In a world where everything is changing, staying in one place is the fastest way to find yourself falling further behind. The same is true when it comes to your supply chain. Remaining stationary in your processes, relying on inefficient technology, and refusing to keep pace is how successful companies find themselves lagging behind the competition. It’s not just about who does it better anymore. It’s about doing things differently. That’s when breakthroughs happen. Unfortunately, many companies are still looking at their supply chains with a lens focused solely on efficiency and the bottom line. That strategy alone won’t yield long-term success. There has to be the opportunity for innovation, as well. It’s what drives new products and pushes companies into new markets. Hence the industry’s latest buzzword – bimodal. Most often credited with coining the term ‘bimodal supply chain’, research firm Gartner describes it as a supply chain made up of two distinct modes. Mode one is about cost-saving measures and efficiency and appeals to a need for predictability, accuracy and reliability. It’s focused on maintaining the status quo and managing day-to-day operations. Mode two is all about experimentation and driving revolutionary changes in how supply chains adapt to new risks and opportunities.
The Supply Chain Risks of Staying Stationary
The risks of ignoring this shift and keeping your supply chain stationary in a single mode are rising. If you’re not also innovating within your supply chain and continually looking for ways to combat the risks outlined below (and more!), you’re going to be left behind.
- Consumers’ demands are rising Companies like Walmart, McDonald’s, Panera and Chipotle are already changing the way their supply chains work to keep up with growing consumer demands. From free shipping to 24/7 ordering to ensuring sustainable, environmentally friendly goods – customers’ requests are driving businesses into new processes and practices.
- Talent shortages looming According to the American Association of Retired Persons (AARP), it is estimated that more than 10,000 baby boomers a day are turning 65, a pattern that will continue for the next 19 years. Industry veterans are beginning to retire without suitable replacements to succeed them. This problem is relevant across all industries, and compounded by the fact that many organizations’ current supply chain technologies and processes don’t support the new level of risk and response management required to address all of the threats facing supply chains. You have an experienced workforce leaving, with the need to not only replace those vacancies, but also drive supply chain process improvements at the same time.
- Unexpected global events are increasing From 2014 to 2015 there was a 118% increase in disruptive supply chain events according to data from Resilinc, a leading provider of supply chain resilience and supply chain risk management intelligence and analytics. Resilinc named Typhoon Soudelor, which hit Taiwan in August 2015, the most disruptive supply chain event in this timeframe in terms of lost revenue. The estimated impact was more than $20 billion, with total recovery time lasting 29 weeks and impacting 2,401 sites. This is just one example of increasing supply chain risk that has made fast response time a critical success factor.
Combining stable best practices with innovation-seeking behaviors will help keep your supply chain competitive in the face of mounting supply chain complexities. Focusing only on cost and operating efficiency doesn’t allow for continued and sustainable growth. Combating stagnation in your supply chain is essential to moving forward. Interested in learning more about bimodal supply chains? Read our white paper Building a Bimodal Supply Chain, to explore how you can combine growth and efficiency successfully in your supply chain.