Now is the time to ensure you can respond quickly to changes in your supply chain.
‘Let’s face it – it can’t get any worse.’ This came from a man on ABC News, talking about the impact of COVID-19. It’s an optimistic statement at best, but more likely famous last words. Make no mistake about it – things can get much worse. 2021 might just make us long for 2020 (incredulous as that sounds). Whether 2021 is an improvement on its predecessor or not, the fact still remains that our supply chains need to become more responsive. It’s time to ask yourself, how agile is your supply chain?
Accenture recommends we prepare for what comes next through a continuous cycle of risk mobilising, sensing, analysis, configuration and operation to optimise results and mitigate risk. The model looks like this:
Step 1: mobilise an initial response plan that establishes operation rules for responding to all supply chain interventions and contingency management.
Step 2: Sense and prioritise new risks and implications to your supply chain components, services and ecosystems.
Step 3: Analyse what-if scenarios and protocols for source, plan, make, distribute and service implications.
Step 4: Tailor and configure network and product flows to execute the protocols. Develop a balanced scorecard to track and measure effort.
We need to continuously operate, execute plans and follow results. Accenture argues that this is the best way to create an agile supply chain that responds quickly to change. But there’s more than one way to skin a cat.
The ‘Triple A’ response involves a three-step response:
Step 1: Analysis – quickly identify impacts of rapid change in demand, supply and supply chain.
Step 2: Action – quickly identify opportunities to make changes to ensure supply chain capability, optimise costs and opportunity and deliver market-leading service levels.
Step 3: Augmentation – fills gaps in teams, add additional capacity, provide management assurance and governance frameworks.
Both the Accenture and the Triple A model have been proposed as a response to the impacts of COVID-19. These models, however, will be useful post-COVID too, when the economy is changing. It’s highly likely the economy will have a K-shaped recovery with some segments recovering faster than others.
There’s also likely to be some changes to customer behaviour, so we need to think about how can introduce agility into our supply chains to cope with this demand.
For an agile supply chain to exist, the executive buy-in must be high. All executives need to have a proper understanding of demand and the risks associated with your supply chain. As demand changes, executives need to adapt supply chains to put them in the best position to grab the market opportunities.
Procurement needs to involve a high degree of communication and transparency so that contracts can be managed in a way that allows for dynamic planning. The world we live in demands that we have more continuous and dynamic supply chain management so we can respond to market changes quickly.
No one knows how the economy will recover. We might get lucky and have a V-shaped recovery in 2021; we might, as mentioned previously, experience something closer to a K-shaped recovery. Either way, the last position you want to find yourself in is planning for the scenario that doesn’t eventuate.
The best piece of advice we can give is this: know thyself. You can’t adapt if you don’t know the intricacies of your own supply chain. Purchasing Index is an analysis powerhouse, with the tools needed to model and predict changes in your supply chain. Don’t wait to see how 2021 pans out; get in touch now and inject agility into your procurement practices.