CLAREMONT, CA— Ongoing supply chain volatility and disruption are creating major challenges for manufacturers, distributors, construction firms and retail groups. The strength of your customer and supplier partnerships is critical to successfully weathering the storm and thriving with high levels of disruption, according to The Society for the Advancement of Consulting® (SAC) Supply Chain SIG. Proactive prioritization and allocation of products and services will create customer loyalty and enable profitable growth.
The World on Backorder – How the Best Supply Chains Compete
“Globally, we are experiencing significant supply chain delays. At various points in the supply chain, organizations may be feeling material disruptions, resource constraints, and cost increases. Expect these interruptions into 2022,” says Diane L. Garcia of Lorraine Consulting, LLC, who has over 13 years’ experience in operations and supply chain management and is an expert in helping clients improve their unique business processes. Diane applies cutting edge supply chain optimization knowledge and implements best practices to manufacturing and distribution companies in North America.
“With such dramatic changes, it’s critical to align your supply chain performance to meet changing demand,” according to Garcia. “To do this, my best clients focus on building flexibility, predictability, and scalability into their supply chain processes and relationships. Lastly, with limited material availability, have a robust allocation process established across your organization. This mitigates delays to key customers.”
How Companies Navigate Disruption Will Separate Winners From Losers
“If there is one item every client has in common no matter the size or geography, it’s the increased level of supply chain material disruption,” points out Lisa Anderson, president of Claremont, CA-based LMA Consulting Group, Inc. and manufacturing expert known for creating supply chain resiliency. “Material shortages. Transportation capacity constraints. Extended lead times. Rising prices. The level of disruption is extreme, and there is no end in sight. We are in a new era of transition, disruption, and volatility.
“There will be a large separation between the winners and losers following this pandemic, similarly to the period following the Great Depression,” she adds. “The companies to thrive will focus on talent, innovation, revamping their supply chain (partnership, reshoring and nearshoring will continue to increase), proactive and integrated business planning (Sales, inventory and operations planning (SIOP/ S&OP), and the digitization of the supply chain. The rest will struggle and diminish.”
The New Trifecta: Anticipate, Manage, and Maintain
“Disruption in the supply chain is the new normal,” explains Elizabeth Warren, President and CEO of Dialed-In Partners, a consulting firm that assists clients in achieving the best possible outcome for their projects. “Today’s executives and supply chain managers have to anticipate and manage disruption, while keeping operations running smoothly.
“As shortages continue to impact markets, businesses should find alternative suppliers now, not when inventory is depleted,” adds Warren. “Businesses survive by pivoting, using materials on hand, such as distilleries making hand-sanitizer, or clothing manufacturers making face masks.
“The post-pandemic business environment continues to be in a state of flux, and the need to strengthen existing supplier relationships, while simultaneously building new ones, is critical,” Warren notes. “Disruptions aren’t going away anytime soon. The key to surviving and thriving is to be flexible and pivot.”
The Fruitful Areas of Supply Chain Resilience
“Supply chain material disruptions across many sectors and global regions have been a key feature of the last eighteen months. This is due to a combination of factors including the COVID pandemic, geopolitical tensions, accidents, and natural phenomena,” remarks Dublin, Ireland-based Patrick Daly, managing director of Alba Consulting, author of the book International Supply Chain Relationships: Creating Competitive Advantage in a Globalized Economy, and host of the Interlinks podcast on globalization.
“This has provided opportunities for those businesses that have explored three aspects of their activity to change and improve—namely, their internal processes, their relationships with key supply chain partners, and innovation arising directly from the disruption and volatility of the trading environment,” points out Daly.
“If you want to look forward to a better future for your business beyond the pandemic and in a world of permanent disruption and volatility, these are the fruitful areas on which to focus to ensure ongoing resilience and adaptability,” he recommends.
Velocity Can Reduce Supply Chain Challenges
“The COVID-19 pandemic has taught organizations how to conquer any global supply chain disruption,” says Art Koch, President of Arthur Koch Management Consulting, LLC, based in Miami, FL. “As the world exits the COVID-19 pandemic, we encounter localized hot spots that disrupt supply chains.
“Diligent, insightful supply chain leaders are transforming their supply chains to be more flexible, responsive, and predictable,” Koch notes. “It’s all about increasing supply chain velocity with reduced lead-times by near-shoring, on-shoring, and in-sourcing. An additional strategy is to partner with suppliers that have dual manufacturing capabilities. These tactics give supply chains added resilience during global, regionalized, or localized disruption. Hence, greater flexibility and responsiveness.”
One Beacon of Light in the Current Chaos
“Supply Chain disruption is an opportunity to create predictability in client communication,” says Dr. Karen Wilson-Starks, President and CEO of TRANSLEADERSHIP, INC., and an executive leadership development expert based in Colorado Springs, CO.
“Companies that are open, honest, and timely in their communications garner respect and trust from their clients,” explains Wilson-Starks. “Clients know they can count on you to keep them informed, to anticipate what they need to know, and to prioritize their best interests. Whenever unavoidable changes and delays occur, proactive communication opens the door for partnership and co-creation of mutually beneficial solutions. You become a beacon of light in chaos.”
Lean is Not Dead
“Some say that lean is dead because disruptions in supply chains have shown how vulnerable lean is and that it exposes companies and supply chains to shortages,” says Antonio Zrilić, Managing Director of LOGIKO CONSULTING, based in Zagreb, Croatia, and the author of the book Six Step Inventory Optimization. “They also blame lean supply chains for material shortages, while others suggest that less rigid inventory management would in some way improve the availability.”
However, Zrilić points out, “They forget that lean should not be implemented without a heavy dose of cooperation and relationships with partners. Lean without relationships is an empty phrase.”
Vulnerability Exposes 18-Month Road to Recovery
“Global supply chains are suffering their own version of Warren Buffett’s famous saying, ‘Only when the tide goes out, do you discover who’s been swimming naked,’” says David Ogilvie of David Ogilvie Consulting a niche consulting firm based in Brisbane Australia. “COVID has exposed how vulnerable the supply chains of the world really are to disruption. It would be fair to say not enough risk management was conducted. No one really role played this type of scenario to the level that has come to pass.
“Companies need to revisit their supply chain strategy and inventory management practices in light of this disruption,” adds Ogilvie. “It will take 18 months or more to recover. This will have a large impact on cash flow as a result. A review and potentially redesign of your supply chain is the most strategic and impactful thing you can do right now.”
Deep Relationships Offset Long Lead Times
“Long lead times due to supply chain disruption are here for the foreseeable future,” said Evan Bulmer, director of EBAA in Adelaide, Australia. The author of Numbers that Matter: Learning What to Measure to Achieve Success in Your Business, Evan is the Financial Concierge for small business.
“It’s critical that businesses maintain strong and effective communication with their customers to help them through what is now a much longer and more problematic buying cycle,” explains Bulmer. “Without that input and direction, your customers are likely to get frustrated and look for alternative solutions.”
Originally posted on SAC website: October 1, 2021