THE FUTUREPROOFED SUPPLY CHAIN

This helps supply chain leaders think proactively, rather than reactively. Many roads can lead to a supply chain that’s more future proof. Transforming work culture and values to attract and retain forward-thinking staff, for example, or setting sustainability targets aimed at renewable energy and eco-friendly sourcing can help guard against future troubles, Greaves-Cacevski says. Both digitization and technology more broadly can help to safeguard supply chains going forward.

“The advantage of digitization is that it increases transparency between the process steps between internal and external partners along the supply chain,” Greaves-Cacevski says. “A digital platform reduces wait-time between steps. This time saved in waiting for responses, feedback, or product is converted to time spent on activities that produce a higher value, such as finding alternative sourcing and transportation strategies, automating the procure-to-pay system, reducing production scrap volume, or validating Kanban board.”

Future Instability

With the speed of recent innovation and technological advancement, the future seems to be arriving faster than ever. Artificial intelligence (AI), the Internet of Things (IoT), cloud technology and other developments appear set to transform not only supply chains but how business is conducted more generally. At the same time, between events like the war in Ukraine and the COVID -19 pandemic, disruptions and geopolitical circumstances appear more common and far-reaching.

What this means for supply chain professionals is that they must not only prepare for those challenges, but deal with them as they arise. The ability to do so involves adequate staff training, proper technology adoption, and so on. So, what might the future hold, and how can supply chain professionals ‘future proof’ their operations to meet those challenges?

Disruptions can be divided into two groups: innovation or market-led, says Maria A. Greaves-Cacevski, senior category sourcing lead, indirect, at Chemtrade Logistics. For instance, innovation in technology can lead to faster transactions, which can then cause bottlenecks when there’s a gap in data transparency. Or, market disruptions such as policies, legislation, trade laws and similar factors that can cause access barriers leading to long process times or supply interruptions. Disruptions that are hard to predict include economic, environmental, or humanitarian crises.

Yet, these various disruptions and challenges are different from each other, Greaves-Cacevski notes. And while disruptions are usually negative, they can sometimes be controlled and therefore have a positive outcome.

“A challenge is the situational outcome stemming from instability within the business environment,” she says. “The opportunity for a business is to convert these obstacles into constructive new processes or best practices; that’s the silver lining behind understanding the difference between a disruption and a challenge within the supply chain process.”

Future proofing a supply chain – developing resilience and the agility to react – involves

Supply chains will likely remain unstable, at least in the short term, says Douglas Kent, executive vice-president of strategy and alliances at the Association for Supply Chain Management (ASCM). The organization’s Supply Chain Stability Index shows that supply chains are two times as vulnerable as they were pre-pandemic, Kent says. Disruptions are no longer tied mainly to the pandemic, and now arise from various sources, including geopolitical unrest, the labour shortage, climate change and so on.

Optimizing the supply chain network design can help build in resiliency and protect against future shocks, Kent says. But there are still questions surrounding what should change within those networks, whether nearshoring or reshoring are necessary, and so on, Kent notes. That view across the supply chain gets more complex when suppliers are included, he says. It’s important to be able to rethink and build scenarios around network design considerations and having the agility to shift across the network to mitigate risk.

As supply chains rethink their networks, they must also reconsider their inventory strategy, Kent notes. Organizations should think about, for instance, what state they should hold their inventory in, whether raw, semi-finished, or finished goods, and therefore where those products should reside to be as agile as possible.

“Just building up inventory blindly without a thoughtful approach to that inventory, that higher level inventory strategy, doesn’t work. We know that,” Kent says. “But how do I get better and how do I increase the speed of my sales and operations planning process to replan and take advantage of the inventory and the network that has been established?”

A third area of focus to build resiliency involves attracting supply chain labour, Kent says. A better strategy is needed to bring in entry-level workers while also deciding what are the skills that organizations need in the future. Appealing to and retaining that talent is necessary to make the most of technology options.

“We might have made the investments in the technology, but if our talent isn’t growing enough to be able to fully utilize that, then some of those investments may go underutilized,” Kent says.

Mitigate And React

Future proofing is made more difficult by the unpredictability of international and geopolitical events, like the global shutdown during the COVID-19 pandemic and the war in Ukraine, says Chris Sawchuk, principal and global procurement advisory practice leader at The Hackett Group.

And while it’s difficult to foresee such largescale disruptions, organizations must still plan to deal with potential challenges. Before the pandemic, many organizations had become complacent to potential risks inherent in a global supply chain.

“The question is, if I know that, what can I do now to start protecting myself,” Sawchuk says. “You have to determine as an organization, ‘what level of risk am I comfortable with?’ What we’ve experienced over the last couple of years is that the events that we went through expose vulnerabilities.”

Sawchuk recommends that organizations look at strategies for mitigating those risks while also creating a playbook that outlines how to react when unexpected events arise. That process can involve looking at inventory, considering dual sourcing, or other strategies.

Some organizations are also considering shortening their supply chains to deal with potential Black Swan events, Sawchuk says. Some companies are looking to decouple their supply chains from China or thinking about a “China-plus-one” strategy that involves sourcing from other locations.

“A piece of agility and a more proactive standpoint is having foresight in terms of what could happen,” Sawchuk says. “If you have predictive capability, that can give you more agility as an organization. Those are two components that you have to look at.”

While it’s impossible to predict the future, organizations can still strive to prepare. With technology changes and uncertainty still ahead, that preparation is more important than ever. SP

BY JACOB STOLLER