If 2020 has taught us anything, it’s to expect the unexpected. At the dawn of the new year, not many of us could have predicted the arrival of a global pandemic, let alone the devastating impact it would have on public health, the global economy and the business of supply chain planning. Although there’s no doubt the pandemic has created havoc on a global scale, it’s important to remember that it’s not the first such disruption we’ve had to face, and it won’t be the last.
If anything, the extraordinary challenges of the past year, as painful as they’ve been, should serve as a stark reminder for supply chain professionals. Whether it’s global trade wars, tariffs, geopolitical instability or natural disasters, we can say with 100 percent certainty that sooner or later we will encounter powerful forces and events beyond our control that will disrupt global supply chains. What these will be and when they’ll occur is impossible to predict. But what supply chain professionals can do is prepare — right now — to meet them head on by rethinking how they manage their global supply chains.
How to build the right capabilities
In an article published in Logistics Viewpoints, Polly Mitchell-Guthrie, VP of Industry Outreach and Thought Leadership at Kinaxis, discusses the urgent need for companies to invest in building three key capabilities in their supply chains: agility, resiliency and sustainability.
The first of these, agility, is critical for achieving supply chain success in times of major disruption. As the current research makes clear, companies with agile supply chains outperform their peers. The 10 percent of firms Accenture categorized as supply chain Masters achieved 13 percent higher growth, triple the contribution to total revenue, and a 2.5 percent higher EBITDA margin. All of these firms are investing in agility, and it’s paying off.
What do we mean by agility?
In a supply chain context, agility means being able to plan, monitor and respond instantly with what-next scenarios when something comes at you out of left field. It means turning on a dime when required to shorten planning cycles, rationalize SKUs and shift production lines. When it comes to contingency planning, speed and responsiveness are not nice-to-haves, they’re critical. And yet many companies do not have the right planning tools and processes at their disposal to react with anywhere near the level of agility required, especially those that continue to rely on sequential supply chain planning methods.
If the pandemic has taught supply chain planners and executives anything, it’s that these outdated, siloed methods of planning are insufficient to deal with the realities of today’s global supply chains. Sequential planning involves multiple teams working in silos, often without a clear idea of the big picture. These teams gather data independently and store it in dozens of disconnected Excel spreadsheets. When the unforeseen occurs, these methods and tools are not conducive to responding with agility. It’s quite the opposite. Determining the financial implications of a particular event or identifying viable manufacturing alternatives typically takes several weeks.
In contrast, modern supply chain planning solutions, especially those that support concurrent planning, give you the agility you need to respond quickly and effectively to the next disruptive event, whatever that might be. These solutions facilitate rapid what-if scenario planning, so you can quickly evaluate the impacts and alternatives in a matter of minutes.
When is the right time to improve supply chain planning?
For companies considering transforming their existing supply chain planning, the good news is that the experience of the pandemic has thrust the subject into the spotlight. Business leaders everywhere now understand the limitations of sequential planning and recognize that supply chain agility is vital to the long-term viability and profitability of their businesses. And that makes them that much more open to investing in the next-generation supply chain planning solutions that you’ll need to not only survive but thrive when the next big global disruption comes along.
To learn more about preparing your supply chain for the future of planning, visit Polly Mitchell-Guthrie's full article on the benefits of agility, resiliency and sustainability.