Supply Chain Strategy For COVID-19 VUCA

While the COVID-19 pandemic is certainly the most significant disruption that the world is facing, it is by no means the only disruption the world and especially the supply chain is facing.  In fact, the level of VUCA (Volatility, Uncertainty, Complexity and Ambiguity) has increased over the last 5 - 8 years through a series of natural disasters, political unrest and most recently of course the pandemic.  What we must learn is not how to address specific disruption events, we must instead develop a strategic plan that identifies potential disruption events that may or may not occur and then identify potential responses that can be selected singly or grouped to respond to the disruption.  

This VUCA response strategy is simply a more robust business continuity plan.  This is dramatically over-simplified, I understand, however what I am focused on is the definition of continuity which has been an established practice for a long time.  This VUCA response strategy requires a more robust process that defines every type of response for every type of disruption that would then be reviewed on a regular basis to validate and update.  This enhanced response strategy must be incorporated as part of the regular continuous improvement process to analyze not only potential process improvement but also potential disruption.  The risk analysis must become part of the regular process for the business and especially the supply chain to allow for a well thought out response that will reduce the impact of the disruption.

I know that many think - how can you evaluate potential risk of a disruption such as a pandemic?  The evaluation is not based on any specific type of risk, it is based on potential impact if and when any service, supplier (especially raw materials or parts suppliers in manufacturing), transportation partner or customer is suddenly shut down.  Another very critical aspect to the risk analysis is the impact sudden changes in package quantity when specific areas of demand are impacted.  For instance, when institutional demand dried up as a result fo COVID-19 and dairy farmers were forced to discard milk.  The risk analysis and continuity planning must focus on the areas of impact and not the impact event in order to be effective and support the needs of your business. 

The continuity analysis and planning must be planned and executed as a continuous process that is reviewed on a quarterly basis and the events that can impact the business must then be reviewed to confirm that the potential impacts are still valid and also review and the response is still valid and most importantly, the triggering events analysis and review process is still valid.  With the increase in business threatening disruptions it is critical to get ahead of the events as much as possible so that the reaction to the event can be triggered in a time frame that will control and limit the impact of the disruption.  The best time to plan for the response to a disruption is before the disruption occurs!

We have entered into a time of VUCA that will continue to impact professional practices and capabilities and then this will carry over into the personal side as well.  Everything is connected and there is a ripple effect across industries that must be anticipated.  It is no longer acceptable to say - who would have expected this type of disruption?  We all must be prepared for disruption of any kind that may occur and then have a response planned and ready to implement.