Resilience Road Map
Resilience requires organizations to have visibility into not only their
internal value chain but also into what’s happening with their buyers,
their suppliers and the suppliers of their suppliers. Technology including the supply chain “control tower” and secure and automated sharing of
supply and demand status is transforming organizations’ transparency into their supply chains.
To build a resilient supply chain, businesses need to focus on three
key areas, says Haynes-Gaspar: security, agility and sustainability.
“The first would be to strengthen the supply chain through
risk management and improving end-to-end transparency,” she says.
“The second would be enabling data and people to work together
to transform the supply chain and the third is to think about forming partnerships and industry consortia.”
Security
Identify Security Threats
Set Up Control Towers
Integrate The Supply Chain
Focus On The Problem
Supply chain disruptions threaten security at many levels, especially when it comes to essential life-saving products, job stability and the transport of goods. “Complexity, insecurity and bottlenecks in supply chains present a risk to economies and, frankly, to national security,” says Haynes-Gaspar. Increased connectivity and collaboration offer greater visibility into supply chain operations but also pose higher cybersecurity risk.
An effective way to achieve a bird’s-eye view of the entire operation is with a supply chain “control tower,” much like an air traffic control tower. Control towers—a combination of people, processes, data and organization, supported by various technology elements—allow continuous monitoring of supply chain disruptions and risks in real time.
Insourcing doesn’t necessarily prevent supply chain disruption. “Operations will likely still be outsourced for flexibility, cost and access to advanced capabilities,” says Michael Whitman, principal at PwC. “But you can use technology to create connected or virtually integrated supply chains where you have a better view of what your contract manufacturers or suppliers are doing.”
A control tower that offers heightened visibility across the supply chain is not an all-in-one application but instead a group of capabilities built on a complex technology architecture. Its value depends on human experts leveraging visibility across the supply chain to identify which potential disruptions and problems to prioritize, determine relevant solutions and take action. “With a control tower, you can go from no visibility into your global shipments to getting hit all day long with notices about what’s happening,” says Whitman. “You should focus on what the problem is. The technology by itself cannot solve it.”
Agility
Sustainability
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For decades, supply chains have not been built for agility. Their intricate production networks have been optimized for high efficiency, reduced cost and low inventory levels—but not necessarily for responding quickly to a crisis or meeting rapidly changing customer demands.
When supply chains fail to anticipate uncertainty or crisis, explains Whitman, “the result is a more fragile supply chain, where everything has to work perfectly. If it doesn’t, there are challenges that manifest as increased cost or lost revenue.” But as companies begin to face disruptions almost regularly, the cost equation is changing. Businesses are no longer focusing only on low cost—they’re willing to pay more for resilience and agility. Visibility and intelligence allow businesses to understand and make decisions based on an accurate risk model.
Agility is critical to handling the challenges of operating in what’s increasingly described as a VUCA (volatile, uncertain, complex and ambiguous) world. Globally, manufacturers have started their journey toward agility by implementing technologies to connect previously siloed supply chain functions.
“I think figuring out how to crack this agility discussion through a profitability lens is where the magic is,” says Haynes-Gaspar. “Executives are rethinking profitability. They see it not through the lens of operational efficiency but rather operational stability, because of what disruptions can cost companies on an EBITDA basis.”
Pinpoint Roadblocks
Change The Cost Equation
Prepare For Ambiguity
Redefine Profitability
The environmental, social and governance (ESG) aspects of sustainability are gaining stakeholder attention the world over, but for a supply chain, sustainability isn’t just about going green. It’s also about production efficiency, improving product quality and manufacturing processes, setting compliance standards for partners and suppliers and driving performance improvement.
“Sustainability is ongoing, not a response to a specific event,” says Vinay Sumant, principal at PwC. “We’re talking about a steady supply of materials. Some of the decisions may not be in anybody’s hands in terms of what that steady supply is. There is disruption for various reasons. But there are ways within the supply chain to plan and help ensure steady supply.”
Another example of the need to maintain supply during disruption is when a sudden order comes in that hasn’t been planned for but needs to be fulfilled quickly to gain the revenue. Advanced technologies that provide end-to-end visibility, agility and transparency throughout the supply chain can enable a swift response.
Take the case of a fuel supplier that uses a just-in-time process to ship fuel from its source, the Gulf of Mexico, to the destination, a gas pump in New Jersey. Ensuring a steady supply of gas in the pump may mean establishing enough redundancy in the pipeline—such as having two providers available—as a buffer against disruptions.
Go Beyond ESG
Ensure Steady Supply
Invest In Technology
Establish Redundancy