As the COVID-19 virus continues to spread rapidly around the globe and governments put severe restrictions in place to contain it and limit loss of life, chief supply chain officers (CSCOs) are being forced to find workarounds for broken supply chain networks.
Since the virus first began in late 2019, many supply chains have been severely affected. As the virus continues to spread, the level of disruption has skyrocketed.
While effective decision-making is more important for CSCOs than ever in this kind of environment, it’s also much more difficult to achieve as decisions must be made extremely quickly amid high levels of complexity and uncertainty.
We believe supply chain professionals are looking for guidance to enhance their decision-making effectiveness under these conditions. According to Gartner, “More than 80 percent of supply chain professionals report that decisions made in response to disruptive change could be improved — either more accurate, faster or more cost-effective.” Gartner finds a similar proportion, 76 percent, "say that disruptive changes have increased compared to three years ago, while 72 percent believe that disruptions have become more impactful.“
Fortunately, Gartner’s analysis offers timely insights into how CSCOs and other supply chain professionals can use decision-making constraints to respond more effectively to the impact of COVID-19 and other disruptive events.
Key decision-making challenges
The report outlines some of the key challenges decision-makers face when dealing with global events on the scale of the COVID-19 crisis. For one thing, it’s extremely difficult, if not impossible, for supply chain planners to prepare for something like a global pandemic. Then, when the nature of a threat of this magnitude becomes clear, decisions must be made extremely quickly, especially as the virus itself continues to spread rapidly and have an impact in other markets. This kind of quick decision-making is extremely challenging, given the high level of complexity involved. We believe, when taken together, all of these factors and behaviors undermine the quality of supply chain decisions.
Applying decision-making constraints
According to Gartner’s research, which is described in more detail in the report, constraints-based decision-making can mitigate these challenges for CSCOs and other supply chain professionals. What exactly are decision-making constraints? Gartner defines them as “limits that are strategically applied on decision-making inputs.” For example, the report lists four key constraints that can be applied to any decision:
"Time: Limit time to gather information, deliberate in meetings and reach a decision.
Information data: Limit the amount of data decision makers have to synthesize
Escalations: Limit formal and informal escalations.
People: Limit the number involved and limit the number accountable"
In addition to providing a “Decision Constraints Impact Overview Matrix,” which indicates, “given the scenario, which input(s) will be the most impactful for supply chain leaders to constrain when responding to a disruptive event to achieve high decision quality,” Gartner makes two key recommendations for CSCOs. The first is to: “Develop a strategic response plan to put your company in the best position to respond to disruption by placing constraints on decision-making inputs such as people, information, time and escalations.” The second is to: “Demonstrate successes resulting from constraints-based decision-making to the C-level and identify how setting constraints can limit disruption from COVID-19.“
Learn how you can apply constraints-based decision-making in your organization to mitigate the impact of the COVID-19 pandemic on your supply chain. Download the full report: Coronavirus Requires Supply Chain Leaders to Adopt Enhanced Decision-Making Abilities, Sarah Watt, John Johnson, Gartner 2020.