I recently saw the headline for an article that said supply chains are NOT disrupted, just a demand planning issue.
I could not believe it. The writer must either have a very narrow idea of what supply chain is or be unaware of what is going on in the world.
It’s this head-in-the-sand thinking and denial and the resulting inaction that will kill businesses in the future. The moment of truth for the supply chain has arrived!
Supply Chains Are Broken – Stop Denial!
Supply chains are broken. The coronavirus pandemic has exposed the fragility of supply chains from the start, and this unprecedented disruption continues today and into the foreseeable future.
The pandemic led to hamster purchases early on. Store shelves were emptied of toilet paper and basic housewares. Masks were in short supply. Healthcare PPE (personal protective equipment) and ventilator shortages impacted the medical treatment system.
The shortage of computer chips has affected the automotive industry, among others. Raw material and raw material shortages of all kinds have delayed the manufacture and distribution of goods in most industries, driving up prices in the process. Just-in-time systems that were once admired have faltered badly.
Skilled labor and processing capacity are limited in all sectors. Restrictions on offloading container ships, shortages of truck drivers and trucks, and space constraints in warehouses and distribution centers have all contributed to restricting the flow of goods of all kinds.
No one, no company or industry is immune from the effects of the pandemic. Never before in history have governments, politicians, corporations, institutions, the media and everyday people referred to “supply chain” so extensively.
Does that sound like supply chains are unbroken? Does that sound like it’s just a scheduling issue? Does that sound like conditions that can be ignored until things magically return to “normal”?
Anyone who denies current realities is doomed to failure and doomed to drag their colleagues and their companies down with them. You will remain in the Middle Ages and miss out on the upcoming supply chain renaissance.
The full extent of the supply chain breakdown and redesign
As mentioned, the article I reference said the supply chain has not been disrupted and it is just a scheduling issue that we are experiencing. To me, this belies a very short-sighted view of what supply chain actually entails.
The supply chain is the real engine of what makes most businesses run. Supply chains include leadership and management, engineering, marketing, planning, finance, sourcing, procurement, manufacturing, distribution, warehousing, customer service, I/T, engineering, order management, reverse logistics, environmental stewardship, and more.
It is fairly easy to see that the supply chain disruptions that we have experienced and will continue to experience affect a large number of these aspects of any business.
It’s not just a matter of planning.
One of the fundamental problems that has contributed to the current collapses is the sheer lack of visibility. No matter how good your planning system, if you don’t have real-time, end-to-end visibility into what’s happening at every level of your supply chain, you’re bound to fail.
Comprehensive, real-time visibility would enable the most informed, holistic decision-making required to deal with what is going on. This type of visibility would also allow for instant 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 bad strategy and a fallacy. No matter how good your planning processes are, mistakes will always happen. 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 requirements and plans will always ebb and flow, and there will always be unforeseen circumstances. The enlightened approach is to design a supply chain that can respond to any circumstance in real-time and quickly. It shouldn’t matter how long the delivery times are.
Resilient Supply Chain Design is lead time independent and frankly planning independent.
The Dangers of Denial
Failure to recognize the issues with current supply chain performance across the board will be the leading cause of supply chain failures in the future.
At some point the pandemic will pass or at least become more manageable. People will go back to work, manufacturing plants and warehouses will be at full capacity, and logistics operations will be handling their backlogs.
Unfortunately, this will result in many people reverting to their old pre-pandemic ways of doing things. They will not make any improvements or investments in their supply chains. You will not establish better visibility and connectivity. And they won’t invest in their people, leadership and strategies.
Some of this will be due to people getting stuck in old habits. Some of this will be due to a lack of executive intelligence. And some of that will be due to the denial that we discussed earlier.
But some things are predictable: death, taxes, and change. Who knows when the next global pandemic will hit. But what we do know is that there will be some local and broad-based disruptive event of some sort that is about to happen.
This can be a natural event such as a tsunami, hurricane, earthquake or fire. Or it could be a man-made event, like an industrial explosion or a nuclear meltdown, or a shipping 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 large enough to shut down businesses and industries for some time. Disaster will strike.
Because of this, organizations must move beyond denial and build more resilient and robust supply chains that will help withstand and mitigate these disruptive events.
The companies that don’t take these proactive and preventive 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 question of planning. Individuals and companies who deny this need to pull their heads out of the sand.
Failure to do so will prolong recovery and perpetuate the inability to respond to and deal with future disruptive events.
The smart leaders and the smart businesses will take active steps to design and implement more resilient and robust supply chains. The digital supply chain of the future has at its backbone the end-to-end electronic connectivity and real-time visibility that will create that resilience.
We are at the beginning of a new supply chain renaissance. Those who return to the old ways become obsolete and remain in the Middle Ages.
In which state is your company located?