The concept of having an agile and resilient network is nothing new, and in theory it makes sense. Having a supply chain that can react quickly to disruptions, and that can continue to operate no matter what the issue? Surely that’s what all businesses have strived for over the years.
The issue is the gap that exists between theory and reality. In their hunt for efficiency, many businesses have ended up over optimising. They’ve cut here, reduced there and instigated Just-In-Time inventory policies. Alongside this, supply chains have become stretched geographically which, combined with poor vsibility across increasingly disparate networks, has made them difficult to manage and has heightened supply chain risk. While networks are more fragile on the one hand, the global nature of networks has also made them more susceptible to an array of events including natural disasters and political upheaval which would not have affected older and more local supply chains.
In short, from political upheaval to multiple natural disasters, trade wars to pandemics, supply chains (and the businesses they serve) have been left vulnerable.
The impact of globalisation
This is because companies have embraced the double-edged sword of globalisation. Globalisation brings opportunities in the form of access to new markets and cheaper or more innovative suppliers, while it also increases complexity, competition and the need to manage far flung networks.
That is where the challenge lies.
Many global supply chains struggle to manage the different parts of their network in a manner that supports fast, accurate decision-making. They lack the visibility to see what’s happening, both in and out of their organisation, and the tools to orchestrate the network.
It is like trying to conduct a huge orchestra where everyone is blindfolded, having been told to play slightly different tunes, and expecting it to sound cohesive – it could work, but any success will be more through luck than judgement.
Put simply, without visibility, networks can neither be agile nor resilient.
Four steps to agile, resilient networks
How then do businesses go about unlocking the visibility they need to build more agile, resilient networks?
First, they need to ensure alignment. That means having their systems, processes and communication all aligned with one another throughout the network. This is the foundation of collaboration, and it covers both the supply chain and the business itself, ensuring that functions within the organisation are involved in the network, and are aware of the impact of their own decisions.
Second, there has to be flow. Once alignment is secured, businesses need to drive the unhindered flow of goods and information across their networks. This means partners working together, rather than in competition. For some, this may seem like a foreign concept, particularly in logistics. However, armed with greater visibility and the right information, businesses are empowered to make decisions at the right time, and can avoid siloed metrics and KPIs.
Having achieved alignment and flow, it is critically important that people are empowered to make rapid decisions. They can only do this by ensuring they have the right data, in the right place, at the right time, to generate the required insights into network demand or supply shifts. They then have the ability to quickly model response options through end-to-end scenario planning.
Alignment, flow and empowerment enable agility, which is the ability of the network to flex rapidly in the event of disruption – such as what Amazon does when extreme weather impacts some of its fulfilment centres or part of its broader distribution chain. This is event-driven action, and having the ability to gain insights from a plethora of data sources, sense and react to, events.
Finally there is orchestration. The combination of alignment, flow and agility ensures that, once a course of action is decided, the business has the ability to coordinate the entire network in close to, if not actual, real-time.
It is that speed that is the critical differentiator. If two companies have the same product targeted at the same customers, supported by similar networks, across the same geographies, the ability to get their goods into the hands of their audiences is a key point of competition. A localised disruption impacting those supply chains will have a much more significant impact on the businesses that struggle to react quickly and make the necessary alterations.
Dealing with disruption and seizing opportunity
Bringing all that together delivers more agile and resilient supply chains, because they can adapt to events quickly, as changes don’t disrupt entire networks, and because every part is working together. Not only does that mean supply chains can react to disruptive events, but they can be used to pursue new opportunities quicker, potentially getting ahead of competition.