The past two years have been turbulent. At this point, the many ways the COVID-19 pandemic turned people’s lives upside down is an exhausted narrative. The global shutdown started economic ripple effects, sending aftershocks throughout many industries. The pandemic has proven disastrous for the supply chain, and analysts recognize it as the largest disrupter in recent decades. As business owners continue to navigate the complex, post-pandemic landscape, researchers are taking a closer look at how companies can mitigate the effect of supply chain disruptions. In “Leadership styles in supply chain disruptions: a multimethod evaluation based on practitioner insights,” Shaheen, Azadegan, Linderman and Fereidooni determine how leaders should act to effectively guide their businesses throughout the entire process of a supply chain disruption.
Interrupting Flow
Supply chain disruptions interrupt the ordinary flow of goods and materials between suppliers, manufacturers, and consumers. Disruptions such as natural disasters and lockdowns are often unexpected and cause the supply and demand of certain goods to fluctuate, leading to breakdowns in manufacturing cycles.
Potential interruptions vary in severity, but researchers are particularly interested in events with unique impacts. The COVID-19 pandemic and the Great East Japan Earthquake are examples of “major” supply chain disruptions. Researchers consider them major because they are rare crises that devastate many different aspects of the supply chain and are detrimental to businesses operating within the affected industry.
Effective leadership is paramount while navigating complicated disruptions. Management during major supply chain disruptions requires on-the-spot decision-making skills and flexibility. Leaders must become directly involved in their companies’ operations to critically adapt plans to the circumstances. Disruptions generally progress in two to four stages, and executives alternate between leadership techniques throughout the different stages, modifying strategies as the situation advances.
Leaders commonly utilize three distinct styles of leadership. Some executives focus on sharp decision-making and providing team members with a framework for how the company will proceed, while others talk to their employees and weigh the opinions of employees across different levels of the business’ hierarchy. Alternatively, some managers prefer a tactical, task-centered approach when responding to supply chain disruptions.
These styles are not mutually exclusive, and leaders can engage various elements of all three styles during any stage of a disruption. However, efficiency is critical while reacting to a major disruption. Determining what kind of leader best suits each phase would make working through major disruptions more logical and consistent.
Stages of Effective Leadership
Previous studies have proposed inconsistent models of the stages involved in a disruption’s progression. Shaheen, Azadegan, Linderman and Fereidooni tested models with two stages, three stages, and four stages and found that reinterpreting older ideas about crisis management would lead to a simpler, more direct response.
Past models anticipated firms’ actions to revolve around the discovery of the disruption, respond to its development, and finally implement new strategies for the company. Furthermore, only two models noted the most effective leadership style to employ while navigating developments.
During Shaheen’s studies, focus groups featuring expert practitioners analyzed the various models and leadership styles. They decided a more straightforward model would accurately portray how businesses should react to disruptions and what behaviors would be more effective during a crisis.
When following the researchers’ new plan of direct attack, companies handle major supply chain disruptions in two phases. The first stage is the initial detection and response. Expert practitioners noticed once executives discover a supply chain disruption, they immediately respond and do not stop trying to solve the issue until they identify a solution. Then, companies move into implementing the solution and recovery, which is the second and final stage.
“The implementation stage, as you call it, can last for years, depending on the crisis . . . Sometimes, to fix the situation fully can take a long time. . . So, this is the second stage. Then, there is a first stage that includes the assessment of the situation and telling your team: ‘Here is the damage; here is the plan; let’s start,’” an anonymous member of the focus groups said.
“I have found that, generally, leaders do not shift from crisis mode until the organization is at the solution implementation stage. Until that point, they are still trying to contain and stop the crisis,” another expert practitioner said.
Furthermore, focus groups suggested that decisive leadership should be exercised during the entire response process. During an emergency, teams want their leaders to act quickly and with confidence.
Solid decision-making skills in a short amount of time make the difference. Even if a leader’s choices are not perfect, speed is the critical element when dealing with a major disruption, according to experts. Once the company is implementing a solution, managers could see a benefit in combining other leadership styles with decisiveness.
“In this kind of situation, I think decisive fits to the first and partly to the late stage . . . before fixing the ultimate problem and getting back to normal, you need to have to ‘right the ship’ . . .. After you’ve righted the ship, you need someone who is still quick but can break down the plan into actionable and doable steps,” an anonymous CEO said.
Shaheen, Azadegan, Linderman and Fereidooni conducted a second study to determine what kind of leader is most capable during the two response stages. Once again, they found that expert practitioners largely recall a decisive leader as the most effective during a supply chain crisis. A significant number of focus group members nonetheless recognized managers who combined decisive and task-centered leadership styles as very competent leaders during the implementation or recovery stages.
Sticking to the Plan
The real test of a supply chain leader manifests during a major disruption. During disruptions, interorganizational dynamics of a supply chain are further complicated by time pressures and high stakes. The possibility of your business undergoing such a situation amplifies the need for an effective leader.
Executives now have the opportunity to reevaluate their business’ current supply chain disruption response plan and judge their own leadership style against the researchers’ findings. Even if you do not end up following the two-phase plan researchers proposed, the principle of direct, decisive leadership still warrants consideration when you encounter a major disruption.
Leadership can be a "double-edged" process. Effective leaders battle their organization’s disruption and propel the company out of danger by aligning their leadership style with the situation at hand. Conversely, if a company trusts the wrong leader, they could augment or generate conditions of other crises.
Leaders who are decisive, yet adaptable are a company’s safest bet. Companies should also take the time to train their leaders to handle disruptions, whatever their position within the supply chain is. An untrained manager can put forth an image of chaos and incompetency while handling a disruption, regardless of their actual performance. As supply chain disruptions increase in severity, companies might start to develop potential crisis leaders to be part of the recruiting and training activities of organizations.
Regardless of the disruption, major or minimal, having the right person in charge of your company is essential. While the current dynamic economic landscape may seem intimidating and ripe with risk, if your leaders can steer the organization in the right direction, a promising future is probable.
Iana Shaheen is an Assistant Professor of Supply Chain Management in the Walton College
of Business at the University of Arkansas. Her research interests focus on leadership,
uncertainty, and disruptions in supply chain settings. Specifically, Dr. Shaheen looks
at how disruptions affect commercial supply chains and investigate the significance
of leadership and resilience during the response and recovery stages. Additionally,
Dr. Shaheen studies inter-organizational relationships within humanitarian supply
chains. Her research has been published in Production and Operations Management. Prior
to academia, she worked as a senior supply chain analyst in industry.
Jack Travis is pursuing an undergraduate degree in journalism at the University of
Arkansas. Travis is the copy editor of the Arkansas Traveler and the treasurer of
the UA chapter of the Society of Professional Journalists. He is interested in marketing
and brand journalism.
