3 key focus areas for improving the agility and resiliency of your next-gen supply chain

Apr 29, 2020
Innovation

In times of war, there is essentially one objective: to keep people safe, whatever the cost. The same can be said about supply chains. During times of war or crisis, the key focus for supply chain management is to keep their supply chains alive, ensuring critical medical and essential grocery supplies continue to reach the communities that rely on them.

However, despite best efforts, the scale of the current Covid-19 crisis has left many supply chains around the world battered and broken, leaving businesses with uncertain future prospects. While many organizations are still in crisis-mode, hard-pressed to deal with their immediate challenges, focus is starting to shift to how risks associated with supply chain disruption can be mitigated in future.

Senior Advisor and Adjunct Professor at HEC Paris Michel Fender encourages organizations to think about three key layers of supply chain management that will help guide internal conversations on how to build more agility and resiliency into ‘next-generation’ supply chain designs. The three key layers are: strategic design, tactical and operational monitoring and excellence of execution; and real-time visibility has an important role to play within each.

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Layer 1: Strategic design

Strategic design refers to the high-level focus(es) of any supply chain, which is essentially determining what it needs to do to fulfill customers’ needs, reliably and consistently, regardless of any external forces that may cause strains. The starting point for evaluating a supply chain’s strategic design is to reflect on what kinds of value it is required to create for the business. The value refers to desired organizational benefits such as increased customer satisfaction, reduced costs, increased cash flow, better returns from assets held or improved sustainability.

Supply chain design can impact on each of these, but they can’t all be the top priority at the same time. Getting internal alignment on which pillars of value to focus on is a critical first step. It’s also possible that some members of the wider organizational leadership team don’t have a thorough understanding of the ins and outs of supply chains. Educating these members on the important aspects will also help with achieving alignment goals.

Challenging and testing the robustness of supply chains is another vital component of strategic design. Exploring ‘what if’ strategic supply chain scenarios, in the same way an aircraft manufacturer ensures new aircraft designs undergo rigorous testing, will ensure high levels of safety and reliability for logistical operations. This will include redefining routes to market, looking at ways to shorten and simplify by evaluating alternative sources and assessing potential risks for critical resources relied upon throughout the chain.

Using mathematical tools and software, it’s now possible to model and to simulate many different scenarios, to generate supply chain designs with higher agility and stronger resilience. However, the accuracy of models generated by such tools obviously relies on accurate data input. Using a real-time visibility platform ensures precise data is captured, using GPS tracking, machine learning and algorithms drawing from a variety of external or internal data sources, giving decision makers more confidence.

Layer 2: Tactical and operational monitoring

Next generation supply chains need to be flexible enough to deliver to both long-term plans (operational) and short-term demands (tactical), supporting the sales and operations plan (or integrated business plan) on both levels. A more agile and resilient supply chain at this level requires a few key things.

Firstly, a clear governance structure for the supply chain needs to exist, ideally where a neutral and independent team, embedded within the company’s management structure itself, regularly reports to supply chain managers about the supply chain’s needs. Secondly, as suggested for the first layer, a type of mathematical tool is required to model and simulate demand and supply, test scenarios and project stocks. Thirdly, all transactions along the supply chain need to be accurately tracked and fed into the ERP (Enterprise Resource Planning platform). The accurate live monitoring and capturing of these transactions is best achieved using a real-time visibility platform, ensuring an up-to-date snapshot of the supply chain’s status is always available to managers.

Layer 3: Execution excellence

In order to execute supply chain operations successfully, clear alignment of objectives needs to be established and maintained throughout the organization, and throughout the supply chain itself. While collaboration between teams and functions is important for achieving this alignment, it is establishing ‘connections’ between teams, made possible by technology that actually enables this ‘digital continuity’. It’s not just the trackers, tracers and sensors, but the platforms that amalgamate all of these data streams into actionable and meaningful insight.

An end-to-end visibility platform offers ‘digital continuity’ as it connects and automatically reports back on all elements of the supply chain in real-time, so that each actor within it has the best information available to aid them in carrying out their roles. Countless decisions are made each day and the quality of these decisions is based on the quality of the information available. Tactical decisions can’t be made without accurate data about what is actually happening in the real-world, to the minute, allowing for new plans to be made on the fly.

No single person can respond to and manage a crisis alone. Achieving excellence in execution also requires local empowerment, meaning staff at all levels of hierarchy are appropriately empowered to take decisive action at their level. Each person along the chain, from VPs to blue collars, needs to understand their role and be confident of the decisions they make, and actions they take, for various scenarios. In this way, making real-time visibility platform access available at all levels (with appropriate user access management to restrict access to any sensitive commercial data where applicable) will help make a supply chain more resilient to future disruptions.

These three layers are a helpful framework for critically evaluating, and making improvements on, the agility and resiliency of your supply chain operations. Regardless of an organization’s size or sector, a key ingredient to making a robust supply chain is simplicity. The less complexities and moving parts that a supply chain has, and the more streamlined its operations are, the more resilient it will likely be to disruption. It’s also imperative that top tier management are involved in discussions, and that they can be educated on how critical supply chain resiliency is for their organization’s overall success. And ultimately, while structural and cultural changes may play a role in building resiliency for supply chains, it’s digitization that plays the greatest role in the transformation and real-time visibility is a critical component.

To hear more about improving the agility and resiliency of your supply chain in times of crisis, please view our webinar.

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