Resilience Post COVID-19: Planning to Win the ‘New Normal’
This blog was co-authored by George Fowler, GVP at Spinnaker.
Blue Yonder is committed to helping its customers face the unexpected. To provide insights into the COVID-19 coronavirus pandemic and its impact on supply chains around the world, we are delivering a blog series to help anyone looking for support and advice. Our experts, who have spent years in the supply chain industry, share their insights.
With 80% of U.S. states in some stage of re-opening the economy, businesses are evaluating how new social norms and economic trends established by COVID-19 will shape future customer behavior and actions. With a panic-driven surge in demand and heroic execution having largely settled, businesses are wondering how they should prepare, conduct and sustain future business operations. Businesses should strongly consider the following attributes as part of the blueprint to traverse the ‘regain and renew’ phases of their recovery.
A New Quiver of Arrows
The pandemic with no historical precedence has rendered legacy supply chain planning and execution models ineffective. Emerging customer value propositions require building ecosystems of resilience, and new first principles underwriting supply chain architecture must aggressively leverage digitalization.
We caution against delaying action, awaiting the fog of uncertainty to clear or reverting to the siloed purgatory of spreadsheets. Instead, embrace a reboot that calibrates product-mix, cognitive planning, scenario trade-offs, and creating relevant market offers delivered with always-on, flexible fulfillment flow paths. Business 4.0 powered by Industry 4.0.
Unforeseen volatility, variability and channel shifts saw demands amplify manifold in some industries, while others saw precipitous declines from an abrupt shutdown, social distancing, logistics constraints, or customer’s back-to-basics decisions. Determining whether it’s a short-lived bullwhip effect or the beginning of a new normal requires a thorough product portfolio review—with due diligence.
Besides demand-side analytics, consider impacts from workforce safety and operational configuration mandates that will affect factory capacities and throughput. Emphasis on longer, uninterrupted schedules and minimizing changeovers will require portfolio optimization to deliver a return on assets. Similarly, material and part availability projections and lead times from suppliers down to customer’s retail assortment and merchandizing simplification will need to be considered. Joint business plans with key customers will be critical amidst business continuity imperatives that will drive the line of sight for the next 6 to 18 months.
See Better, Act Sooner
Pre-COVID-19, companies streamlined supply chains, optimized and calibrated just-in-time networks to reduce COGS, lighten balance sheets, and increase profitability. Rolling global COVID-19 hot spots thoroughly exposed the opaqueness across worldwide supply chains. The inability to track and trace logistics networks and inventory distorted assumed lead times, affected the ability to match demand with supply, and potentially introduced even more risk. These supply shocks compounded stretched value chains and exacerbated the customer’s panic. Food worth billions of dollars stagnated, spoiled or were discarded, while some communities didn’t have access to essentials and experienced immense hardships. Critical PPE’s, medical supplies and equipment didn’t make points of patient care on time endangering lives.
Managing risk requires reliability, which warrants transparency.
- Take decisive steps to digitally represent the end-to-end networks, infuse visibility, and enable proactive sensing, prediction and continuous pivot to deliver a timely and profitable response.
- Amplify supplier development programs, overcoming traditional cost-focused relationships.
- Instill a plan—execute—pivot—improve framework alongside trust-infusing business practices to propel suppliers into thought partners and vested stakeholders that will lend agility, flexibility, and responsiveness.
To succeed in a VUCA (volatility, uncertainty, complexity and ambiguity) world, legacy assumptions and operating parameters must give way to proactive planning enabling flexible systems of agile execution. Continuous predictions and real-time order, inventory, and logistics tracking will support scenario planning for market dynamics, supply, and operational disruption. Parameters from trade-off assessments must be captured into playbooks that can be committed and within agile planning systems at a click when situations develop.
To borrow from Donald Rumsfeld, the next disruption is both “known and unknown”. Supply chain professionals know very well, it’s a matter of time before the next disruption shows itself. It is unknown when and how it will manifest itself, but this pandemic has taught us lessons to create the DNA to anticipate, sense and decisively execute.
As the casinos in Las Vegas re-open, our bet is on the new age of supply chain resiliency. Let’s fulfill our potential.
Follow-up posts will build on these themes and explore the role of artificial intelligence platforms, control towers and strategic planning and network optimization.