From Fragility to Resilience: Strengthening Supply Chain Strategy
Four Crucial Steps to Upgrading Your Supply Chain
By Matt Campbell, Founder ArganoSCMO2
Like COVID-19 itself, the world’s supply chain problems aren’t going away.
For many businesses, the pandemic continues to expose intricate, brutal and—in some cases, terrifying production and delivery problems. At ArganoSCMO2, we’ve seen firsthand how ill-prepared many companies were and know it will take many organizations years to fully recover from these logistical setbacks. And without thoughtful changes and transformation efforts, including investments in a core foundation of technology, they are equally vulnerable to the next global crisis.
The fragility of some systems has been embarrassingly obvious. From appliances to pickup trucks, computer chips to baking yeast, companies not only couldn’t deliver on time, they also couldn’t often predict when they would be able to come through. They repeatedly let customers down. And while people did their best to make allowances due to the nature of the pandemic, there’s a limit to how forgiving any customer can be.
Even we were taken aback by just how widespread this clumsiness has been. Our company’s focus has been primarily on supply chain planning. But so many companies have stumbled on the reaction side. In effect, their planning executives have had to become more like firefighters, staring down questions they’d never faced. How should they prioritize which customers to serve first? Which finished goods should they make? And even the biggest companies lacked the sophisticated tools needed to react to these problems.
They weren’t ready. But the pandemic pushed the supply chain world into a paradigm shift. Pre-COVID, much of the work focused on efficiency and automation. It was an area that was often neglected by senior executives, and frequently down the priority list when it came to technology investments. It was just too easy to kick decisions down the road and focus on the more visible parts of the business.
The changing global market forces blew that up. One study found that even weeks after COVID-19 had begun, 70% of businesses said they were still in data collection and assessment mode, manually trying to identify which of their suppliers operated in locked-down regions.
Suddenly, adaptability and resiliency have become the most important supply chain qualities a company can have. We’re committed to helping customers overcome these deficits and achieve that flexibility, creating the visibility required to find a new way of working.
While some are still clinging to the idea that COVID-19 is just a one-time catastrophe they need to fight their way through, we realize that’s not the case. Yes, many of the short-term hiccups are ironing themselves out. It isn’t that people increased their use of toilet paper, for example. They just bought it differently. On the other hand, demand for disinfecting products isn’t going to go away, nor is the clamor for more construction or shipping materials.
Similarly, the rapid acceleration of e-commerce is also reshaping supply chain planning, requiring more companies to set aside inventory for Amazon and other B2C channels.
To survive, companies need end-to-end systems that simplify these complexities. Yes, they need to use AI to automate as much of the planning process as possible. But every aspect of those plans has to be visible, so people can manage the exceptions before they become massive problems.
Finding a Roadmap
Finding a path to a more resilient, agile supply chain takes time, investment, and plenty of forward thinking. Our experience suggests companies need to take four important steps.
1. Conduct a roadmap assessment
A broad look at a supply chain requires stepping away from the duct-tape school of thought and fixing what’s wrong with the engine. In our work, we dig into the critical needs driving the choice of system tools, drawing relationships to what functionality will meet those needs.
Looking closely at implementation and workflow, this calls for honest feedback, which increases the initial adoption rate for the platform. If people don’t trust the system, they won’t use it, undermining the considerable investment in planning solutions.
2. Standardize processes
While it seems like this should be a given, standardization remains extremely challenging. And it’s especially problematic for conglomerates, who often have as many as ten different types of ERP systems in place.
This isn’t an area where companies can simply spend a lot of money and then cross their fingers. Deciding on the best system and then migrating others over to it can take years. There may not even be a good reason to use the same system, but the data must be normalized with standard key performance indicators.
3. A new planning process
Planners typically use history to predict the future. And if that was a safe bet, systems supply chain planning could easily be put on autopilot. But the last 18 months have shown us that history no longer tells the future. So, the importance of scenario planning has become critical. Companies need to run multiple scenarios and then come together for a consensus planning process, one that includes finance, marketing, and operations.
4. Add visibility
The most effective systems let people see every part of the chain more clearly. Where are products now, and when will shipments arrive? What happens if it’s 90 days? Or 120? How can we change production and delivery schedules accordingly? What does our raw material plan look like? How much capital do we need? How much do we need to outsource?
Insights like that require an effective dashboard, a control tower that pulls every part of the organization together. And these scenarios, which once took weeks to pull together, can now be calculated in a matter of minutes, providing top management all the intelligence they need to move forward.
Combined, these actions help people act less like firefighters and more like the strategic thinkers they really are. It enables them to ask fundamental questions. Where are we going to be three years from now? Five? How can we reconfigure our infrastructure to capitalize on whatever might happen?
Complex Problems, Simplified Solutions
We’ve long helped companies use these steps to make their supply chain more agile and resilient. One of our clients is a desk manufacturer, already rapidly growing even before the work-and-learn from home revolution. Because of its effective systems, it has managed to thrive and delight customers, even in the face of intense demand.
Another manufactures pipe. Using the solutions we provided, it was able to reinvent sales and operations planning processes. So, as the demand for building products escalated—with no end in sight—it’s been able to shift production models to meet demand. Importantly, it’s gaining market share from less-prepared competitors.
Customers, ultimately, will migrate to suppliers that give them what they need the fastest, at the best price, and most reliably.
To keep them, companies need solutions that simplify their work. Scalability doesn’t mean complexity. It calls for a strong foundation in core operating technologies that can help you bridge the gap between market opportunity and ability to execute. We can help provide these, with simple designs that are easy to use, engage teams, and adapt for every circumstance.
