The pandemic has pushed organizations in disarray globally. The K-shaped recovery curve is especially visible when it comes to Supply Chains. There are organizations whose Supply Chains were nimble enough to move quickly through the quagmire and those that were left struggling.
Below I provide a checklist of principles and hacks that will stand you in good stead as leaders of the Supply Chain, no matter which industry you may be in.
At a time, when we don’t even physically interact with our colleagues, let alone customers and suppliers, it is crucial to keep the communication with all stakeholders – external & internal customers, teams, and suppliers – going. If you need to choose between over and under communication, lean towards over-communicating. Make time for it. It pays back many times over.
The uncertainty in demand, as well as supply, has never been higher. If transparency was not on the agenda before, it certainly needs to be now. Provide transparency for impending changes, whether product portfolio, delivery schedules, or processes. It plays a large role in lessening the nervousness and smoothening the inevitable bullwhip across the value chain.
Building on the previous point, demand no matter how uncertain, remains a keystone for Supply Chain practitioners. We need to feed the changing demand patterns to the organization faster than ever before. In case the demand cycle was previously monthly, consider making it weekly if possible.
The purpose of demand planning is to help the organization be more agile when it comes to making decisions on customer fulfillment and working capital. Keep in mind that demand will be dynamic and work towards making your Supply Chain more responsive. This is easier said than done, especially in large organizations but once the management wills it, it is not impossible. If you have a portfolio that includes perishable goods, then agility becomes even more important.
Strengthen the overall S&OP/ IBP cycle. Make Demand Reviews truly accountable for accuracy in unconstrained demand plans. Likewise, Supply Reviews must match the demand to the extent possible and make constraints crystal clear. Bring exceptions to the Executive S&OP to drive clear decisions with top line and bottom line in mind. The final output from the overall S&OP/ IBP cycle must be a credible Business Plan.
An impact of the pandemic has been an increase in silos given that people are getting on audio and video calls mainly for work. There are no forums for casual discussions any longer. As a leader, work actively on building trust within teams. Supply Chain by its very nature cannot work in isolation. Consider matrix structures where feasible. Get the teams to engage. Create reasons for engagement if needed. A favorite analogy of mine is Venn diagrams that have slight overlaps. Design organization structures that have some overlapping accountability rather than allowing activities to fall between cracks. Reiterate the importance of the bigger picture (organizational goals rather than a team goal in isolation).
Simplify processes aggressively – question whether an interaction or organizational layer adds value. If not, then consider eliminating or automating. Similarly not everyone needs to approve all exceptions. Right now, exceptions are at their peak causing bottlenecks with excessive approvals. Empower the organization. Have guardrails in place but allow your teams to make decisions within the guardrails. The pandemic is already accelerating digital transformation across Supply Chain. Make sure you are at the forefront.
The goal of Supply Chain is not service, cash or cost in isolation. The goal is to have a balance between the three while working within the boundaries of Safety, Compliance and Quality. To think that service is the task of customer service and cost is the responsibility of logistics is a mistake. Each of these is a Supply Chain combined metric. To arrive at ownership, break the metrics down at an actionable level and then assign clear accountability.
Several organizations were caught by surprise when they suddenly had to face customer closures. Detention at ports ran into millions. Add some resilience to your logistics network. There are organizations that provide space for short term requirements. Tie up with them for contingencies. Keep your ERP systems ready in advance. The ability to quickly change sources, substitute parts, move inventory between channels, repurpose manufacturing facilities, move tooling, or change transportation modes are indicators of how rapidly your Supply Chain can adapt to any scenario.
Finally, upskill your teams – not only digitally but also with the skills Supply Chains need to lead in the New Normal – agility, transparency, and resilience.
Hopefully these hacks will help you well beyond the pandemic. We tend to be more receptive to change during a crisis so the time to make changes is now! Never let a good crisis go to waste.
Thank you, very insightful article. Would like to hear more about supplier management next time.
Sir how can we avoid the bullwhip? Is transparency enough m?