I have been discussing supply chain disruption for quite a while now as it relates to consumer demands and natural events such as destructive weather. The COVID-19 pandemic now adds a new and even more real, and more serious, disruption that must be addressed. The key underlying challenge is how to address disruption and especially extreme disruption. We have already entered into a time of extreme discontinuous disruption that demands and absolutely requires immediate response to survive and support the demands created from the disruption. We can no longer ignore the disruption cycle and as a result must focus now on an optionized supply chain rather than an optimized supply chain so the response can be supported through pre-planned actions. The critical requirement is to continue the supply chain and minimize disruption through a robust risk sense and respond strategy. This risk management strategy must become a critical aspect to the supply chain management overarching strategic plan.
The global supply chain is a fact of life now and as a result of the length of time this supply chain has been developing, it is now the norm. Frankly, it would require an unreasonable length of time and money to change, and most importantly, the cost would never be recovered. We must look past the angry demands to move manufacturing ‘back to the US’ and instead take a more reasonable approach to accept and plan for disruption and then develop options and practices to quickly and efficiently adjust to disruption. This means adding an enhanced risk analysis and risk management strategy to the supply chain planning and forecasting tool kit. We must now focus on disruption scenario planning and response option development to ensure that we are able to minimize the impact to the supply chain.
The good news is that we already have practices and tools available to enable disruption options risk analysis and determination. The current state of supply chain software with the addition of big data analytics provides the framework for a robust early risk warning capability to allow implementation of options to address the disruption. We must develop the strategy now utilizing the framework of available tools to support the process. The result of this initiative will be a framework of process and procedures that will allow the extended supply chain partners to sense and respond to disruption based on scenarios and options that have been identified previously.
The challenge with implementing the disruption sense and respond risk analysis framework is not the supply chain management tools. These tools are quite robust and provide the capabilities to adjust quickly and efficiently to the disruptions in a truly efficient manner. These tools over the years have progressed to a state of flexibility in configuration capabilities that is truly quite amazing. The flexibility and configurability has been built into the software to allow a super user to support standard and general maintenance requirements without support of an engineer or software developer. These configuration capabilities I believe are quite capable to support the demands of the ‘optionized’ supply chain to support the risk sense and response framework.
The challenge now from a technology perspective is related to sensing and identification of the risk in a timeframe that allows the supply chain to identify and then implement the appropriate configuration options to manage and flourish during and (most importantly) after, the disruption event. Fortunately, big data and analytics has reached a state that is beginning to support the requirements to sense and determine how to respond to the disruption based on a predetermined business continuity plan. The analytics requires an efficient tool in order to bring the data together from disparate sources into a pool where the analytics can be utilized. This is one of the new continuing supply chain management requirements.
This leads to the next challenge which is to define a robust and flexible business continuity plan that provides suggestions for predetermined options based on the type of disruption. This business continuity plan takes on new meaning and also new use in the supply chain. This plan must be extended first to identify any type of business and supply chain disruption that may occur and then identify the potential for the disruption (risk) along with configuration options to react and adjust to the disruption. In my experience, the business continuity plan has been reviewed at a minimum and normally on an annual basis. The review process must be more rigorous and reviewed more frequently in order to provide the flexibility and direction required to address disruption.
I suggest a two-pronged focus on the review of the business continuity plan to extend the types of disruption and the potential impact along with identification and implementation of a data analytics tool that supports efficient and flexible identification of disruption early. It is most important to identify the potential for disruption so that you can react early and adjust to address the disruption prior to serious supply chain impact. The key focus must be the big data analytics in order to sense and respond to the disruption. Disruption is a way of life now, it is critical to manage the disruption in a way that limits the supply chain disruption.
Tom Brouillette
Contact: tbrouillette@ncspartners.com
@ncspartners
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