Supply Chain Disruptions: 10,000 Miles Away And 100 Days From Now

Sudy Bharadwaj

With so much attention on COVID-19, it is prudent to consider how to help manage through uncertainty. First, the key issue is not to think of this “pandemic mitigation”; this is supply chain disruption and managing business when disruptions are the norm.

In the recent past, we have seen disruptions of all shapes, sizes, and lengths: recessions, tsunamis, hurricanes, port strikes, Brexit, truck driver strikes – you name it; it happened. We need to realize that disruptions will always occur – some have warnings and some do not. Some are short term, and some are long term. Some distruptions have local impacts and others have global impacts. There are always three key steps to take during a crisis: 1. Recover quickly, 2. Learn, 3. Leverage processes to mitigate the pain the next time.

To recover quickly, organizations need to adopt an intelligent enterprise culture – globally and at most levels in the business, from knowledge workers to senior levels. Organizations must be intelligent, flexible, and agile. What do those three words really mean? Let’s dive into the key themes organizations should adopt.

Visibility

This is not just supply chain visibility, but full product/supplier/customer visibility. During any disruption, a key set of facts is determining which customers, which supplies, and which suppliers or locations are likely to be impacted. This requires full and immediate (near-real-time) visibility of where your inventory is – raw materials, work-in-process, and finished goods. Understanding shortages based on the location of the disruption enables organizations to have strong knowledge of which products, raw materials, and customers are impacted. Such visibility enables intelligence, flexibility, and agility.

Lead times

Many of today’s supply chains are outsourced and spread over thousands of miles. This distance requires organizations at each node of the supply/demand web to typically hold enough stock to continue building, manufacturing, and converting products until the next load of stock arrives. The time to receive this stock is referred to as the “lead time.” Normally, with limited visibility, organizations over-order and/or hold more than necessary, causing inventories to build up. Of course, during a disruption, such a buildup can be very useful. Having a true and accurate understanding of actual lead times will help the organization make better decisions, since knowledge of when the right material should arrive, when/how much to expedite, and when alternate forms of supply may need to kick in (if feasible) can allow organizations improved decision-making. Armed with this knowledge, each node of the supply chain will be intelligent, flexible, and agile.

Collaboration

The good news is that many organizations are performing a rudimentary form of collaboration – using spreadsheets, email, and/or home-grown portals to exchange information with suppliers. One question to ask: Is this current infrastructure scalable to handle your business? Is this infrastructure secure? Is the collaboration sophisticated enough for collaboration with hundreds of suppliers providing thousands of parts/components with the information required by subcontract manufacturers? Are forecasts exchanged in your supply base? Are inventory positions exchanged? Are exceptions flagged and solved before you have supply/demand mismatches? These capabilities (and many more) are elements of true supply chain collaboration and key components of intelligence, flexibility, and agility.

Visibility, lead time, and collaboration are not the only elements to enable an intelligent enterprise, but they are the key elements to be able to manage through uncertainty and disruptions – the new normal in global supply chains. Improve these elements, and you may have fewer impacts from disruptions to your business than your competitors – giving you an advantage.

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Sudy Bharadwaj

About Sudy Bharadwaj

Sudy Bharadwaj has over 25 years experience in helping businesses transform operations in a variety of areas and industries. Sudy's current focus for SAP is helping organizations transform direct spend leveraging supply chain and sourcing competencies.