5 minute read
Tom Craig: Supply Chain Vulnerability
Supply Chain management is central to business continuity. The pandemic has validated its strategic importance and criticality, writes Tom Craig President LTD Management, Pennsylvania, USA, a leading authority and professional consultant on logistics and supply chain management and regular contributor to Global Supply Chain.
The Covid-19 pandemic has presented two shocks. The first was the supply shock as manufacturers, suppliers and exporters shut down. Then was the demand shock as buyers and importers locked down or had curtailed operations. The totality was global supply chain chaos and disruption.
Supply chain management is about the end-to-end movement and handling of inventory—finished goods, products, parts, components, and assemblies. That is what supply chain resilience must be built on.
As you build supply chain resilience, you decrease supply chain risk. Please note that creating resilience is not an overnight project. Not by any stretch of a buzzword. There are two key parts to the achieving resilience endeavor. These two parts are not separate and distinct. They overlap.
Part 1: Call this the product side of your resilience effort with all its nodes, links, and contact points.
The first step is to understand your endto-end supply chain. If you do not do this, then your efforts can be hit and miss. There are two sections to it—upstream where suppliers are and where supply chains begin and downstream which is the more recognized area.
Start your assessment upstream—the inbound supply chain—where the supply of supply chains begins, has the greatest complexity and size. There are many stakeholders and players upstream. All this means upstream is at great risk—and hence your need for resilience.
Look at it in terms of its components:
• Transportation and logistics • Suppliers • Products
Transportation, logistic, warehouses— both yours and those of outsider providers—are your supply chain infrastructure. They are an integral part of what the supply chain does.
Think of this as bills of materials, products and their components. You want to identify and prioritize. Rank critical products—and their components/ assemblies. Determine key suppliers. Select the must-have transportation and logistics service providers.
That means looking at suppliers’ suppliers, their logistics, transportation, forwarders, and ports. If your supplier network and their network has problems, then you have problems. Risk flows down.
Map your upstream supply chain and the supply chains within supply chains. Look for gaps, missing step/players, and weak links. That may be the critical items you started with or revised ones based on your analysis. The mapping can identify new risks, such as suppliers or suppliers of suppliers for multiple or key products or components.
Minor ports or small transport or logistics providers could be problems. Not everything is done by large, MNC provider corporations who are not immune from problems either.
Another point in the assessment is the chain of custody. You want to see the flow
of products. Who does what, where, and how? Gaps in the custody can be red flags for your analysis.
The downstream supply chain is built around your company facilities—factories and/or warehouses / distribution centres.
With the analysis of the upstream and downstream supply chain segments come hard questions about what your suppliers, service providers, and their suppliers and providers and respective approach for resilience. You may face decisions on changing some of these. Remember, increased resilience means reduced risk.
Part 2: This is about technology.
Here come technology and its current silver bullet resilience status. Think of TV commercials and you hear—contactless. It makes it harder to spread coronavirus. Implicit in it too is that technology is contactless and will not be impacted by a pandemic. It will not become ill.
Digitization may be the best place to start. Supply chain management can be document heavy. Those documents can be viewed as analog. Moving away from that paper and into digital provides important data. That data can be used as input with other technologies.
Look at other technology applications:
• Robotics for warehouses / distribution centers. • Consider drones for transportation.You may not be using them now, but you need alternatives and flexibility, especially at critical locations. • Blockchain with suppliers and transportation/logistics providers. Again, go beyond your visible tier of suppliers and providers. There are also gaps in the number of participants in and order-shipment and current blockchain application. • Supply chain visibility, end-to-end, where digitization and blockchain— integrated—can be used, along with your internal warehouse management system.
Again, there may be holes. • Artificial intelligence has been offered more in analytical/planning uses, such as with inventory positioning and buying of products and services. • The cloud, within the context of resilience, has a place—from cloud versions of WMS and other technology.
It may give you ways to integrate various technologies both internal and external to your supply chain.
Present technology does not address and solve everything. Do not go into it as your resilient silver bullet. This it is a vital tool for your resilience effort.
Final Thoughts
Building resilience across your supply chain starts with knowing your supply chain, its critical and weak areas, its suppliers, products, infrastructure, and service providers. This includes identifying all the players and stakeholders. Technology then works with understanding your end-to-end supply chain—and going beyond--with the upstream segment.
Some key points for your project:
• Your total supply chain has contact and contactless elements. • Remember, orders can be digital.
However products, components, assemblies, and materials are not. That is why your resilience program must be more than technology. • Go upstream beyond your suppliers and transportation providers. Problems with their suppliers and logistics firms are your problems, especially during a pandemic. • Be diligent. Look for gaps. By definition, they are risks.
An unknown is the time frame—how long with a next pandemic take from start until it is contained, and a vaccine is available. That unknown is a serious challenge to your plan.
Lastly, there is the implementation. Selling it up, down, across the company, and outside to your stakeholders. Those firms may have other customers. Develop and manage a comprehensive and well-considered implementation plan, including tasks. n
