Supply chain professionals have never had more tools at their disposal, nor a more prominent stage to engage with their corporate leadership teams on risk mitigation and business continuity planning. A calculated and intentional strategy to mitigate supply chain threats enables companies to avoid disruptions that not only lead to higher costs and lower revenues, but an unsatisfactory customer experience and brand erosion.
It’s a pivotal moment for the supply chain profession. The opportunities to develop frictionless business models and solutions are enormous, as are the potential obstacles to meaningful transformation. Determining where to focus your efforts in order to yield the greatest impact is rarely a straightforward decision. When the world feels so upside down, it’s particularly complicated.
Start with an honest appraisal of your supply chain planning function. Though planning has traditionally been viewed as a fundamentally tactical activity, improvements here are foundational, and by their very nature will set the stage for additional ones.
Then, look to these three C's — cooperate, collaborate and communicate — to update your strategy and make your supply chain more adaptive and resilient.
Cooperate: Get your internal house in order. Too often we focus our energies outward, building and nurturing relationships with our supplier partners and other external stakeholders, while overlooking the dependencies within our own organizations that can make or break our improvement efforts.
Design engineering, sales, operations, finance and even IT can contribute to and influence the development and execution of a strategic supply chain solution. Breaking down the silos and building bridges between supply chain and these other functions is essential to optimizing efficiency and profitability. It can also reduce frictions that hinder a quick and effective deployment of your organizational resources to assess and resolve an unexpected disruption.
Companies that take a cross-silo approach to cost management can double their savings, according to consulting firm Bain & Co.
Collaborate: Supply chain management is a team sport. Collaborative planning across the stakeholders involved in an engagement is key to more effective planning. By working closely with customers and suppliers, organizations can facilitate a more open exchange of capabilities and requirements. In the process, they can ensure that resources are best aligned to achieve the shared goal of meeting market demand on time and at the right price.
This might look like coordinating multi-party and joint sales inventory and operations (SIOP) planning calls — including critical component suppliers, OEMs and service providers — to manage escalations and proactively identify and avoid supply and demand imbalances.
Communicate: Knowledge is power in planning. By embracing leading-edge supply chain technology to connect with supply chain partners, companies can improve visibility throughout the supply chain. The more information you can share with and amass from your supply chain partners, the closer you can get to a planning process that’s not only strategic, but smart. Today, supply chain leaders must be able to use this data to draw conclusions and make recommendations. Applying sophisticated data mining and analytics tools to real-time insights into market trends and ever-fluctuating supply and demand signals will enable your organization to move beyond reliance on historical forecasts, so that you can plan with more efficiency, accuracy and flexibility.
The conditions we are wrestling with today are more than a transitory blip. Whether demand is outstripping supply, or supply is exceeding demand, predictable lead times and stable demand will continue to be elusive for the foreseeable future. In the tech sector, for example, many suppliers are telling customers that if they want capacity in 2024, they have to plan for it now.
It’s important to note that while the pandemic has played a leading role in disrupting just about every node within supply chains in every sector and region, there’s a sense among many supply chain leaders that this upheaval was an inevitability. The extremely lean, lowest price-focused supply chain strategies that have pervaded most industry segments for years kept companies on a razor’s edge. We all knew it, but complacency being what it is, it took this extraordinary string of disruptions to compel serious change. It’s an exciting opportunity. Make the most of it, and don’t forget Benjamin Franklin’s words of wisdom: “If you fail to plan, you are planning to fail.”
Richard Diaz is vice president of operations and supply chain at Avnet.
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