4 steps to overcoming supply chain challenges
There’s no denying it – we live in a VUCA world. Volatile, uncertain, complex and ambiguous – this is the backdrop against which manufacturing organisations must now fight to maintain competitive advantage. Faced with a host of supply chain challenges, how will these organisations survive and even thrive in this new reality? It’s a question I’m often asked, and my response is twofold: develop strategies to build operational resilience and focus on driving improvement for long-term sustainability.
Right now, there are seismic shifts disrupting both supply and demand. The Russia-Ukraine conflict is directly impacting global food and raw material supplies. We are also seeing secondary effects resulting from the sanctions that have been imposed on Russia and the burgeoning humanitarian crisis in Ukraine. Add to this the COVID-19 supply chain disruptions, the impact of Brexit and the ramifications of climate change and the result is a global economy in turmoil. Challenges for supply chain leaders now are many and include rising energy prices, limited raw material availability, a potential food crisis and significant cost increases.
What steps can leaders take now to overcome supply chain challenges?
In this time of unprecedented change, leaders need to take a practical approach to mitigating the effects of supply chain disruption. Here are my four recommended steps to help you shockproof your supply chain in the short, medium and long term.
Implement operational review meetings
In the short term, the focus is squarely on managing the immediate impact of disruption by ensuring the robustness of your day-to-day operations. I recommend introducing daily, weekly and monthly review meetings that will give you greater visibility into all facets of your end-to-end supply chain, and involve personnel at all levels, from operators to senior management.
These operational review meetings should focus on escalating problems and resolving key issues. Teams need to establish robust triggers, KPIs and red flags which should feature prominently in the organisation’s objectives and day-to-day operations. For example, you could consider setting up crisis management teams to deal with unexpected challenges.
Build redundancies into the supply chain
The medium-term solution to coping with disruption is building redundancies – which can cover anything from extra inventory to using multiple suppliers – into your supply chain. You’ve likely ruthlessly calibrated your supply chain for cost effectiveness and efficiency, but you now need to move away from a cost optimisation mindset to a business longevity and sustainability mindset. Creating redundancies will come at a cost, but the investment will be worth it in the long run.
Develop workforce capability and implement robust processes
In the long term, the key to ensuring resilience in times of disruption is building a strong culture of continuous improvement. A foundation of best practice will empower your employees to take a proactive approach to problem-solving and driving improvement.
For leaders, this means cultivating a simultaneous focus on running and improving the business. It means documenting, mapping and optimising processes across your value chain, and building robust systems with circuit breakers and fail-safe protocols that will ensure flexibility and sustainability.
Review your supplier base
It’s essential that you regularly review your supplier base, not just against the traditional parameters of cost and quality, but with a view to building redundancies and fallback options into your network.
At the height of the pandemic, for example, businesses that only had a single source of supply had to reconfigure their supply chains, while those with multiple sources were better positioned to make alternative arrangements. Ensure you have at least two suppliers for each strategically important supply, and that they are geographically dispersed.
For supply chain leaders, VUCA is now the new normal. But out of this chaos comes the opportunity for fundamental structural change that will herald a new era of supply chain management. To ensure long-term success, organisations will need to have strategies in place that will enable them to anticipate risk, mitigate impact and respond with agility to any eventuality.
About Philipp Meier
Philipp Meier is Supply Chain Director, CCi Europe. He has an extensive background in end-to-end supply chain/value chain management and has worked internationally across the plan, source, make and deliver spectrum of the supply chain and beyond. He has held positions of increasing seniority at Unilever and Colgate-Palmolive in the UK, Germany and Mexico and has successfully led projects and teams in the areas of supply chain planning, CPFR, S&OP, warehousing, transportation, order to cash, procurement, manufacturing and business development.
Learn more about Philipp’s expertise and connect with him on LinkedIn here.