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Harnessing disruptions to build a strong supply chain

Harnessing disruptions to build a strong supply chain

The move away from traditional business models brings new challenges to the flow of goods

Supply chains are designed to withstand some disruptions, but major global upheavals strain every system. They prove companies need to rethink the traditional operational-platforms approach and recognize the urgent need to focus on flexibility and contingency.

This is critical because every company is facing:

  • Reimagining business models
  • New behaviors of customers and employees
  • Rebuilding and rethinking the supply chain
  • Increased corporate governance
  • Overwhelmed business-technology tools and systems.

Challenges in the markets have highlighted underlying weaknesses in business strategies as well as gaps in complex planning and communication channels. The combination makes it harder to meet customer demand in a quick, secure, and consistent manner.

During disruptions, business and operations need the right tools and data to make immediate and informed decisions to successfully navigate any shocks to the supply chain. It is imperative to have a rapid mobilization strategy, solid contingency plans, and end-to-end integration to maintain a competitive edge.

Driving the right strategy

The priority is a structured and centrally orchestrated approach to face uncertainty with calculated decisions that build a strong foundation for lasting growth. While every disruption is unique, they result in three phases: Respond, Restore, Rebound. Each requires different priorities, tools, and decisions.

To accelerate the Respond phase, the priority is to act now with a sense of urgency and agile mindset. Apply critical findings and quickly move to Restore by implementing advanced analytics to establish control towers and a real-time environment driven by data. This should be supported by increased visibility, a solid two-way communication plan, and a closed-loop feedback process. Companies can then Rebound the momentum via digital transformation, codification, and automation of contingency capabilities, and be ready to be responsive, to successfully navigate future disruptions.

Respond: Act now with an agile mindset

An effective risk-management plan needs a holistic view of supply-chain operations, starting with a framework supported by key foundational elements. Start at the core of your supply chain and mobilize your critical teams to identify unforeseen shifts in buying behaviors, sudden global logistics shifts, production interruptions, and inventory misalignments.

Launch an orchestrated and coordinated communication and governance plan and develop a dedicated command center by leveraging a dynamic sales and operations framework. Review and understand critical data by consolidating existing analytics platforms to identify critical issues. The goal is to identify strategic and operational KPIs for comprehensive mapping and prioritization of risks that encompass end-to-end demand and supply, cash flow, and resourcing.

It means asking questions, such as: are your trusted logistics partners experiencing unexpected delays, is your inventory being depleted at a faster rate than expected, or what shifts in customer behaviors do you need to watch?

Restore: Use analytics and collaboration to plan for the unexpected

Supply-chain resilience is a major part of protecting against unforeseen disruptions. Assess tactical operational challenges continuously for better responses to market conditions and customer needs.

Advanced technologies can support a more resilient supply chain. Machine learning can rapidly capture customer buying patterns and adjust short-term demand plans. Artificial intelligence can determine accurate assortment planning and inventory deployment.

Leveraging analytics-based modeling to enable control-tower solutions provides real-time results and proactive alerts, and mitigates future risk while improving communication and visibility across the enterprise.

Companies need to answer critical questions, including:

  • Should inventory be re-positioned?
  • What production constraints should be adjusted?
  • Should you remap your item-level segmentation?
  • How can you develop probable scenarios and determine their validity?
  • What new metrics should you implement and review?
  • Should we trade our hyper-focus on cost reduction for one balanced on security of supply?

Rebound: Drive resilience and responsiveness

To stabilize and drive a more resilient and responsive supply chain, companies need to capitalize on lessons learned and provide a clear path forward. Documenting response protocols, proven scalable processes, and analytics capabilities will mitigate future risks and enable business execution with less disruption.

It is important to maintain digital and synchronized supply-chain principles and incorporate them into the long-term operating model for the flexibility to respond to future disruptions. Companies should also:

  • Document and digitize lessons learned that led to a successful recovery
  • Empower the culture of reconfigurability and innovation
  • Invest in a resilient supply chain by driving diversification and multi-tier collaboration
  • Continue to review and enhance business-strategy plans
  • Embrace the digitalization of supply chains through ML and AI adaptation.

Companies need to scale a business-continuity mindset by assessing how to automate processes, protocols, and the tools needed for flexible data modelling and visualization. It may also mean diversifying supply and logistics bases.

Unforeseeable disruptions are among the biggest challenges for supply chains. They test resilience, flexibility, collaboration, and planning capabilities. The keys are plans to Respond, Restore, and Rebound. This requires strong leadership with a pragmatic approach and ability to develop a strong and centralized response team to orchestrate quick action. A focus on real-time digital supply-chain visibility, a what-if mentality, and well-defined risk protocols with strategic metric supports will together create a foundation for an effective recovery.