26 ISE Magazine | www.iise.org/ISEmagazine
We grew up hearing about the Great Depres-
sion from our parents and grandparents. Like
the Great Depression was for their time, the
COVID-19 pandemic will be for our gen-
eration – the story we tell our children and
The COVID-19 pandemic created impacts not seen in our
lifetime. From a record number of unemployment claims to
a sharp decrease in GDP and performance issues due to in-
creased demand, this is the most dynamic, uncertain time
we have ever witnessed. Government restrictions, including
a stay-at-home order and the closing of all nonessential busi-
nesses, amplified a volatile situation by straining commerce
and the global economy.
While issuing these orders effectively closed the economy,
simply lifting the restraints does not automatically reopen the
economy or return business to “normal.” In my playbook,
“Restarting the Economy: Guidance for Public and Private
Leaders,” (link.iise.org/restarting-the-economy) I explain the
huge difference between restarting the economy and relax-
ing government restrictions. To successfully restart the econ-
omy, companies must first be reopened, and each plan will be
unique. Similarly, restarting companies requires more than
just reopening store doors; the supply chain infrastructure
needs to be in place for companies to be able to restart busi-
ness operations.
Synchronizing supply and demand
Twenty-five years ago, the supply of goods to the consum-
er was in the hands of supply professionals. Retail planners
worked with manufacturers to decide how much of what
items they would sell to consumers. However, as each year
passed, the control of the flow of goods moved from the sup-
ply side to the consumer, or demand, side. Today’s sophis-
ticated sales and operations planning (S&OP) processes at-
tempt to forecast the demands of consumers and satisfy this
demand by producing the right items in the right quantities
at the right time.
For some products, like the amount of tomato soup con-
sumers desire, S&OP works well; for other product catego-
ries, such as womens fashion, it does not. But in January
2020, the whole game changed and even the best S&OP pro-
Restarting companies
and the economy
How to overcome supply chain challenges,
disruptions in a VUCA world
By Jim Tompkins
July 2020 | ISE Magazine 27
cesses in the world were woefully inadequate to synchronize
supply to demand.
The U.S. economy was booming in early 2020. As the
Chinese population migrated to their hometowns for the an-
nual Lunar New Year celebration, there were early reports of
a virus that was very infectious and resulting in fatalities. As
the virus spread, people were isolated and could not return
to their workplaces. The Chinese economy was brought to
its knees and the virus spread to other countries. China is
often referred to as “the factory of the world” as it produces
a significant portion of the materials used to manufacture
products, as well as a significant portion of finished goods.
Chinese manufacturers supply materials for manufacturers
around the world.
The flow of materials and finished goods around the
world is transported via the supply chain. The materials were
planned and bought from China but not made there because
factories were closed. Planning was done by forecasting de-
mand, then buying the materials needed. In fact, one of the
key objectives of supply chain management is to synchronize
the supply and demand of products as they flow around the
world to minimize cost and drive profitable growth.
The virus in China had a major impact on the supply of
materials around the world as demands could not be filled,
resulting in product shortages. The reopening of the Chi-
nese economy was unpredictable due to a ripple effect that
encountered the following set of “problem/go/problem/go
as follows:
The factory did not have workers.
Workers came back to work.
The factory did not have required materials.
Workers came back to the materials’ suppliers.
Truck drivers to deliver materials from manufacturers to
the factories were not available.
Truck drivers came back to work.
The factories started manufacturing.
Truck drivers to deliver products from the factories to the
port were not available.
Truck drivers to the port came back to work.
The ports did not have workers to unload trucks and load
Port workers came back to work.
Ships sailed to their destinations with critical supplies of
both materials and finished goods to provide the much-
needed supply.
The disruption of the ripple effect as the virus spread
through China was huge. Demand for products went un-
lled. But just as the supply to Western countries was re-
stored, the virus arrived there. It did not arrive aboard the
ships of products but instead aboard airplanes carrying in-
fected passengers. As COVID-19 spread across North Amer-
ica and Europe, stay-at-home orders had a major impact on
demand for products. For discretionary products, demand
disappeared; for health-related products, demand doubled,
tripled and more. For some products, the demand shifted.
At the end of the first quarter of 2020, there was so much
uncertainty that there was no synchronization of supply to
demand, resulting in inventory overages of discretionary
products and shortages of essential products. There were ap-
parel stores full of inventory that were closed for business and
grocery stores that remained open with near-empty shelves.
At that point, COVID-19 had created tremendous uncer-
tainty on the flow of goods, which had major impacts on the
global economy.
Innovative and crisis disruptions at play
We live in an unprecedented time in the evolution of the
global economy and the supply chain that supports it. This is
the result of an unprecedented level of innovative disruptions
and crisis disruptions peaking at the same time. If only one
of these disruptions were peaking, the supply chains of the
28 ISE Magazine | www.iise.org/ISEmagazine
Restarting companies and the economy
world would be shattered. But in the spring of 2020, both
types of disruptions were peaking.
Innovative disruptions. The level of volatility we are
experiencing is driven by the rise of digitalization and the
frequency of change, also known as the “disruption cycle.
The disruption cycle is turning nonstop, beginning with an
innovation that sometimes leads to entrepreneurship or, if
it’s too risky, winds up dead. Businesses that move on from
entrepreneurship will become disruptors, but some of those
will die, too.
However, those that harness innovation and boldness will
disrupt the status quo. They then move through the incuba-
tion and validation phases before becoming the new status
quo and, with the addition of professional management, be-
come an established firm. It is in this phase when those that
are too risk-averse or resistant to change will fail. Businesses
that live through this stage and move on to innovation, cou-
rageous leadership and new boldness will achieve profitable
growth and value creation and become the new leader(s).
Innovative disruptions occur as companies pursue the dis-
ruption cycle (Figure 1). For the last three years, disruptions
via digital innovations have occurred at an ever-faster rate,
with today’s digital era producing the highest level of in-
novative disruption in history. This is partially due to the
increased speed at which companies travel around the dis-
ruption cycle. Thirty years ago, an organization did so once
a decade. Fifteen years ago, a loop around the cycle took five
years; today, the cycle is traversed once a year or faster.
Crisis disruptions. Crisis disruptions can result from a
variety of events. Here is a list of the top 15 of 2018, in order
of frequency of occurrence, that accounted for 90% of all
crisis disruptions.
1. Mergers and acquisitions
2. Factory fire or explosion
3. Reorganization
4. Business sale or spinoff
5. Factory slowdown or disruption
6. Regulatory change or tariffs
7. Extreme weather
8. Hurricane, typhoon or cyclone
9. Earthquake
10. Labor strike
11. EMA, FDA or OSHA action
12. Fine or recall
13. Power outage or shortage
14. Labor action or settlement
15. Port disruption
Interestingly, in the top 30 – which account for 99.8% of
all 2018 crisis disruptions – the topic of human health or
pandemic is not mentioned. Additionally, at the end of 2019,
a panel of global trade experts presented the top 10 crisis dis-
ruptions they predicted would occur and mentioned nothing
related to human health or pandemic.
Another way to look at crisis disruptions is by measuring
their impact on the local, regional or global level and also
viewed by severity. A special category of crisis events that
have a huge global impact are referred to as “black swan
events that have never happened before or are extremely rare
(highly improbable events); take people by surprise, as they
never imagined such an event occurring; carry a massive
transformational impact; and after its first occurrence, the
event is rationalized in hindsight, as if it could have been
expected (even if it could not).
The disruption cycle
How innovative and crisis disruptions, and reactions to it, can affect the life cycle of a business. (Courtesy of Tompkins International)
July 2020 | ISE Magazine 29
Clearly, COVID-19 is a black swan event. The frequency
of black swan events has been increasing over the last three
decades, as evidenced by these events:
1990: Recession
2001: 9/11 terrorist attacks
2008: Mortgage crisis
2014: Ebola outbreak
2019: COVID-19 pandemic
Each of these black swan events had major impacts on the
economy and what was considered normal. In fact, all black
swan events result in creating the next normal.
How innovative and crisis disruptions
beget VUCA
As explained in my column (Page 22), the business world
has faced unprecedented levels of VUCA – volatility, uncer-
tainty, complexity and ambiguity. The concept of VUCA
was first introduced by the U.S. Army War College in 1987
to describe the world following the Cold War. The term
can also be applied to the business environment, where the
combination of innovative disruptions spurring from to-
day’s increasingly digital world and crisis disruptions like the
COVID-19 pandemic have a tremendous impact on supply
chains and commerce, producing the highest level of VUCA
in histor y.
Let’s take a look at how VUCA impacts supply chains and
commerce today and what businesses can do to overcome
these challenges:
Volatility. Volatility is all about change – the nature of
change and frequency of change. The nature of change is
best illustrated by bugs. Take, for example, the ant: when
a baby ant grows into an adult, it gets bigger, but there is
no change, which is represented as continuous improvement.
Grasshoppers experience transformation through changes in
wings and reproductive organs. Lastly, the caterpillar under-
goes a total metamorphosis, or reinvention, as it becomes a
buttery. The circle of life for companies requires comple-
tion of all three steps – continuous improvement, transfor-
mation and reinvention – to be successful in today’s digital
In addition to the nature of change, we also have to look at
the frequency of change, also known as the “disruption cy-
cle.” As described earlier, the pursuit of the disruption cycle
is innovation and boldness that disrupt the status quo. Those
that successfully navigate all the way through the disruption
cycle and on to new innovation, courageous leadership and
new boldness will achieve profitable growth and value cre-
ation. Then the cycle repeats.
Uncertainty. We live in the most uncertain times in
world history. This high level of uncertainty makes it impos-
sible for us to make accurate predictions or dene standard
operating requirements. Instead of developing optimal solu-
tions, we need to focus on developing flexible supply chain
solutions that are capable of adapting and constantly evolving
to offer a series of options. When fast-food chain Popeyes
failed to accurately predict the popularity of its chicken sand-
wich, it blew through its entire inventory of the new menu
item more than a month earlier than projected.
Optionality is the new optimality. Since you cannot pre-
dict what the future holds, make sure you have the greatest
number of options available so when uncertainty hits, you
can move to the option that will meet the requirements of
that day, or moment.
Complexity. The rise of digitalization and increased
complexity of commerce today requires companies to “sell
anywhere” and embrace a unified performance. While
there used to be a clear distinction between retailers, dis-
tributors, manufacturers and wholesalers, those lines are now
blurred, from grocery stores developing their own private
label brands to consumer packaged goods (CPG) companies
creating their own e-commerce sites and selling direct-to-
consumer (D2C).
To achieve success, companies must “sh where the fish
are” by selling anywhere their customers are. This includes
diversifying sales strategy to incorporate all the channels
and methods used by each of your customer demographics.
When developing a strategy, companies must think beyond
traditional digital and physical channels and evaluate all op-
tions, including mobile, desktop, social media, retail e-com-
merce, marketplaces, brick-and-mortar and more.
When broadening your sales strategy, it is important to
maintain a single, unified supply chain, which is where com-
plexity comes into play. This complexity drives the need to
unify our channels, logistics, marketing and technology to
act like a single company – or supply chain – and provide
customers with a seamless shopping experience.
Ambiguity. As we enter a new era of business, there is a
haziness of reality, or inability to understand what is really
going to happen, that takes place across all companies and
industries. Digital technology affects all businesses by paving
the way for new products, services and business models. In
this digital era, it is imperative for all organizations to vigor-
ously pursue digital commerce and prevail among the lack of
certainty. The COVID-19 pandemic has also fueled a rise in
ambiguity, as businesses and consumers alike are unsure what
the next normal will look like.
In addition to the digital imperative, we also battle the
speed imperative. The speed at which the marketplace
changes its mind is much faster than companies’ ability to
respond. With the speed imperative, it is not about how fast
you work; it is about the rate of acceleration. If it takes your
organization weeks to make a decision that should only take
30 ISE Magazine | www.iise.org/ISEmagazine
Restarting companies and the economy
days, you will fall behind and become a victim of the speed
imperative. Likewise, the half-life of a great idea is much
shorter than it used to be due to the speed of disruption. As
the pace of life accelerates, you need to act faster than ever.
The path forward: Restarting companies
Many factors impact the ability to restart business operations.
Like the economy, this cannot be done by simply flipping a
switch. The COVID-19 pandemic separated companies by
industry sector into two different categories – the haves and
the have-nots. We look at the performance of these compa-
nies leading up to the crisis and separate them by those that
were strong or weak in December. The strength or weakness
of the business is based on the following factors (if you have
these below, you are strong; if not, you are weak):
Financial stability: Strong P&L statement, balance
sheet, valuation, brand equity, cash flow, liquidity, credit
availability, net profit margin.
Customer-centric: Great customer satisfaction, high re-
peat business, strong pipeline of new customers and lead-
ership understanding customers’ expectations.
Planning: Robust and well-understood organization
plan, strategic plan, contingency plan, marketing plan,
customer acquisition plan, budget plan and succession
Execution: Clear priorities and accountability, strong
metrics and feedback, responsiveness, discipline, maintain
deadlines, methodical and decisiveness.
Unique value proposition: Pervasive across the com-
pany, a focus on applying core competencies to making
customers delighted and ambassadors.
Energy: Passion for company success, high energy and
engagement, collaborative, inspiring, aggressive, optimis-
tic, a sense of urgency and an attitude of “getting it done.
Innovation: A spirit of openness and eagerness to get
better every day, to improve, to slay all sacred cows and
nd a digital path forward.
Leadership: A high level of integrity and honesty, candid
open communications, perseverance, optimism, adapt-
ability and a good judge of people.
Teamwork: A keen awareness of the tremendous value
and importance of true partnerships with customers, sup-
pliers and staff. Not one or two of these but all three.
Culture: A progressive culture based upon organizational
alignment, respect, profitable growth, intolerance for me-
diocrity, embracing diversity and having fun.
The industry sector has to do with how your industry
fared throughout the COVID-19 disruptions. Some indus-
tries were haves in that their industry did well and had ample
opportunity to prosper. To the contrary, the have-nots saw a
reduction in business and few opportunities to enhance suc-
cess. From a high level, here are the haves and have-nots
from COVID-19:
Given our prior performance ratings of weak and strong
businesses and being in a have or have-not industry sector,
we can see one of four paths for each business:
1. If you entered COVID-19 as a weak business and you are
in a have sector, you must pursue Doom to Boom.
2. If you entered COVID-19 as a strong business and you are
in a have sector, you must pursue Boom to Boom.
3. If you entered COVID-19 as a strong business and you are
in a have-not sector, you must pursue Boom to Hibernate.
4. If you entered COVID-19 as a weak business and you are
in a have-not sector, you must pursue Doom to Tomb.
To determine the strategy moving forward for each of
these paths, we must apply the philosophy of VUCA 2.0.
Developed by Bill George, a senior fellow at Harvard Busi-
ness School, VUCA 2.0 represents the top four leadership
traits vital for success in a VUCA world:
Vision. With the current level of uncertainty and com-
plexity, today’s business leaders must possess a clear vision
for their organization and be able to steer the company in
the right direction based on its dened mission, values and
Understanding. In order to successfully navigate the
business through unpredictable times, leaders must have a
thorough understanding of their organizations capabilities
and strategies and engage directly with customers and em-
ployees to gain clarity and get a pulse on the changes occur-
ring in their markets.
Courage. Speed and decisiveness are crucial in times of
VUCA, so today’s business leaders must have the courage to
take risks and make bold decisions without hesitation or fear
of criticism.
Drug stores Airlines, airports & TSA screening
E-commerce & delivery Cruise lines
Janitorial services Engineering & consulting services
Grocery stores Events, conventions & trade shows
Pharmaceutical products Fitness centers, spas, hair & nail
Security services Food & beverages for restaurants &
Streaming services: Netflix,
Hulu, etc.
Hospitality, tourism & Airbnb
Walmart, Target & Costco In-store retail, malls & luxury goods
Wine & spirits Sporting goods
July 2020 | ISE Magazine 31
Adaptability. In today’s rapidly changing environment,
business leaders must be flexible and able to quickly adapt
with a series of options to address whatever is happening at
the moment while still maintaining their strategic direction.
While the outcomes will vary and not all businesses will
prevail, the innovative disruptions of the digital era coupled
with the crisis disruptions from the COVID-19 pandemic
require total reinvention and an intolerance for mediocrity
to survive in today’s VUCA world.
With today’s unprecedented level of VUCA, it is impossi-
ble to predict what the future holds. COVID-19 has revealed
the weaknesses in traditional supply chain models, with the
introduction of the virus in China and the ripple effect it cre-
ated in supply chains and commerce that, like the virus itself,
spread across the world in the subsequent months.
The rise of digitalization and increased frequency of in-
novative and crisis disruptions require organizations to re-
think their supply chain strategies and focus on building
anti-brittle” solutions. Instead of seeking ways to optimize
their supply chains, organizations need to “optionize” their
supply chains, deploying flexible and agile solutions that are
capable of adapting and evolving to provide a series of op-
tions to address whatever is happening at any given moment.
Anti-brittle supply chains operate as a living system, enabling
organizations to recongure strategies, structures and solu-
tions quickly and efciently to achieve success, profitability
and growth in times of VUCA.
James A. Tompkins, Ph.D., is founder and chairman of Tompkins
International and an international authority in digital commerce,
unichannel and supply chain reinvention. He is an IISE past presi-
dent and Fellow and received the Frank and Lillian Gilbreth In-
dustrial Engineering Award in 2015. He served as president of the
Materials Management Society and the College-Industry Council on
Material Handling Education and has been named a Distinguished
Engineering Alum by Purdue University and has also received more
than 50 additional awards for his service to his profession. He has
written or contributed to more than 30 books, been quoted in hun-
dreds of business and industry magazines and has spoken at thou-
sands of international engagements. Tompkins received his bachelors
degree in industrial engineering in 1969, his master’s in industrial
engineering in 1970 and his Ph.D. in 1972, all from Purdue Uni-
You can learn more about Jim Tompkins’ tips for managing
VUCA and the current COVID-19 crisis from these
Webinars by the IISE Chapter 1 Performance
Excellence series: “Restarting the Economy:
Guidance on the Backside of the Disruption,” and
“Business Continuity Strategies and Tactics in Periods
of Major Disruption” with Tompkins and IISE President
David Poirier of The Poirier Group. Recordings and
downloadable PDFs are available at link.iise.org/
• Tompkins’ white paper, “Restarting the Economy: Guidance for
Public and Private Leaders,” can be downloaded at link.iise.org/
restarting-the-economy or read at www.tompkinsinc.com.
• Tompkins is a scheduled keynote speaker Nov. 3 at the IISE
Annual Conference & Expo 2020, set for Oct. 31-Nov. 3 in
New Orleans. To register and find a program schedule, visit
• A full list of resources, statements and more related to the
pandemic is available on the IISE Coronavirus Resource &
Response at link.iise.org/ covid_resource.
Webinars, white paper expand on topic