Logistical aspects of a corporate crisis

A crisis in an enterprise – and more broadly, in business activity – is nothing extraordinary. The activity of a manufacturing, trading, or service company is inherently associated with taking risks. Modern business conditions, especially fierce competition and very difficult, often inherently risky markets, require various threats to be factored into a company’s operational strategy. This is compounded by “natural” and unpredictable threats (catastrophes, natural disasters, terrorist acts, etc.), as well as the side effects of other actions. Current operational decisions often boil down to a permanent balancing act on the edge of what is defined as rationally acceptable and economically justified risk. Because the boundaries of acceptable risk are very difficult to define precisely, they are often exceeded – sometimes consciously, other times as a result of an uncontrolled combination of circumstances. As a result, we are dealing with a crisis. In descriptions of the course of crises in various structures and environments (both in enterprises and on a societal scale), several characteristic observations often stand out:
• participants in events (including “decision-makers”) are usually surprised by the fact that a crisis situation has occurred
• both corporate management and community leaders have fundamental difficulties in predicting the course of further events
• mastering the situation is hindered by a lack of (especially sufficiently rapid) understanding of the essence of the crisis and the mechanism of its development
• decision-making, organization, and implementation of anti-crisis measures proceed too slowly for the needs of the moment, which significantly delays (and sometimes even prevents) reaching a turning point in overcoming the crisis.

The repeatability of these observations and the fact that they concern both crisis situations in enterprises and in social groups undoubtedly testify to the poor preparation of management and leadership elites to face threats, but also to the significant need to include the issue of risk and crises in management strategies, professional training programs, and in the organization of societies themselves.

In the latter field, it was only after the terrorist attacks in the USA on September 11, 2001, that a great deal was really done in the sphere of preventing and countering crises – especially at the level of state and territorial administration organizational units. Crisis management groups and teams were created, appropriate procedures were developed, and a huge number of people were trained. These actions provided a sense of greater security and created the conviction that, as societies, we are somewhat better prepared for modern threats.

The situation looks much worse on the scale of enterprises and larger economic structures, as well as in the dimension of supply chains and logistics systems. Enterprise managers will usually focus more on operational risks – financial, organizational, logistical, or those resulting from the absolute mechanisms of the market and the actions of competitors. The number and potential of such threats are constantly increasing, and rising bankruptcy statistics (to which a crisis is usually a prelude) brutally confirm how many companies are unable to cope with a crisis situation. Despite this, only a few enterprises still include elements of crisis prevention and counteraction in their operational strategies. The level of preparation of high- and mid-level staff, who are professionally competent, in terms of preparation for action in emergency situations, is improving slowly and on a very insignificant scale.

The article comes from the magazine “Logistyka” 5/2005.