Supply chain leaders have to train supply chains to be more flexible
Historic disruption is pushing supply chain leaders to recognise that now is the time for change and to make supply chains more adaptable
“If I could come up with one word across the board, that's sort of the watchword for everything that's happened since COVID, the word would be flexibility,” said Karen Leavitt, CMO, Locus Robotics at the Supply Chain USA Virtual 2020 Summit.
The arrival of COVID-19 has meant massive disruption all along supply chains, as well as longstanding market dynamics shifting, particularly when it comes to e-commerce.
For example, in “The development of the e-commerce and direct-to-consumer markets, what's happened in the last six months was what might not have happened in three-to-five years otherwise,” noted Robert Walpole, Vice President, Cargo Operations & Logistics for Delta Air Lines. “So, in all markets, there's a rapid development which has caught all parts of the supply chain sector, not so much by surprise, but certainly created some challenges.”
“Dealing with risk and disruption goes hand-in-hand with the supply chain business,” said Robert Sanchez, Chairman & CEO of Ryder System. “We do it every day. The disruption could be traffic-related, could be weather-related, it could be geopolitical-trade issues that are going on that make getting our product where they need to go challenging on any given day.”
The level of disruption has gone up in 2020 but “Even before COVID, we’ve had significant disruption over the last few years that I think is going to continue to change the way we do business for the future. It’s the three suspects that you all probably know: E-commerce , driven by Amazon; it’s asset sharing, driven by Uber; and it’s the next generation vehicle – the electric and autonomous vehicle, that has really driven by, I would say, Tesla.”
Leavitt thought that the size and rapidity of change means “People now are at the point where you realise that that no matter how great a grasp you've had over the historical metrics of your business, anything could come along to disrupt it, and being able to respond nimbly to these changes is critical.”
For Matt Konkle, Senior Managing Director, Head of Industry Teams at G2 Capital Advisors, this dynamic is creating mismatches in capacity and ability to deliver: “As an industry, we think of the gap as a complexity gap. There's record demand [and] record volumes across this entire industry right now. So, it's a very exciting time, unlike anything in the last 20 years in this industry as it's evolved, but companies have to identify how to prioritise what complexities they are going to tackle first, [and] how they're going to get the capital to do it.”
Prioritising the right strategic investments to build up capacity and know-how now will pay dividends in the future, said Ravi Dosanjh, Head of Strategic Programs at Intel. “The muscles we build and supply chain during the numerous disruptions come into play now, and I think it sounds obvious, but you need to enable the right muscle, the right capability at the right time. That's something that doesn't happen by accident. …I think the analogy is, if you want to be good at business continuity planning, you need to treat it like recurring military parachute training. You need to do it all the time and you need to keep doing drills…. You really need to embed it.”
Part of this is the overarching leadership and strategy of an organisation, but critically it must be underpinned by the right information, gathered systematically and parsed so it can be understood throughout a supply chain.
Ed Barriball, Partner, McKinsey & Company said “You need to bring together a mosaic of data,” from external providers, and from within that is merged “to start to get an idea of who I'm actually buying from, or my suppliers are buying from.”
“Once you have all that information,” Barriball advises that you need to “understand where your vulnerabilities and risks are in the supply chain. And for a lot of folks, I think that's a new muscle to be working.”
Konkle agreed that the data and enabling tech are, and will be, key, but plenty still have a way to go. “You have to stay nimble, you have to have alternatives, and you have to be able to enable those alternatives to meet the consumers demand. Part of being able to enable those scenarios, though, is really having the technology of data right between the carriers and the shippers and being able to flex between those various carriers.
This is part of our reporting from the Summit. To be notified when we release the complete post-Summit report,sign up to our newsletter here!