As we approach the start of November after a significantly challenging year for many multi-industry supply chain management teams, the focus is turning toward learning and preparation for what to expect and plan for in the new year.
First and likely foremost, many would like to believe that the year 2020 was the extraordinarily outlier, a global wide pandemic that tested the limits of many industry supply chains. Many indicate that 2020 provided testimonial to human adaptiveness and ingenuity when it counted most.
That stated, the year 2021 will present its own collection of product demand and supply network challenges. When and until a global wide COVID-19 coronavirus vaccine is available, distributed and administered to populations, such challenges will continue to test industry supply chain ecosystems.
Last week, this supply chain technology industry analyst had the opportunity to both view and participate in the UK based Future Insights Network, TRANSFORM 2020 Supply Chain Management conference. I participated in a final day keynote fireside chat session with Moderator, Maria Villablanca.
The TRANSFORM 2020 sessions were many and the speakers were varied in role and perspective. Overall, they all provided important observations, insights and learnings which reinforced other common messages being communicated among global wide supply chain leaders.
Reviewing my notes, they include:
- The realization that COVID-19 laid bare many of the cracks and fissures of existing industry supply chain business processes and capabilities along with the testing of their abilities to pivot. That included the occurrence of significant demand and supply network shocks happening simultaneously, that very few supply chain management teams could have anticipated or prepared for. Top performing supply chains were those that could pivot as quickly as possible as well as adapt to something hardly experienced in many careers.
- Clear focus on the health and well-being of people at all levels, along with added reliance and emphasis on the innovation and ingenuity of people and ad-hoc teams. This pandemic has likely molded deeper relationships as well as added insights among cross-functional supply chain management, line-of-business and external supplier teams.
- As MIT Professor Yossi Sheffi indicates in his recently published new book, The New (AB) Normal, supply chains became a global news item of 2020. What COVID became, in addition to the experience of a pandemic, is the elevation of the supply chain and its associated processes, people and technology capabilities into C-Suite, Boardroom and general media awareness for being either enablers or obstacles to customer or business outcomes.
- The massive and now ongoing preference among consumers and businesses large and small, for conducting business and selling products in Omni-channel customer fulfillment has provided compelling evidence of the need for doing business digitally. Organizations that had previously invested in various elements of digital transformation were better prepared to take advantage of this need.
- An increased realization that lowest cost and cost-to-serve tradeoffs in prior supply network sourcing strategies have been exposed because of inherent risks. Strategic supply management will now have to factor and balance risk mitigation with cost aspects under the notions of needing added resiliency.
- An acute awareness that small and medium businesses were particularly impacted and were at a disadvantage without a keen focus on supply chain agility.
- That supply chain leadership will now be weighted toward the emergence of more tech-savvy, diversity focused and business savvy leaders who will need to assume greater roles as mentors and organizational change leaders.
The topic I elected for a fireside chat was a revisit of our original 2020 Predictions that were published just before the start of this year because it often helps for teams to take a step back every now and then to gain perspective of the broader picture. I talked about how these predictions changed after the COVID-19 pandemic made its disruptive presence and in the light of what has occurred, what have been the characteristics of top-performing supply chains along with what has been the lessons and learning of this disruption.
What to Anticipate in the Coming Year
No doubt, the topic that is on the mind of many global wide business and supply chain management leaders is what to anticipate in the year 2021 in the area of supply chain challenges and consequent business process and technology needs. My belief, along with others, is that the year 2021 focus will need to be on renewal.
My view is to be prepared for three aspects of Renewal:
New Thinking in:
- The “next normal” as requiring a set of supply chain process and decision-making capabilities for sensing and responding to continuous disruption or unplanned events. Teams must now be prepared for all levels of disruption. Sensing and response take on more time-sensitive meaning for product demand and supply network context.
- Returning customers to the focal point of supply chain response and for outside-in perspectives for information exchange and collaboration related to both key customers and suppliers. An understanding that supply chain has become an ecosystem of interconnected product demand fulfillment channels and supporting supply networks starts with changing our language. Start communicating what is meant by “ecosystem” and stop utilizing the sequential meaning term of “chain.”
- Planning approaches that are more invested in forms of connected, continuous, concurrent, scenario-based and simulation driven decision-making needs as opposed to sequential, time-dependent decision-making. The accuracy of plans is no longer the objective, rather the speed and proper context of overall decision-making. This is indeed the time to begin thinking about leveraging streaming information streams generated from both software applications and physical objects closest to working activities.
- Rethinking Just-In-Time in the notions of the original process goals related to either Kaizen, Lean Manufacturing or Six Sigma. What COVID-19 exposed was the flaws of Just-In-Time applied to a globally extended inventory replenishment process. Many of such processes broke down given the significant scope of the COVID disruption in areas of demand, supply and transport. A rethinking involves preserving the process goal of just enough inventory to meet customer orders with the realization that balancing inventory carrying costs with that of lost sales, required service levels or non-delivery penalties now take on more continuous and context aware calculations and determinants. The opportunity presented is in leveraging advanced technologies such as machine learning and continuous planning in electronic based Kanban decision-making flows that factor pertinent streaming data of orders related to digital and physical state of inventory movements or required safety stock hedging.
- Believing that people and human judgement will remain as the cohesion of overall supply chain process and decision-making innovation. Artificial intelligence, machine-learning or autonomous technologies should be viewed as providing the ability to assess large volumes of information and overcoming time challenges that either identify and self-correct every day abnormal situations, better assist people in their job roles, or help identify opportunistic areas in market trending.
- Continuing to challenge complexity in all dimensions and why it exists.
New Definitions in:
- Understanding that while supply chain agility, alignment, orchestration and resiliency remain aspirational, every organization needs to contemplate, define and communicate what these terms actually mean in relationship to interconnected ecosystems in planning, collaboration and customer fulfillment. Up to now, the broader industry analyst and influencer community, supply chain thought leaders along with advance technology providers have taken the lead in defining and articulating what is meant by these terms. Many supply chain leaders now believe that rather than just terms and definitions, they represent broad organizational mindshare shifts. They are industry or supply network specific and will involve aspects of proactive and broad change management actions.
- Assessing the required new job roles of the “next normal” which imply what Professor Nada Sanders of Northern University articulated as “humans interacting with technology.” A realization that job roles will continually change based on the challenge at-hand and predicated around the presence of ad-hoc response teams. New roles include analysts, strategists, network operations or risk management, simulation experts. Traits move from fore fighting to risk mitigation. One of the more important definitions in this area is to address recruitment needs in skills-based definitions rather than static job descriptions.
New Directions in:
- Strategic sourcing of direct material supply that assesses, weights and balances resiliency and risk factors, along with landed cost dimensions. My view is that supply management must evolve to umbrella demand and supply network risk mitigation factors as well as cost needs. The new direction is this area is in determining the business and monetary value of global or regional based direct materials supply risk.
- In the value of focusing more on analytics driven decision making supported by more meaningful data governance competencies.
- Placing a broader perspective to the meaning of Sustainability driven, that businesses and respective supply networks exist as global citizens and leaders. It implies assuring the future of businesses in product and supply network dimensions as well as people, natural resource and climate affect dimensions. It further implies social, ethical and diverse strategy, advocacy, leadership composition and workforce recruitment dimensions.
Starting in November, the Supply Chain Matters blog will begin to feature added commentary related to what to expect in the coming year in the dimensions outlined in this commentary. This will include more depth of the learnings of this year, leading to a different format for our annual predictions for industry and global supply chains advisory that will publish later this year.
In the meantime, what are your views and and perspectives regarding the renewal themes for 2021? Please share them in the Comments area associated with this blog commentary or input them directly to us via our Ferrari Consulting and Research Group web site.
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