I recently saw the headline for an article which said that Supply Chains are NOT broken, but rather it is just a demand planning issue.
I couldn’t believe it. The author must have either a very narrow view of what Supply Chain is, or be oblivious to what has been going on in the world.
It is this very head-in-the-sand thinking and denial, and the resultant inaction which will ensue, that will kill companies in the future. Supply Chain’s Moment of Truth has arrived!
Supply Chain ARE Broken – Stop the Denial!
Supply Chains are broken. The Coronavirus pandemic has exposed the fragility of Supply Chains since the beginning, and this unprecedented disruption continues to this day, and for the foreseeable future.
Early on the pandemic resulted in panic buying. Store shelves were emptied of toilet paper and basic household goods. Masks were in short supply. Healthcare PPE (personal protective equipment) and ventilator shortages compromised the medical treatment system.
Computer chip shortages have impacted the automotive industry, as well as others. Commodity and raw material shortages of every kind have delayed the manufacturing and distribution of goods across most industries, driving up prices in the process. Once admired just-in-time systems have faltered badly.
Skilled labour and processing capacity has been limited across all sectors. Container ship unloading constraints, truck driver and truck shortages, and warehousing and distribution centre space limitations have all served to restrict the flow of goods of every kind.
No one, no company and no industry has been immune from the effects of the pandemic. Never before in history have you heard “Supply Chain” referenced so broadly by governments, politicians, companies, institutions, media and everyday people.
Does this sound like Supply Chains are not broken? Does this sound like it is just a planning issue? Does this sound like conditions that can be ignored until things magically return to “normal”?
Anyone who is in denial about the current realities is doomed to fail, and doomed to drag their fellow employees and their companies down with them. They will remain in the Middle Ages and miss the Supply Chain Renaissance that is forthcoming.
The Full Extent of Supply Chain Breakdown and Redesign
As mentioned earlier the article I reference said that Supply Chain were not broken and it is just a planning issue that we are experiencing. To me, this belies a very myopic view of what Supply Chain actually entails.
Supply Chain is the very engine of what makes most companies run. Supply Chains involve leadership and executive management, development, marketing, planning, finance, sourcing, procurement, manufacturing, distribution, warehousing, customer service, I/T, engineering, order management, reverse logistics, environmental responsibility and more.
Its pretty easy to see that the Supply Chain disruptions we have been experiencing, and will continue to experience, involve a large number of these aspects of any business.
It is not just a planning issue.
One of the fundamental problems which has contributed to the current breakdowns is the sheer lack of visibility. No matter how good your planning system may be, if you don’t have real time end-to-end visibility as to what is going on at all levels of your Supply Chain, then you are bound to fail.
Comprehensive visibility, in real time, would enable the most informed, holistic decision making necessary to deal with what is going on. This type of visibility would also allow for instantaneous course corrections based on what is going on.
The truism is that we need more resilient and robust Supply Chains.
Waiting for good planning, or good forecasting is a bad strategy and a fallacy. No matter how good your planning processes are there will always be errors. And no planning system could ever predict and account for pandemic level disruptions.
For Supply Chains to be resilient they must adopt a “lead time agnostic” design philosophy. Customer demands and plans will always move up and down, and there will always be unforeseen circumstance. The enlightened approach is to design a Supply Chain that can respond to any circumstance in real time, and quickly. It shouldn’t matter what lead times are.
Resilient Supply Chain design is lead time agnostic, and frankly planning agnostic.
The Dangers of Denial
Failure to recognize the problems with current Supply Chain performance, across the board, is going to be the prime cause of Supply Chain failures in the future.
The pandemic will pass at some point, or at least become more manageable. People will get back to work, manufacturing facilities and warehouses will be operating at full capacity, and logistics operations will be on top of their backlogs.
Unfortunately this will result in a lot of people going back to their old, pre-pandemic, ways of doing things. They will not make any improvements or investments in their Supply Chains. They will not establish better visibility and connectivity. And they will not invest in their people and leadership and strategies.
Some of this will be due to people being stuck in the old ways. Some of this will be due to lack of Executive intelligence. And some of this will be due to the denial we have previously discussed.
But some things are predictable: death, taxes and change. Who knows when the next global pandemic will occur. But what we do know is that there will be some local, and broad based, disruptive event of some kind which will happen at any moment.
It could be a natural event such as a tsunami, hurricane, earthquake, or fire. Or it could be a man-made occurrence, such as an industrial explosion or a nuclear meltdown, or a shipping lane blockage like the Suez crisis. These single points of failure have major disruptive impacts.
While most of these events will not have the global reach of the pandemic, they can be big enough to shut down companies and industries for some period of time. Disaster will strike.
It is for that reason that companies must get past the denial and build out the more resilient and robust Supply Chains that will help to withstand and mitigate any of these disruptive events.
The companies who fail to take these proactive and preemptive steps will falter while their competitors who had this foresight will survive and thrive.
Supply Chains are broken. This is much, much more than just a planning issue. Individuals and companies who are in denial about this must get their heads out of the sand.
Failure to do so will prolong recovery and perpetuate an inability to respond to and handle future disruptive events.
The smart leaders and the smart companies will actively take the steps to envision and implement more resilient and robust Supply Chains. The Digital Supply Chain of the future has as its backbone the electronic end to end connectivity and real time visibility that will create this resilience.
We are at the beginning of a new Supply Chain Renaissance. Those who go back to the old ways of doing things will be passed by and will remain in the Middle Ages.