Disruptive Forces In The Supply Chain

There are so many factors driving transformation and disruption in the supply chain that we have moved from a model of discontinuous change to a model of discontinuous disruption.

The disruptions in the supply chain now are driven by the developments and incorporation of new capabilities that are more and more identified and developed utilizing the information and capabilities delivered by data analytics and artificial intelligence technologies. The pieces of technologies are being brought together through the immense amount of data and abilities to fully utilize the data that themselves have been made possible by technology. In the same way that technologies have allowed consumers to mold their professional interactions to meet their lifestyle needs, technology is also supporting the supply chain and extended partners to meet the supply chain business interaction and operational needs.

In a very real way consumers are driving the disruption through their embrace of technology combined with increased network capabilities that are blending their interactions across every corner of their professional interactions. Supply chain leaders and partners have embraced growth in data analytics that is made possible by technology improvements in data storage, network improvements to move the data and then most importantly the computing power improvements to drive the data analytics capabilities to analyze the data to understand and define direction and capabilities required to improve the supply chain to meet the demands. The supply chain supports the consumer demands across all industries and the computing power along with the network capabilities available to every individual across the supply chain is driving the discontinuous disruption.

The pieces of discontinuous disruption have been developed and also been growing in their use in the supply chain starting with the growth of the Internet of Things technologies and tools and naturally expanding in the supply chain arena into automation of processes and then add to this the robotic movement that is growing now, especially in the third party logistics industry and you can see that these pieces required a technology and capability to coordinate and connect the dots. All of these technologies are collecting immense amounts of data for the supply chain to utilize to improve the services and increase their capabilities without necessarily increasing the long term costs.

Supply chain leaders are using these technologies and really driven by their own imagination and questioning ‘why not’ to drive this growth and expansion of supply chain processes and operational improvements and most importantly efficiencies. These technologies are disrupting through the implementation and growth of automated operational and process improvements that are driving efficiencies into the supply chain. The true disruption innovation in the supply chain is the imagination that has been released through the implementation of these technologies that are driven in large part by the improvements in analytics and computing power to release and encourage this imaginative approach to disruption.

This is the amazing thing in my opinion, that the consumer is at the center driving the disruption into the supply chain industry based on their demonstrated imagination and use of technologies to put together their own solutions. These strong outside influences are driving the basic need for the supply chain to understand and maintain the velocity of disruption in processes operations and especially functionality in order to meet the consumer and market demands. Most importantly, though is the continuous improvement process and data analytics capabilities that must be implemented to allow the supply chain to sense and respond to the disruption that is now impacting the supply chain marketplace.

Disruption Driving Transformation Of The Supply Chain

 

Disruption displaces an existing market or industry to produce something new and more efficient and worthwhile. It is at once destructive and creative. Disruption in the marketplace is driving a transformation of the supply chain into a more efficient and flexible framework that can support the continuous disrupting forces. This transformation of the supply chain is driven not only by reaction to disrupting forces in the marketplace but also from the enabling technologies developing at a breakneck pace.

Historically, supply chain disruption has been described as a major breakdown in production or distribution nodes that comprise a supply chain. This definition of disruption implies an event within the supply chain that interrupts the normal process and flow that must be overcome to return to the pre-event state. However, technologies, especially eCommerce technology, coupled with improvements in network capabilities that are driven by consumer lifestyle demands have redefined disruption into a break that will never return to the pre-disruption normal, the disruption creates a new normal.

NOTE: The COVID-19 disruption is another example of disruption driven by consumer demands, in this case though there are additional disrupting factors that add to the equation. These factors include disruption in the manufacturing capabilities and also, more importantly, business continuity disruption that has highlighted the brittle nature of the pre-COVID-19 extended supply chain.

This process of recovery into a new normal is what makes up innovation and new capabilities for the market. Rather than a recovery to the pre-disruption state, the disruption produces a recognition of a need for innovation and change based on the market demands for innovation in the process. Disruptive innovations tend to be produced by outsiders and entrepreneurs in startups, rather than existing companies. This innovation cycle is now driven by consumer lifestyle demands colliding with the existing market practices creating an innovation cycle. This innovation cycle disrupted the continuous improvement cycled to a continuous innovation cycle and the market leaders recognized and adjusted to the change.

Currently, the waves of innovation in the market are driven by supply chain participants recognizing and developing features and functionality designed to meet customer expectations, partner needs and financial requirements. Supply chain disruption is the repurposing and realigning of existing capabilities to support changing consumer lifestyle demands. Then, just for good measure, the great disruptors add new supply chain capabilities to enhance the innovation.

The best change agents in the extended supply chain implement these features and functionality before the consumer recognizes the need. This drive to experiment based on sensing a market shift that creates the demand for goods and services is the actual driving force of disruptive innovation in the market. Disruptive innovation in the supply chain is a leading influence in remaking the market to meet consumer demands. Consumer demands are being driven at an enormous speed and this velocity of change requires robust tools and practices to react. I believe the supply chain is particularly ready and capable to develop these required tools and capabilities because of the history of disruption within the supply chain.

Shifting demands from all corners of the market—ranging from product and consumer services to supply chain partners—contribute to supply chain disruption and in turn are driving innovation in the supply chain as a reaction. Consumers as the ‘Great Disruptor’ in the marketplace and are driving the supply chain to innovate in capabilities and flexibility in order to react to the disruption. The supply chain innovators are driven by a spirit of experimentation that in turn allows them to innovate in the face of the discontinuous disruption. The best of the innovators incorporate the continuous improvement (PDCA - Plan, Do, Check, Act) practice to support the innovation cycles driven by the disruption.

This transformation will only increase in speed as disruption drives new disruption. We have entered an age of disruptive transformation driven by the demands of the market that is no longer accepting the status quo. In order to survive in the age of disruptive transformation the market partners must also embrace a practice of experimentation based on flexibility.

Supply Chain Reshaped By COVID-19 Disruption

There is no question that the Coronavirus has disrupted the world and in the face of all this disruption, the supply chain is being reshaped in reaction to the waves of disruption started by this pandemic. It is safe to say that the world social and economic order has been turned upside down during this time in reaction to the speed and the range of disruption driven by this virus. There has been no area left untouched at this point and the focus is on reaction and adjustments in reaction to the disruption. This requires more than ever extreme flexibility and robust collaboration and communication to sense and respond to the disruption.

I firmly believe that one of the key strengths developed over the years on the extended supply chain is the ability to sense and respond to disruption in a manner that efficiently identifies disrupting factors and resolves through a robust process of continuous improvement. The baseline tools, practices and procedures are in place to respond to the disruption and these have really been the foundation framework that has helped the supply chain to respond and continue to support the market.

The question now is - What process and procedures should be incorporated to allow the extended supply chain to support the multi-faceted waves of disruption that will continue?


These are some key factors that will support the velocity and impact of disruption:

First and foremost is robust, open and holistic collaboration practices. This is key to the ‘sense’ process in sense and response to the disruptions. This requires open sharing of information collected from all quarters in order to better understand relationships and impact of the disruption. Without the collaborative practices the response portion of sense and respond runs a great risk of reaction to the wrong cause of the disruption.

Data collection and analysis provides the information and identifies the relationships that are driving the disruption. There is really nothing new to the level of importance of data in the ability to first sense the disruption and then determine the cause and identify a reaction to the disruption.

Define and implement actions and change based on the data analysis in response to the disruption. One key to the implementation of change is the realization and acceptance that there is no silver bullet that will address the disruption. The disruption is fluid and the changes and reaction must be fluid as well!

The reaction in the system to the change must be reviewed and validated to confirm the response to the change provided a positive impact. This is starting the process over again.

Finally, the most important factor now is speed of reaction! This means multithreading reactions and actions with the analysis of the data. There are two key tool in this time to analyze reactions; the use of Artificial Intelligence and robust collaborative practices.

The guiding factor in this time of disruption must be ‘Don’t Panic and Respond to Data’! This will be the most difficult and greatest time of disruption and when you add the cultural and health disruption to this business disruption the impact can initially seem overwhelming. In order to overcome this feeling we must identify a program that includes a process of actions to address the disruption. We should be using the experience gained over the recent years driven by business and consumer disruption in order to meet the demands of the current disruption.