding your processes and building resilience across your operations and value stream, you can ensure your organization remains agile, competitive, and prepared for whatever comes its way. Proactive preparation is the key to staying ahead of disruptions and maintaining long-term success.

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Jared Thatcher is passionate about Lean and sharing its principles with others via the Virtual Lean Summit. He also runs the in-person event, the Global Lean Summit. Jared is a CPI Program Manager at the Port of Seattle, and is the author of the book, “Parenting the Lean Way”