The Reactive vs Proactive Supply Chain! Which Will Prevail?

Proactive Supply Chain

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Anyone who has worked in Supply Chain knows that problems will arise anytime, anywhere and anyhow. These problems will require quick reaction, expediting, firefighting, long hours and sleepless nights.

Certainly the disruptions caused by the pandemic have made reactive Supply Chain operation the norm in virtually every industry and every geography.

How much of this reactivity could have been, or can be, avoided through the implementation of more robust Supply Chain strategies? After all wouldn’t you prefer to work in a more strategic and less frantic organization?

Everyone Running Around With Their Heads Cut Off

Even before the pandemic occurred, it was standard practice in most companies to have a Supply Chain team that had to react in real time to unforeseen circumstances.

Late deliveries, supplier quality problems, equipment downtime, resource shortages, defective materials, missing inventory, manufacturing capacity and quality issues, demand fluctuations, natural or man made disasters, and more all have the impact of stopping production and shipments.

And when these problems occur, the Supply Chain team is called to action. They must understand the problem and find immediate, if not interim, solutions. The heat is on. Adrenaline is flowing. All other work stops. And the attention from the CEO on down is intense, which is a dramatic understatement.

I’ve lived through these nightmare scenarios many times, as a high-priced expediter. Unfortunately, through exhaustive experiences in resolving part shortages, my team and I became so good at this firefighting that the CEO would call us in to any situation to get things fixed fast, even though it wasn’t our “day job”.

Expediting is a very tough job. And the people who do it are truly heroes who don’t always get the credit and recognition that they deserve for getting a company back on its feet. Still they get the job done and move on.

The Reactive Supply Chain has historically been accepted as a standard reality and responsibility that just has to be dealt with as circumstances demand.

Now throw a global pandemic in the mix. Starting at the end of 2019 and continuing for many years after, the Coronavirus pandemic has exposed the fragility of Supply Chains everywhere. It is hard to name a single product, industry, company, or element of a Supply Chain that has not been disrupted.

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Whereas in the past Supply Chain reactivity was a sporadic activity, in the wake of the pandemic Supply Chain reactivity became the dominant, if not the all consuming, activity for everyone everywhere. Strategies were cast aside. Every action was focussed on dealing with the hour to hour and day to day catastrophes and fires and putting them out as quickly as possible, and then moving on to the next problem.

It is understandable that this would be the short term focus. The pandemic demanded a reactive response and focus.

But the question is wouldn’t a more robust and proactive Supply Chain reduce the severity and incidence of problems?

So many times I’ve heard people say that they are too busy fighting fires to do the work to improve processes so that they could spend less time fighting fires. The result is that they continue to spend all their time fighting fires.

Obviously this type of thinking results in the self-perpetuation of reactive scenarios, over and over and over again.

The Proactive Supply Chain

If you could make Supply Chains more robust this would clearly mitigate, thought not likely eliminate, the number of reactive situations which occur. You would be able to spend your time on more strategic initiatives, more intellectual endeavours, development and competitive differentiation.

The fundamental trick to create the more robust, proactive Supply Chain, is to have the leadership that will allocate the time and resources to pursue these proactive activities.

Without that leadership and vision, organizations will continue to be sucked into the morass of expediting and fire fighting. With that leadership and sponsorship organizations will get to spend the time on a slew of activities that will strengthen their Supply Chains in advance of the next impending disaster.

Some of the steps that can be taken to create more robust and proactive Supply Chains include:

  • Dual sourcing
  • Disintermediation and waste elimination (reducing opportunities for error and disruption)
  • Both Onshoring AND Offshoring, not just one or the other
  • Both Outsourcing AND Insourcing, not just one or the other
  • Alternative supplier pre-qualification
  • Multiple logistics channels, manufacturing and distribution facilities
  • Parallel Supply Chain implementation
  • Backup systems, data, processes and resources
  • Strategic inventory reserves and stockpiles
  • Implement full end to end electronic connectivity and visibility
  • Create a Digital Supply Chain with Control Tower processes and real time decision making and risk management
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Implementing several of these actions will reduce the incidence and duration of Supply Chain disruptions. Implementing the full complement of these actions will dramatically elevate a company’s Supply Chain performance relative to all competition as they will have fewer incidents, will resolve them more quickly, will further strengthen their business, and will move onward more rapidly.

Now this does not mean that there will be no incidents. Take the global pandemic, for example. The level of disruption was so extensive that even the best (eg. just in time) Supply Chains faltered.

But the goal is not really to eliminate Supply Chain failures. Something disruptive will always happen. The goal is to reduce these events and their impact, reduce the time to resolution, and increase the speed of recovery.

Conclusion

There will always be disruptions in Supply Chain. There will always need to be an ability to react to and resolve those disruptions.

But those disruptions are costly. They do not contribute to morale or customer satisfaction or profitability. So it is important to be able to dramatically mitigate both the occurrence of those incidents as well as the time to resolution.

For that reason it is necessary to create more robust, Proactive Supply Chains. The companies that take those proactive steps will not only survive better than Reactive Supply Chain companies, but they will be the companies that will prevail.

Supply Chain’s Moment of Truth has arrived and we need to take the path of proactivity.

Originally published on May 17, 2022.

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