With each significant disruption in the supply chain and in the global market our supply chain practice and procedures must perform a lessons learned exercise to identify the areas of successful response and areas for improvement. I know it sounds counterintuitive to call out benefits however every event should be evaluated to identify areas of success and improvement. There have been areas of success in the supply chain, especially in the way that the entire supply chain reacted to the disruptions in both product types and manufacturing. There are also many areas for improvement and most importantly this pandemic has identified significant weak areas in the global supply chain. The challenge now is to look back to evaluate the disruptions to determine improvements to incorporate in both sensing and responding to the disruption.
First let me call out that I believe the disruptions in the global supply chain are the result of poor risk analysis and business continuity responses to disruption. The overarching answer is not moving the supply to local manufacturing but to implement improvements in the process and procedures for sense and response to disruption. We know that the impact of a pandemic can and should be defined and practiced, while we can’t tell the exact nature of a pandemic, we can plan for a pandemic response. We also know that the global supply chain has grown and developed as a result of the global market demands on the supply and there is no easy answer to the challenge, especially moving manufacturing locally!
We have learned some key findings from this regarding the importance of the response to the disruption that could reduce the impact in the future. These are the factors that must be documented and a process implemented to review the market conditions on a regular basis. I believe that we have let the supply chain become fragile and brittle as a result of a focus on cost only. One learning or benefit from the experience is the need to plan for disruption of many types and combinations to improve supply chain resiliency. There are two factors that improve the resiliency of the supply chain;
Risk and response analysis is critical to the successful response to any disruption. This is a complex exercise because it requires imagination to identify the potential risk and then another type of imagination to define the response to the disruption. This is a major area of improvement.
Supply chain partner collaboration is another critical success factor to the response to any disruption. We have seen improvements in supply chain partner collaboration recently, however it has not been nearly fast enough, nor far enough. The supply chain is just that a chain of links from partner to partner that must work together to successfully support the market. The supply chain activities have met the challenge of the global market, however, the partners have refrained from extending and growing the collaboration that is necessary to react to significant disruption.
The future success of the global supply chain is based on the ability to quickly sense and respond to disruption, and more importantly multiple combinations of disruption. This is where process automation and analytics come into play. This is also the same areas showing dramatic increases in interest and expanded implementation. We must be careful in our response and strategic planning that we focus on flexibility and resilience when developing our strategic plan and reactions to the multiple disruptions. We have the process in place for the process automation and this has become critical to the response to the disruption. We must now develop the analytics to allow us to sense the disruption before significant impact and define the potential responses to any disruption. The third point that cannot be shorted is expanding collaborative practices across the extended global supply chain to improve response and reaction time to the disruption.
What steps have you taken to evaluate your response to the pandemic and identify areas of improvement?
Tom Brouillette
Contact: tbrouillette@ncspartners.com
@ncspartners
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Tom Brouillette discusses supply chain trends and provides strategic business & technology advice to his followers and companies.
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