The 3 Essential Elements for Today’s Supply Chain

In today’s global digitally disruptive economy, where the basics of business are being turned on their heads (the world’s largest taxi company owns no taxis, the world’s most valuable retailer owns no inventory, the folks who are crushing the eye wear industry, and the list goes on…) the one thing that stands tall is a company’s ability to execute in newer circumstances. Today nothing is more important for execution than the supply chain. Thanks to the Amazons of the world, supply chains are now being seen as a true source of competitive advantage. One of the biggest challenges today for supply chain leaders is the recognition that things won’t always go according to plan, and ensuring the right infrastructure is in place to succeed even through the unexpected. In order to shore up your supply chain, we identified three essential elements needed. It is important to note that these elements are transformational and cannot be achieved overnight. However, when achieved, the impact to the organization can be significant. Today’s supply chains should have these three qualities:

1. Supply Chain Visibility

Successful supply chains function end-to-end and across multiple-tiers. Having visibility across your extended supply chain network at every tier is critical. From “where’s my stuff” to “predicting the impact of milestones not achieved”, the importance of supply chain visibility is now widely known. However, the real value is when visibility can enable early warnings about disruptions across the extended trading network to take necessary action ahead of time – and ensure operations and performance are not negatively impacted.

We already know that the “network of networks” and “cloud information” models both are the best positioned to enable true visibility end-to-end across all partners in the supply chain.

2. Supply Chain Collaboration

While the notion of collaboration and working in unison to deliver business outcomes through the supply chain is noble and the benefits are understood, collaborating is not easy. One of the fundamental reasons collaboration outside the four walls has not been easy is because of the misalignment of incentives. Compounded by global, geographical, and cultural differences, collaboration has simply defaulted to doing just the basics to make money. The secret to effective (and thus efficient) collaboration is the right (and sometimes more sophisticated) benefit-sharing model that applies to supply chain partners.

Real-time collaboration technology is not a dream anymore. However, the key to ensuring success is to create win-win scenarios for all partners. Unless partners see incentives to collaborate, no technology will help.

3. Supply Chain Resilience

While gaining efficiency and reducing costs will remain high on the list of priorities, analyzing different levels of risk and building in resiliency is the next frontier in supply chain management. Financial models help analyze risks and identify impact to the organization. Supply chain resilience is the ability for an organization to bounce back in the wake of unprecedented supply chain disruption due to man-made or natural disasters as well as intrinsic vulnerabilities like changes in consumer demand.

Natural disasters and other large-scale disruptions leave no time to re-plan. Supply chain resilience ensures a company’s ability to identify risk probabilities, prepare recovery scenarios, adjust plans based on unexpected demand surges or shortfalls, and change supplier capabilities when the unexpected happens. In order to react effectively, organizations must be able to quickly determine which supply is affected, the products containing those components, the location of inventory within the whole network, and options for alternate supply.

Spoken first in August 2015; repeated a number of times.