Before the pandemic, many companies prioritized efficiency and lean supply chain models, focusing on minimizing inventory and ensuring products were available just in time to meet customer demand. This approach was aimed at reducing costs and maximizing operational efficiency, with limited buffers for unforeseen disruptions.
Operations were centered on reducing waste and increasing efficiency, striving to deliver maximal value to customers while using resources in the most effective way. Operations managers continuously analyzed tasks, processes, and personnel to eliminate non-essential activities and ensure seamless communication across each step of the workflow. Digital transformation played a key role in this optimization, centralizing data and increasing visibility, enabling senior leaders to have greater control over operations.
However, the turmoil caused by the COVID-19 pandemic and the more general international instability over the last few years has changed the game. These carefully optimized systems, which had gone through iterations of minimal changes in order to function as efficiently as possible were suddenly hit with a wave of unpredictable problems.
Lockdowns across the globe meant that certain materials or components were in short supply, quarantine times led to transportation delays when crossing borders and the change in people’s everyday lives led to shifts in the demand curve. Furthermore, the rise of remote working meant that internal processes were forced to adapt, and new methods of communication and collaboration became necessary.
Optimization was no longer the priority as the gains from this approach became negligible in the face of significant potential losses. Instead, the focus was shifted to operational resilience. The organizations which came out on top were those with the capacity to withstand, adapt to and recover from disruptive events.
In real terms this means flexible logistics routes which are able to adapt to geopolitical situations, agile multi-source management and tactical buffer plan implementation. Those organizations which implemented these structural changes successfully were able to avoid the cancellation of customer orders and keep revenue stable.
The disruption caused by the pandemic taught us an important message: When you spend too much time resolving predictable challenges, you’re left with no time and resources left for unpredictable ones.
A trade off: efficiency or resilienceSince the pandemic, we’ve seen some degree of normalization across industries. Most organizations are no longer faced with large-scale disruption on a daily basis. However, the impact of these extreme events has not been forgotten. While operations managers return to seeking out small gains from lean supply chains, the prospect of chaos caused by unpredictable, uncontrollable events looms large in their minds. The question is, how much time should be allocated to daily challenges, and how much should be assigned to predicting the bigger picture? Limited resources mean that there is often a trade-off between efficiency and resilience – both of which are necessary if an organization is to succeed.
The SolutionAutomating responses to predictable challenges is the solution to this problem. Advances in technology are allowing organizations to automate more complex tasks than ever before. Tasks that previously would have had to have been done manually by employees can now be completed by machines. Not only does this reduce human error, it allows staff to focus on more complex and fulfilling tasks and leave the mundane to AI or machine learning models.
In the context of the tradeoff between efficiency and resilience, automation can be used to resolve predictable challenges, maximizing the efficiency of operations by reducing waste and increasing short-term flexibility. AI can handle processes such as sales and operations planning, (S&OP), coordinating different areas of the business to meet customer demand with the appropriate level of supply. Reporting measures such as demand forecast accuracy (DFA), measuring how well a forecast matches actual demand can also be automated, reducing the burden on team members.
AI chatbots can be used to communicate with key stakeholders and improve the flow of information internally and externally for an organization. These models can sift through and analyze massive amounts of data, compiling comprehensive information that can be used in decision-making. For instance, a chatbot could instantly give availability of stock inventory and plans to partners and clients, as well as to the sales team, reducing the need for manual research and back-and-forth email interactions.
Automation assumes regular and uninterrupted processes, meaning it’s not equipped to deal with irregular events such as pandemic and its effects. Material shortages, longer transportation times and demand instability have an unavoidable impact on entire ecosystems. That’s where the human element comes in.
Technology like AI and machine learning means staff can spend their time predicting unpredictable challenges and using these predictions to create accurate solutions. The number of possible scenarios means that complex models alongside human judgement and creativity are necessary if an organization is able to come up with reactive strategies in advance, allowing them to navigate through obstacles on a geopolitical scale. This may mean developing relationships with alternative suppliers, building up a stockpile of key components or working with clients to suggest a staggered delivery schedule in times of turmoil.
Moving ForwardInstability is a fact of life, and the modern world will always present us with challenges that seem impossible to predict. The tradeoff between efficiency and resiliency is not something that we will see the end of anytime soon. Organizations need to innovate and adapt, using automation to deal with the daily challenges of optimization, leaving employees free to spend their time and resources predicting the unpredictable. That way when the next obstacle emerges – we’ll be ready.
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On July 19, approximately 8.5 million Windows machines were blocked causing flight cancellations, banking disruptions and media outages around the world. Major US airlines, including American Airlines, United Airlines, and Delta had to cancel flights due to communication problems. Banks and stock exchanges, including the London Stock Exchange, Lloyds Bank, and South Africa's Capitec, faced similar problems. The failure also affected the Visa and Mastercard payment gateways, according to DownDetector data.
The outage led to serious financial distress. For instance, the cancelation of almost 7,000 flights by Delta could cost the company from $350 million to $500 million. According to some estimates, the total direct loss facing the US Fortune 500 companies, excluding Microsoft, was $5.4 billion. The healthcare sector has been hit the hardest, with projected losses of $1.94 billion, followed by the banking sector with $1.15 billion in estimated damages. The airline industry also experienced significant disruptions, leading to an estimated $860 million in losses. Fortune 500 companies alone could incur direct losses of $5.4 billion.
What went wrongThe outage was caused by errors in an update of the Falcon security platform by information security solutions provider CrowdStrike, as the company later explained. Interestingly, the update was successfully tested on March 5, but the error could not be noticed due to a bug in the diagnostic software.
CrowdStrike also noted that it usually provides security content configuration updates in two ways: one through Sensor Content, which comes with the Falcon Sensor component, and the other through Rapid Response Content, which flags new threats using various behavioral pattern-matching methods. The latter was the one that contained the previously undiscovered bug.
Why did this mistake lead to blue screens around the world? The reason lies in the relation between this kind of endpoint protection software like Falcon and operating systems: there is no way to limit such software from controlling the operating system, as doing so would open the possibility for a virus to take over. This scenario would negate the very purpose of having a security application in place, as it would allow malicious entities to bypass the protection measures entirely.
Gradual upgrades and regular backupsDespite the significant impact of the recent incident on companies and organizations, it is unlikely that there will be a widespread abandonment of CrowdStrike products. Solutions like Falcon are deeply embedded in IT infrastructures and have been developed and refined over decades. Replacing them is time-consuming and costly. In addition, there is no guarantee that alternatives would not lead to the same troubles.
However, this incident shed light on some burning issues in the tech industry. One of them is the lack of diversity. Nowadays the market is dominated by just a few major vendors, and this concentration of control is precisely why the impact of the incident was so widespread. To mitigate such risks in the future, it's crucial to develop and invest in alternative solutions, including cloud-based options. This is the key takeaway we should derive from this situation.
Furthermore, while accountability for the accident rests with CrowdStrike, businesses also need to incorporate new approaches to security. One of them is to constantly back up their data. Companies that do that regularly probably were also less impacted by this outage, in my opinion. Some system software usually updates itself over the night or in the morning. If something goes wrong, the firm can just roll that out. So another suggestion for business, and we've been saying that again and again for decades, is that you should have some backup procedure applied, running, and regularly tested.
I also think that companies that keep their infrastructure in the cloud, coped with the consequences of this outage quicker than others thanks to virtualization and API-based scripts. For AWS-hosted and Microsoft Azure-hosted virtual machines, the instructions are usually published in a matter of hours. Moreover, it does not take much time to imply those instructions compared to doing that for a full park of bare metal servers. Therefore, probably more firms would switch to cloud-based solutions. If 20% companies would do that, it would be a fantastic win for our industry. But I believe, only 5-15% would actually go for that.
Future updatesIn addition, future updates are also better deployed gradually. It means first upgrading a small subset of systems, then monitoring their performance, and extending changes to a larger group of systems. With this strategy in place, it would take more time for businesses to update everything, but it would help them to avoid such massive damages as we have seen today.
There are some steps that regulators could take too. Many companies create a risk model to assess potential threats and choose appropriate cyber defense solutions. However, regulators sometimes mandate specific cybersecurity measures without considering if all businesses truly need them. For example, they might require the installation of antivirus software without verifying its necessity for every company. As a result, some businesses end up purchasing cybersecurity solutions just to comply with regulations, rather than based on their actual needs. It's likely that from 50% to 90% of affected companies would not have been impacted if they had not installed CrowdStrike or other EDR and XDR software products solely for compliance reasons in the first place.
Overall, I hope that the situation will bring more positive change to the industry and help transition to safer cybersecurity practices.
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Good morning! Let's play Connections, the NYT's clever word game that challenges you to group answers in various categories. It can be tough, so read on if you need clues.
What should you do once you've finished? Why, play some more word games of course. I've also got daily Wordle hints and answers, Strands hints and answers and Quordle hints and answers articles if you need help for those too.
SPOILER WARNING: Information about NYT Connections today is below, so don't read on if you don't want to know the answers.
NYT Connections today (game #486) - today's words (Image credit: New York Times)Today's NYT Connections words are…
What are some clues for today's NYT Connections groups?
Need more clues?
We're firmly in spoiler territory now, but read on if you want to know what the four theme answers are for today's NYT Connections puzzles…
NYT Connections today (game #486) - hint #2 - group answersWhat are the answers for today's NYT Connections groups?
Right, the answers are below, so DO NOT SCROLL ANY FURTHER IF YOU DON'T WANT TO SEE THEM.
NYT Connections today (game #486) - the answers (Image credit: New York Times)The answers to today's Connections, game #486, are…
This is not too bad, as Connections puzzles go, but it does contain some classic NYT misdirection that caused me to lose two guesses. That all concerned the purple group, the most difficult one of the four as is usually the case. It’s also usually the most interesting and cryptic of the quartet, and today was no exception; what you had to do here was find four words that all contained an item of TABLEWARE at the end. The trouble was, there were potentially five of them: BOILERPLATE, BUTTERCUP, JACKKNIFE and WITHERSPOON, which ended up being the correct answers, plus PITCHFORK.
I guessed a couple of combinations and got them wrong, then rather than risk falling at the first hurdle, decided to instead look elsewhere and return to that group. With the rather easy yellow and green groups out of the way I was left with a much easier task, realizing that PITCHFORK went with BILLBOARD, MOJO and SPIN to make MUSIC PUBLICATIONS, and thus confirming what the purple group was too.
How did you do today? Send me an email and let me know.
Yesterday's NYT Connections answers (Tuesday, 8 October, game #485)NYT Connections is one of several increasingly popular word games made by the New York Times. It challenges you to find groups of four items that share something in common, and each group has a different difficulty level: green is easy, yellow a little harder, blue often quite tough and purple usually very difficult.
On the plus side, you don't technically need to solve the final one, as you'll be able to answer that one by a process of elimination. What's more, you can make up to four mistakes, which gives you a little bit of breathing room.
It's a little more involved than something like Wordle, however, and there are plenty of opportunities for the game to trip you up with tricks. For instance, watch out for homophones and other word games that could disguise the answers.
It's playable for free via the NYT Games site on desktop or mobile.