The pandemic sorely tested the robustness of plans and business’s ability to respond to change
Covid’s impact on supply chain resilience planning
8. Sustainability – making decisions based on quality that reduce risk and protect future resources 9. Awareness/sensitiveness – the ability to anticipate actual demand 10.Supply chain risk management culture – the importance of taking a proactive and informed approach to potential problems 11. Velocity – the supply chain’s speed of reaction to adverse changes 12.Market position – associated with the financial capability of an organisation 13. Risk control/revenue sharing – encourages sharing the risk among supply chain partners 14.Partnerships – to consider strengthening a company’s position by setting up a partnership with another organisation 15. Adaptability – to design a framework that can flex according to changed requirements or conditions 16.Supply chain network design – proper understanding of how an organisation’s supply chain operates can avoid issues 17. Security – should be built in ahead of time to protect against counterfeiting and cyber-crimes, for example It concurred with some other researchers that supply chain resilience has three key parts: anticipation; resistance; and recovery and response.
• Internal and external communication should be improved, more regular and open, with a better flow of information across functions internally and externally with supplier partners • Suppliers, customers and logistics providers need more current information about what is happening within their own business and what forward plans are being made • Multinational businesses, especially those operating in the East where it first hit, could have exchanged more information about its impact and best practice to cope • The mental well-being of managers and employees, especially where health is a concern, normal working relationships break down and lockdowns cause social isolation. Now that many businesses are better set up for hybrid home/office working, any future switch should be achieved more smoothly. Managers, however, would generally welcome training to run such teams. Some suggested a ‘chief medical position’ was necessary to help support the physical and psychological wellbeing of staff. Companies could also benefit from an increase in training that generates ‘out-of-the-box thinking’ and scenario- building skills to better prepare them for the next devastating event. Other strategies highlighted included rationalising product ranges, reducing process complexity and relying more heavily on circular supply chains - “which tend to be more localised and dependable”. An acceleration in the use of augmented reality in
warehousing operations and 3D printing is also anticipated.
The majority of academic work on the subject of supply chain resilience naturally occurred before the impact of Covid. The pandemic sorely tested the robustness of plans and business’s ability to respond to change. It found many were not ready for, or able to respond quickly enough to such a high-impact, low-probability event. This is perhaps unsurprising since such rare occurrences are rarely covered by risk registers. Authors of a World Economic Forum (WEF) article published in December – just one of many reports covering supply chain resilience since Covid – noted that most supply chain disruptions have “limited geographical extent and conform to the standard single-trough, limited-duration profile outlined by Sheffi and Rice back in 2005”. Meanwhile, the impact of the covid pandemic has been “global, prolonged, and comprised a series of major shocks to companies’ logistical systems”. The WEF convened a session with a group of 60 supply chain leaders as part of the New Generation Industry Leaders community, to consider how pandemic-related disruptions were reshaping managerial thinking on supply chain resilience. Feedback was: • Response times should have been quicker – especially given the warning the West had based on what was happening in the East. There could have been a swifter move to ‘crisis management mode’ and preparedness for remote working
Managers “argued their companies required ‘deeper knowledge’ of their upstream supply chains to assess their vulnerability to future global threats”. It was felt that visibility of tier-one and tier-two suppliers was no longer enough, especially since disruptions can occur beyond the reach of typical due diligence assessments. And finally, they said the covid pandemic may herald in a new era of supply chain collaboration that would not only allow companies to manage risk more effectively but also yield wider sustainability benefits. Earlier studies also concluded that a high level of collaboration is a key means to mitigate supply chain risk. Conclusion There are a whole range of capabilities that can affect an organisation’s ability to be resilient, we’ve focused on a few. Most of these elements are part of the procurement lifecycle and therefore require strategies embedded in the way you carry out sourcing (see the procurement lifecycle article on page 12). Since the outbreak of Covid, the State of Flux annual survey has taken a closer look at resilience. An essential tool identified by companies in our own research is to increase communication with suppliers and engage in more joint mitigation planning. The symbiosis of co-dependent suppliers and buyers working together for mutual success and to guard against disruption makes them stronger and more successful than the sum of their parts. Further reading: To find out more about our resilience research findings – what you’re most challenged with and how you are coping – go to page 30. For more on how supplier management boosts resilience turn to pages 12 and 74; for a look at the importance of mapping your value chain go to page 35, and to understand how you can become a customer of choice to your suppliers to boost the resiliency of your business, go to page 20.
Investment into resistance and recovery can take many forms. The paper lists eight key categories for such spend: 1. Discovery: Investing in the ability to identify potential problems as close to an event occurring as possible, through, for example, better IT and information sharing, forecasting, monitoring and demand sensing 2. Information: Improving the quantity, speed and quality of information flowing within the supply chain through better tools, greater visibility and communication 3. Supply chain design: Chains that can be quickly configured and reconfigured in response to change. Selecting flexible supply chain partners and strong supply base management would support this approach 4. Buffers: Cushions of time, inventory or capacity 5. Operating flexibility: Changing product specifications or flows in response to problems. Arranging alternative transportation, for instance, or amending the bill of materials in some way 6. Security: Protecting the system from shocks in the form of theft, damage or counterfeiting through, for example, improved firewalls 7. Preparedness: designing contingency plans for possible supply chain shocks and testing plans so that those involved understand what they must do. This requires investment in training, insurance, risk assessments and contingency planning
8. Indirect investments: These typically create goodwill that can be drawn on when a shock occurs. It could mean more support for innovation; engendering greater customer and supplier loyalty; relationship building; revenue management; and the use of supply chain capital
Capabilities and attributes Elsewhere a 2019 paper that
appeared in the Journal of Industrial Engineering International, collected and classified a range of articles already published to try to identify indicators that could boost supply chain resilience. Performance indicators for supply chain resilience: Review and conceptual framework (authored by Chandra Shekhar Singh, Gunjan Soni and Gaurav Kumar Badhotiya), found 17 indicators and developed a conceptual framework to help supply chain managers withstand a shock. 1. Agility – the capacity to quickly react to an erratic change, particularly in supply and demand 2. Flexibility – the ability of a supply chain to adjust, according to what’s needed and the circumstances, in the smallest amount of time 3. Robustness – the ability of a supply chain to proactively pre-empt issues and be designed to withstand them as much as possible 4. Redundancy – having a buffer of stock to cope with disruption 5. Visibility – end-to-end sight of the supply chain 6. IT capability/information sharing 7. Collaboration – operations are planned and executed jointly by two or more autonomous firms for mutual benefit
BACK
06
07
Powered by FlippingBook