The situation and expectations for CSCOs
This outbreak is only the latest in an increasing number of complex and unexpected disruptions that are impacting business performance – and it will not be the last. Organizations will, from now on, expect their supply chains to be much more resilient and adaptable to future disruptions.
On top of this, supply chains will increasingly be viewed as drivers of growth and a competitive advantage which will raise expectations on CSCOs. Rather than being lean experts, they will be tasked to transform supply chains into digitally-enabled and autonomous ecosystems.
Nine actions for CSCOs:
1. Mobilize a crisis management task force
Initiate a governance model with clear roles and responsibilities as well as communication protocols and reporting.
2. Assess and remediate impacts
For some items, such as protective equipment and sanitizers, demand is off the charts, but stockpiling makes demand signals harder to understand. CSCOs should analyze data around inventory, network, hubs and nodes to match supply to demand. Quantify cost and mitigate current and potential supply and demand disruption. Develop a short-term remediation plan to navigate through the crisis and implement furloughing if needed.
3. Address costs
Supply costs account for 50%-75% of corporate costs, understand which levers can help drive substantiable cost reduction: create cash and working capital by SG&A cost reduction through contract reviews and sourcing events. Improve margin and COGS by simplifying products, rationalizing your portfolio and optimizing asset utilization.
4. Be ready for any crisis
Conduct regular supply chain resilience assessments to define strategy and capability build-out. Conduct stress tests on your supply chain to anticipate future disruption. Incorporate the anticipated business and financial impact in your budgeting and business planning processes. Update your corporate strategy and review the robustness of your business model for future crisis potentials. Finally, leverage rapid response advanced analytics support to address fluid situations in key areas.
5. Invest in building a resilient networked ecosystem
Transition from a linear to a networked ecosystem where all the data is in the cloud and any event that happens in the supply chain can be seen by all, at the same time, and worked on simultaneously. Leverage internal and external data sources to gain end-to-end visibility. This will help to identify and reduce key single points of failure, e.g., supply concentration. Monitor market and economic indicators, supply availability to mitigate risks and supply disruptions.