Thoughts on Future Challenges and the Strategic Direction of Supply Chain!

Strategic Direction of Supply Chain

In a recent interview I was asked to discuss my views on what was in store for Supply Chain in the near future and beyond. It’s a good time to reflect on recent global events and what this should mean for the future.

A lot has happened. The pandemic has disrupted and upended a lot of paradigms about how Supply Chains should be run. And the profile of Supply Chain has never been higher.

So let’s talk about the future challenges and the strategic direction of Supply Chain. A Supply Chain Renaissance has begun!

What major challenges do you foresee the Supply Chain grappling with looking forward?

 I believe the future will see continued disruptions in Supply Chains caused by the Coronavirus pandemic.  Many of these disruptions should dissipate over the course of the year but the ripple effect seems to have prolonged these disruptions beyond what many would have suspected.

Many industries, and economies are still suffering the far reaching effects of the pandemic. Automotive chips shortages continue for instance, and commodities supply is short of demand in many different areas. Ensuring continuity of supply will be an ongoing issue.

The major challenge in the future will be to establish truly robust and resilient Supply Chains, or at least to begin that work.  The most significant force that will prevent the strengthening of our Supply Chains will be the tendency to go back to the old ways of doing things, which clearly didn’t work in the face of the pandemic.

Despite the cataclysmic disruption caused by the pandemic, inertia will prevent real and sustainable progress from being made. Strong, persistent Supply Chain leadership will be necessary to move the needle in rethinking fundamental Supply Chain principles. And having the courage to implement these changes will be the real test of leadership.

With the reeling effects continuing from the pandemic, what do you see as the top things Supply Chain professionals should focus on?

Supply Chain professionals must lead the charge in envisioning and implementing more resilient Supply Chains.  Supply Chain and it’s importance is more visible than at any time in history.  We must deploy and rally that attention into a force for positive change in Supply Chain.

Additionally Supply Chain professionals must develop the skills to make all of this happen.  Supply Chain must develop the leadership skills to really manage global Digital Supply Chains with real time visibility, based on the end-to-end global electronic connectivity of every aspect of their Supply Chains. 

Back office skills are important to have a grounding in how Supply Chain works. But holistic, visionary leadership development, with an emphasis on transformation and change management, will be the most important skill sets of the future.

As always Supply Chain professionals will have their precious time torn dealing with the day to day tactical issues and fires, while simultaneously carving out time to imagine, promote, and deploy plans for the strategic implementation of more resilient Supply Chain capabilities.

How have the last 2 years affected companies’ perspectives and initiatives in technology and data?

Most every company in every industry has been affected.  Smart companies will recognize the importance of Supply Chain as a leadership function, not just a back office organization.  They should also realize that without the real time visibility, and decision making capability, afforded by technology and data, their Supply Chains will fail at some point.

Paradigms around outsourcing, strategic inventory positioning, single versus dual sourcing, single tier vs. multi-tier vendor management, just in time viability, and the technology that makes these practices work, have all been called in to question.

The very survival of many companies has been in the balance because of these old paradigms. And when your company’s survival is at risk it is a powerful motivator for rethinking old ways of doing things. The pandemic has brought this about. The real question is whether this will stick.

If anyone was questioning the value of real time visibility, digital end-to-end connectivity, and technology enabled decision making these concerns can be laid to rest.

With the major shifts and challenges in the global supply chain how can companies and Supply Chain professionals be more successful in the future?

The number one lesson is everyone should never forget that virtually every Supply Chain failed in some fashion due to the pandemic.  We cannot have short memories and go back to the old ways of doing things. 

Think about “Just-in-Time” for instance.  For decades this Supply Chain model has been the envy of many and the backbone of industries like Automotive.  But clearly this model failed in the face of the pandemic.  If we just go back to the “Just-in-Time” model as it was, some future disruptive event will again rupture this Supply Chain. 

Improvements and variations to the “Just-in-Time” model will be needed.  And this should be expected.  The model was born of the paradigm of continuous improvement, so it should be expected that the model needs to evolve and be further improved.

If an organization did not understand and appreciate the importance of Supply Chain before the pandemic, they certainly should recognize it for its importance now.

Companies will need to invest in the strategic direction of Supply Chain like never before. Employee acquisition, development and retention will be of paramount importance. Strategic investment in processes, supplier partnerships, systems, infrastructure and technology will be critical. Tactical investment in critical inventories, logistics arrangements, outsourcing, and more will also be necessary.

Finally, companies must embrace change and transformation. It will be too easy to just go back to the old ways of doing things. The companies that survive and thrive will be those that make change happen and recognize Supply Chain for its preeminent position in their organization. The rest will struggle and falter when the next inevitable disaster occurs.

Strategic Direction of Supply Chain article originally published on November 16, 2021.