Resilience planning is essential to the success of a cannabis business

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Early in the COVID-19 pandemic, the existential crisis was clear – the coronavirus threatened the fabric of society and many businesses’ ability to continue to operate normally.

Marijuana was hit particularly hard: Up to 95% of cannabis vaporizer components were suddenly closed off; other supplies key to business continuation were squeezed as well, particularly when single source suppliers were involved.

“Resilience,” sometimes interpreted as a “shrink-to-survive” tactic, became a go-to.

While tactical resilience worked to varying degrees early in the pandemic, the long-range benefit of resilience as a strategy deserves another look in anticipation that the future is guaranteed to bring change.

The International Organization for Standardization (ISO) defines resilience as “the capability of an organization to continue the delivery of products or services at acceptable predefined levels following a disruption.”

The greater the disruption, the greater the threat to the normal course of business.

Resiliency planning does not have to predict macro-upheaval. It can be as important in “normal” times to help overcome unanticipated hiccups as in catastrophic circumstances.

Considering that resiliency benefits employees, customers, suppliers and your community at large, planning to be resilient is a worthwhile task.

It boils down to thoughtful planning to ensure business models are flexible enough to accommodate changes that occur unexpectedly.

For example, when COVID-19 effectively closed off China, the cannabis industry was hit with disruptive shortages of everything from cultivation equipment to vaporizer components to batteries and packaging.

It took several months for supplies to rebuild to barely sustainable levels.

Since resiliency permeates all aspects of a business, a good way to get a handle on it might be thinking about how it relates to your operations, supply chain and people.

Operational resilience focuses on ongoing operations.

As we learned during COVID-19, while knee-jerk resilience tactics – layoffs, shorter hours, service compromises – might have helped in the short term, the longer-term impacts were suspect.

Employees and their families, customers, suppliers and, sometimes, even company reputations were damaged.

Alternatively, resilient organizations are resilient by nature. Your team has a clear understanding of how the company runs and the environment in which it exists.

Attention to operational improvements and processes is built into the organizational culture.

Strategic resilience takes nothing for granted and seeks improvements at every turn and in every aspect of your product and services.

Resiliency invites planning for the unexpected with a preplanned, well-thought-out response.

It might be a useful to engage your team in an assessment of your response to COVID-19 as a model to inform advanced resilience planning for not only catastrophic but everyday changes that demand a response.

Supply-chain resilience goes hand-in-hand with operational resilience.

Thanks to COVID-19, the cannabis industry quickly discovered its supply-chain vulnerability: It could span continents, is astonishingly complex and fragile. (Next time you’re at a gathering, instead of being asked “how’s business,” you might hear “how’s your supply chain?”)

Clearly, supply-chain resilience is worth planning for. COVID-19 highlighted its importance, but is it possible to build a resilience strategy for it? As with all industries, the cannabis sector offers opportunities for supply-chain planning that can mitigate disruption.

For example, COVID-19 exposed many cannabis firms’ financial constraints that limited the ability to “stockpile” necessary materials. Resilience plans might have suggested such strategies as cooperative purchasing of key (noncompetitive) materials, implementing robust materials management systems and developing supply relationships with more than one supplier when possible…

As a cannabis executive, as supply-chain issues ease into the rearview mirror, you might consider undertaking a supply-chain vulnerability assessment to discover ways to mitigate risk, even in normal times. Identification of backup or alternative suppliers could be a useful part of a resiliency plan.

In the same vein, diversifying suppliers can be a good thing should change in your supply channel occur.

Maybe most important, a supply-chain vulnerability audit will help paint the picture of “what-ifs” and help inform which potential risks are most important and potentially most costly to address.

People are a key element of your resiliency strategy. So communication of your commitment to resiliency and the plans you’re making is no less important than other operational communications.

Cultivating awareness that yours is a business that expects change and plans for it as a condition of long-term success will help create a culture of support that’ll be important when change happens.

While the ISO definition might “cover the subject,” it’s clear that when resilience becomes a core strategy of the firm, the reality exceeds the ISO’s concept in that, at the strategic level, resilience pervades both the operational and conceptional aspects of the organization.

Resilience, like quality, is not something tacked on but, rather, is built into the fabric of successful operations.

It’s important to all your constituencies, including customers, suppliers, employees and your community.

As such, it might even be worth making resilience an element of your business’ core values statement.

John Stearns can be reached at editorial@mjbizdaily.com.