Many organizations can visualize and analyze their supply chains (see Figure 2) but lack the differentiating capabilities that allow them to respond with agility. The ability to sense likely disruptions ahead of time is a vital trait that allows them to prepare rather than constantly be in reactive mode. The effects of a severe weather event can be mitigated by moving inventory to less affected areas or expediting order shipments before disaster strikes.
After disruptions hit, businesses need a codified response — a playbook for what to do and whom to contact, with processes that are automated and repeatable. With a control tower processing data from sources across the supplier ecosystem, companies can be positioned to not only quickly act and resolve issues, but to optimize their response and create a virtuous cycle.
2) Gain a clear understanding of your baseline resilience.
Control towers can run scenarios that help companies develop backup plans for when their supply chains are jolted. But a business can only realize such benefits if it has a foundational level of resilience built into the enterprise. Before scenarios can be helpful, a business must be able to identify alternative suppliers, materials, products and logistics routes. At that point, the technology comes into play — crunching the data on what’s happening or soon could happen at all current and alternate suppliers and providing options for how to proceed.
Scenarios also provide details on the ramifications of each option. Perhaps an alternative supplier is available but is located farther away and will cost more. That added cost still may be far more desirable than having to shut down a plant if a threatening event indeed transpires. Thus, the company diversifies its risk and has buffers — which, for too many businesses, have been sorely lacking during the ebbs and flows of the pandemic.
Companies still must prioritize how they buffer the business, lest costs rise to unmanageable levels. This heightens the importance of taking customer segmentation and product segmentation into account. More than ever, companies must be focused on serving their most valuable customers and keeping their most profitable products in circulation. Sustainability considerations, such as the overall carbon footprint of the organization’s supply chain, are a significant and growing concern that also must be factored into the scenarios and options weighed by the business.
3) Review your operating model.
Attempts to achieve end-to-end supply chain orchestration can be foiled if organizations don’t first consider the implications of their operating model. For example, where are your warehouses today, and where should they be to sense and respond when extreme events occur? Are your people in a position to respond if, for some reason, they can’t come into the office? What alternate routes to market are available in case first and second options are unavailable? Are there elements of the supply chain that you are considering bringing closer to home to improve your agility?
In addition, companies must have a clear understanding of the target skills, behaviors and mindset they need to successfully orchestrate their system. Pitfalls lurk, depending on how leadership handles delicate decisions on who should have access to the view provided by a control tower and who can make changes in the supply chain based on that visibility. If access is too restricted, it can lead to resentment in the ranks; if it’s too open, the business risks spreading responsibility for decisions with huge ramifications for the enterprise across too broad a population. These risks underscore the premium that has to be placed on talent; businesses have to have the right skill sets in place — highly trained people adept at analyzing incoming information and presenting it in a way that helps leaders make the right decisions.
The bottom line on supply chain orchestration
End-to-end supply chain orchestration is a crucial component to help businesses recapture revenue losses from the numerous external events that wreak havoc on the efficient delivery of goods. While it can help companies weather the next generational cataclysm, it also helps them optimize their response to ever-more-frequent disruptions that come in the form of power outages, storms, wildfires, port congestion, rail disruptions, container shortages and other logistics delays. Companies that lay the groundwork for a well-orchestrated supply chain position themselves to face the future with confidence that their heightened agility and resilience will sustain them through even the most uncertain times.