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Transforming Global Supply Chains

May 16, 2022

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“Insanity is doing the same thing over and over and expecting different results.” That’s an oft-quoted saying of uncertain origin dating back to the 1980s. It rings so true, however, that it has often been misattributed to the late Albert Einstein to ensure it maintains it gravitas. Many pundits insist that anyone who believes the global supply chain is going to return to normal is suffering from this form of insanity. Journalist Chris Stokel-Walker (@stokel) writes, “The system of getting things from A to B is broken. Fixing it will involve rethinking how pretty much everything moves.”[1] Noted supply chain expert Lora Cecere (@lcecere), founder of Supply Chain Insights, put it another way. She writes, “For business leaders, the chickens are coming to roost. … We must take responsibility for supply chain leaders failing to deliver a resilient supply chain equal to the COVID-19 challenges. … The failure abounds and will become worse. … What can we learn? While many are scratching their heads and pointing fingers at the compounding of issues, I hope that business leaders take a hard look at the current state and accept their part in the failure.”[2]

 

Transformation Requires a Paradigm Shift

 

Andrew Kinder (@Kinder_ai), a Senior Vice President of industry and solution strategy with Infor, insists, “COVID-19 has taught manufacturers a bitter lesson. The global supply chain doesn’t adjust well to unexpected or unusual incidents — so-called black swan events. Extended lockdowns, changes in consumer behavior, spikes in fuel costs, and tensions among global trading partners have caused an unprecedented breakdown of the supply network. Today’s organizations need to take action to fortify the supply chain. But how to do it is still up for debate. Planning for future disruptive events, whatever they may be, isn’t easy.”[3] He explains, “The supply chain can’t be repaired overnight, but getting started is essential.”

 

Without a paradigm shift (i.e., understanding that the world has changed in significant ways), supply chain professionals will try to apply bandages to wounds that require major surgery. Fortunately, journalist Bridget McCrea reports, “Companies are thinking differently about how they design and orchestrate their supply chains. With securing low-cost labor no longer the ultimate goal — and with supply chain disruptions, labor shortages and rising freight rates being the ‘new normal’ at least for now — companies are reshoring, localizing and making goods closer to where they sell them. They’re also placing a larger focus on environmental, governmental and social (ESG) considerations; looking for new ways to reduce their carbon footprints; and starting to use advanced technology like digital twins to achieve better business outcomes.”[4]

 

Although advanced technology will (and must) play a significant role in efforts to transform global supply chains, journalists Emily Peck (@EmilyRPeck) and Kate Marino (@theKateMarino) insist, “The new tech won’t solve the kinds of big problems that got us into our current mess.”[5] Stokel-Walker notes that those “big problems” are varied, and some of them beyond the control of supply chain professionals. He explains, “The issues knocking the supply chain out of kilter runs the gamut from enormous government interventions to the global pandemic shutting ports.” He also notes that government stimulus packages aimed at supporting faltering economies increased demand beyond the ability of supply chains to respond given all the problems they were encountering. That’s why new thinking is required.

 

Transforming Supply Chains

 

Peck and Marino quote Wall Street Journal columnist Christopher Mims (@mims), who notes, “There’s no such thing as ‘the supply chain’ — there are only an infinitude of supply chains. That’s what makes fixing [the current situation] so complicated.” Because finding solutions is difficult, there is obviously no way I can discuss all suggested remedies in one short article. Nevertheless, below are a few of the recommendations that experts have put forward.

 

• Improve supply chain visibility. Journalist James Burman writes, “If you want to get ready for the future, connecting your entire supply chain is the first step. Modern technology will play a big role here. … To get more visibility and control of the entire process, you want to collect data from suppliers and distributors to a single dashboard. By doing it, you’ll get a chance to use predictive analysis, which is proven to be pretty insightful.”[6] Kinder adds, “It’s no longer enough to be familiar with tier-one suppliers and the potential risk they might carry. Purchasing agents should have a complete picture of where and how resources originate, and routes associated with each step in the progression.”

 

• Prioritize business continuity. According to Kinder, “CEOs and their executive leadership teams are obligated to reexamine and make business continuity strategies a priority. Reliable financial analytics across the enterprise — including branches, plant assets, fleets, and inventory — are required. Disparate or siloed systems will make consolidating capital harder.” Helle Bank Jorgensen (@HelleBankJorgen), CEO of Competent Boards, insists corporate boards must take seriously their role as stewards.[7] She quotes Eric Wetlaufer, director of TMX Group, Investment Management Corporation of Ontario, and Enterra Solutions® board member,  who “provided a fantastic definition of stewardship: ‘Stewardship is the accountability one has for leaving the company — with all its stakeholders — stronger than when you arrived. How can you best help the company navigate the path to its best future?'”

 

• Invest in market sensing. Cecere writes, “Realize the latency and distortion of the current demand planning programs and build outside-in processes. Use data scientists and many start-up cloud-based solutions to write to current systems of record (companies like 1010 Data, Aera Technology, Alloy, Enterra Solutions, o9, Tailwinds, UCBOS, or Zebra Technologies (previously Antuit.ai)) as an overlay to current processes.”

 

• Optimize and automate supply chain management. Burman asserts, “Technology brings lots of benefits to the supply chain, and one place where it will bring the most good is decision guidance. A modern system can analyze hundreds of thousands of data points from different sources and tell you precisely what you need to do to stay ahead of the curve. Soon enough, companies that rely on humans to make all the decisions will be left in the dust.” In order to help our clients and prepare them to meet future needs, Enterra® is advancing the field of Autonomous Decision Science™.

 

• Build value network capabilities. Cecere writes, “Stop fooling yourself that investments in enterprise solutions build value networks. Reach out to Supply Chain Operating Network providers like Elemica, GT Nexus (a part of the INFOR suite), Nulogy, and OpenText to begin the journey of building a supply chain bi-directional dial tone.”

 

• Regionalize. Common sense tells you that extended supply chains are more complex and more prone to disruption than shorter supply chains. McCrea reports, in response to the current situation, “some companies are procuring materials from more U.S. sources while others are reshoring their manufacturing operations. Still others are shifting focus to countries like Mexico, Malaysia or Vietnam, and all with the goal of minimizing the geographical gaps that exist between their operations and their end customers. This push for more localization finds companies ‘making it where they sell it’ and ‘buying it where they make it’.”

 

Concluding Thoughts

 

Jorgensen asks, “What keeps our world connected?” Her answer: “At the moment, our supply chain is a good bet. But this once tough rope connecting the world through demand and supply and trade looks very threadbare in places, dangerously so.” Those threadbare areas need more than a simple patch. Burman observes, “There are plenty of things you can do to future-proof your supply chain even now. But as the years go by and technology evolves, we’ll see new trends emerging. To keep up with them, you have to start as soon as possible. It will require lots of work, and maybe you’ll have to make some foundational redesigns. That said, it will be worth it, as it’ll ensure to stay in the game for the years to come.”

 

Many of those “foundational redesigns” will involve new ways to connect and share data. Matt Gunn (@mattgunn), Vice President for solutions marketing at Slync.io, explains, “Today the focus is on creating operational resiliency across global supply and logistics networks. But, to do so takes more than planning and capacity alone. The flow of information between parties needs to match — or even outpace — the flow of physical goods. This remains the biggest opportunity in logistics and supply chain today, and one area where all enterprises should focus their efforts in 2022. Until data and materials flow continuously from party to party, the recovery will continue to feel incomplete. While it might feel good to see things start to look like normal, we also must question if we want to go back to the same normal that resulted in the many logistics crises faced over the past two years.”[8] Isn’t that the definition of insanity?

 

Footnotes
[1] Chris Stokel-Walker, “Good Luck Trying to Fix the Supply Chain Crisis,” Wired, 24 November 2021.
[2] Lora Cecere, “When The Chickens Come Home To Roost,” Supply Chain Shaman, 15 November 2021.
[3] Andrew Kinder, “Fixing Broken Supply Chains Requires a Paradigm Shift,” SupplyChainBrain, 22 March 2022.
[4] Bridget McCrea, “Reshaping Global Supply Chains,” Supply Chain Management Review, 24 February 2022.
[5] Emily Peck and Kate Marino, “The future of the supply chain,” Axios, 26 February 2022.
[6] James Burman, “7 ways to future-proof your supply chain,” SHD Logistics, 1 March 2022.
[7] Helle Bank Jorgensen, “How do you redesign your supply chain in a chaotic world?” GreenBiz, 4 April 2022.
[8] Matt Gunn, “New Normal Presents New Way of Doing Things for Supply Chain Leaders,” Supply & Demand Chain Executive, 5 February 2022.

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