In the first article of our three-part series, we outlined the connection that Avicon’s Diamond Analysis makes between supply chain design and enterprise value and shared nine metrics that influence shareholder valuation and boardroom analysis.
The impact of COVID-19’s extreme and lengthy disruption of supply chain designs has been evident in the marketplace performance of many organizations. Supply chain designs that are end-to-end (E2E) and agile are now critical to enterprise performance. But with an agile global network comes complexity, cycle time constraints, and increased disruption risk. Disruptions are a logical expectation: natural disasters, political unrest, trade wars, and epidemics may be rare locally but common globally.
E2E agile supply chain design needs built-in resiliency capabilities amid disruptions to retain customer response times at reduced operational expense. For the white paper “Advancing E2E Agile Resiliency in Supply Chains,” GSCI Fellows Dave Demers and Brian Kolek leveraged a group of 22 supply chain leaders from different industries to discover the top 10 agile resiliency capabilities and provide an implementation model.
- Agile Resiliency Metrics
To manage agile resiliency in your supply chain, you need metrics that serve three purposes: indicate a disruption early, measure the disruption’s impact, and identify workflow constraints. Measuring an event’s impact on enterprise performance creates the business case for any improvement expenditures. It is a vital first step. - Leadership and Cross-Enterprise Teaming
Timely response to disruptions requires alignment across the enterprise. If your organization struggles with supply chain interdependencies and workflow handoffs, start by streamlining. Developing agile resilience in executive briefings helps shift the culture to begin the process. - Command Center
Whether virtual or physical, agile resilient supply chains have a central repository of supplier information and capabilities. Capturing data from disparate sources in the same format facilitates a complete view of supply chain performance and real-time decision-making. - Agile Resilient Workflow Design
Current E2E workflow designs fail to identify disruption vulnerability risk points, response plans, and risk reduction procedures. Some key opportunity areas include new product introduction, order to cash, supplier/service providers, sales and operations planning, inventory policies, and least-cost sourcing. - Disruption Response Tools and Methods
Teams need support tools to rapidly identify multiple disruptions simultaneously, prioritize workflows, and deploy solutions. AI-based systems that recognize and predict disruption patterns will become backbone elements to foster these abilities. These tools can be expensive, so start with a gap analysis of tools, methods, and team competencies. - Disruption Event Readiness
Like any disaster planning, disruption planning and scenario practice provide structured settings for executives and teams to assess and gain confidence in responding under safe conditions. Scenarios should define team and leadership roles and map critical disruption points in core workflows. - Agile-Resilient Supply Chain Network Designs
Bringing Tier 1 to Tier 3 supplier disruption metrics, such as risk scenario costing and disruption vulnerability mapping, into optimization modeling and ongoing network design analysis will be difficult. But this step is essential. Begin by collaborating strategically with cross-industry users confronting similar network design enhancements. - Dynamic Response
Disruptions require dynamic response flexibility in inventory deployment, supply planning, and capacity on short horizons. The most significant barrier to speed is alignment across the supply chain. Achieving it at a high level may require blurring organizational boundaries and empowering faster decision-making at the functional alignment boundaries. - E2E Trading Partner Alignment
Achieving agile resiliency with long cycle times and high complexity requires aligning with key suppliers and customers to integrate processes, policies, contract terms, and response capabilities. To improve this capability, leaders will have to address cultural issues, such as trust, shared values, and long-term commitments. Next, they should create a baseline model of network supplier interdependencies. - E2E One Team Readiness
Disruptions exacerbate the dysfunction created by internal silos and misaligned incentives. E2E One Team Readiness means creating unified internal goals and bringing supply chain partners into the fold. The road to this capability requires incorporating the perspectives of each department and identifying organizational boundary biases—then stepping outside of them.
Many of these capabilities are best practices that supply chain management professionals know will support and improve their supply chain design. Their contribution to agile resiliency makes an even stronger case for adoption. Diamond Analysis provides the metrics to justify expenditures. Many of the leaders Demers and Kolek surveyed have been advocating for these capabilities for years; they urged the authors to create a blueprint. We detail that blueprint and how to enable it in the third post in our series.
Find a complete description of each capability, a full implementation model, and a case study showing how a top-performing firm implemented all 10 capabilities in the GSCI white paper, available for free download.
Authors:
David Demers, Fellow, Global Supply Chain Institute, University of Tennessee, Knoxville
Brian Kolek, Fellow, Global Supply Chain Institute, University of Tennessee, Knoxville