By Stephen DeAngelis
The pandemic was an eye-opener for supply chain professionals. Despite all the bad press the supply chain has received, supply chain managers should be lauded for their ability to think on their feet. Supply chain journalists Edwin Lopez and Shefali Kapadia explain, “If there’s one thing the past two years have shown, it’s that supply chain managers are creative under pressure. Skyrocketing freight rates, port congestion and labor disruptions due to a global pandemic frequently converged to create headaches for companies. Despite it all, companies found ways to work around the issues.”[1] The requirement to find constant workarounds motivated many pundits to insist that the most important characteristic of any supply chain is agility.
The dictionary defines agility as the ability to move quickly and easily. And management guru Steve Denning insists, “As the global coronavirus crisis is forcing many organizations to act with unaccustomed speed, organizational agility has suddenly become a necessity.”[2] He adds, “Agility begins at the top, is inspired by the top, and is embodied in how the top conducts itself. … The Agile organization sets aside any assumption that the way things have been are the way things are going to be. … One of the most difficult things for the C-suite to grasp about agility is that it involves a different way of thinking as much as a different way of doing.”
The Supply Chain Agility Imperative
“The landscape of supply chain is growing more challenging by the day,” writes Peter Rifken, Principal Solutions Consultant at Quickbase. “If current events haven’t spurred organizations and teams into realizing the importance of an agile supply chain, those organizations are going to be swallowed up by competitors or be mired with inefficiency.”[3] Like Denning, Rifken insists agility begins with the mindset. “Ultimately,” he explains, “it comes down to mindset — whether or not your company is proactive or reactive.” According to Rifken, “Where reactive companies are at the whims of outside forces such as supply chain disruption and machine breakdowns, proactive organizations are already looking to the future and identifying risks, and then working backwards to coordinate and plan ahead.”
Unfortunately, supply chains are frequently disrupted by unexpected events. When that happens, common sense tells you that supply chains that can react quickly and adapt easily are going to do better than those that can’t. The staff at C3 Solutions notes, “In business parlance, agility is … the ability to adapt seamlessly. This agility or flexibility is an important aspect of various business systems in use today. In the context of supply chains and logistics, agility refers to how quickly businesses can adjust to the latest developments in the industry. Whether it’s last-mile delivery technology, logistics and freight tracking, or yard and dock management solutions, agility is a feature all these systems need to possess. Agile logistics systems can react quickly to unexpected delays, changes in the environment, and more. As a result, businesses can expect growth and higher customer satisfaction.”[4] The C3 Solutions staff goes on to discuss four elements of an agile supply chain (i.e., alertness, visibility, better decision-making, and flexibility) and three benefits (i.e., cost reduction, better customer satisfaction, and streamlined operations).
Some people may think that supply chain agility will lose its luster once the pandemic ends. That’s not the case. PwC U.S. Chairman and Senior Partner Tim Ryan observes, “The initial shock of the virus and its effect on the business community is over. And we’re seeing a real shift among executives around focusing on what they can control.”[5] And one thing executives can control is how agile their supply chains become. PwC analysts insist one way supply chains are becoming more agile is by leveraging automation and cognitive technologies. They note, “In the supply chain, CFOs plan to apply automation to improve agility — a quality 72% of CFOs said their organizations expect to develop as a result of the pandemic. [In addition,] PwC expects to see a focus on automating data collection and analysis regarding supply chain effectiveness.”
Chase Flashman, co-founder and CEO of ShipSigma, agrees with the PwC assessment. He insists businesses will continue to implement “various technologies … and data will be key to post-pandemic supply chains. Leveraging data analytics will be important for business strategies such as product development, expansion into new regions and achieving financial goals. In addition, company-wide data visibility will allow organizations to make critical decisions like what suppliers to use or what sites, parts and products may be at risk in any given situation.”[6]
Making Supply Chains More Agile
Insisting that supply chains must become more agile is one thing; actually making them more agile is much more difficult. There is neither a template nor a silver-bullet solution that achieves that goal. Below are a few suggestions experts have offered to help supply chains become more agile.
• Accelerate digital transformation. For years, consultants have insisted that supply chains could be improved by making them digital. The pandemic only increased the urgency for digital transformation. Jerome Roberts, Vice President of product marketing at Blume Global, writes, “A digitized supply chain can help anticipate disruptions and ultimately optimize operations. Real-time analysis of integrated data spanning customers, partners and suppliers will lead to outcomes that better match supply and demand while containing costs. AI and machine learning can also power optimization to minimize costs, maximize capacity, increase agility and anticipate potential impacts while recommending solutions.”[7]
• Improve risk management. McKinsey & Company analysts note, “[Enterprises must] assess vulnerabilities across supply nodes and apply robust risk-mitigation frameworks to address those vulnerabilities. … Digitization will help organizations create this new function without incurring prohibitive costs.”[8]
• Enhance visibility. Roberts writes, “Your supply chain should benefit from end-to-end supply chain visibility and execution solutions that work together in a coherent supply chain orchestration strategy. True resiliency is achieved when supply chain leaders can predict issues and dynamically respond — from sourcing and manufacturing to final delivery — with agile solutions. … Organizations leveraging a neutral, single source of truth that enables real-time tracking of orders and items throughout the entire manufacturing and shipment process, including solutions that truly orchestrate the end-to-end supply chain process, create their own success.”
• Leverage cognitive technologies. As noted above, analyzing data is essential to making supply chains more agile. Cutting-edge solutions, like the Enterra Global Insights and Decision Superiority System™ (EGIDS™), can help companies better understand changing conditions and provide them with insights that lead to better decisions. Rifken notes, “By being able to minimize the impact of issues that crop up, organizations no longer have to devote resources to problems that become larger over time.”[9]
• Diversify. If a company has no options, it obviously can’t be agile. Kamala Raman, a Vice President at Gartner, explains, “When making a decision [to diversify], first determine what you are trying to protect — a product line, government contract or market access. And then consider what you’re trying to protect against: sole-sourcing risks, increasing labor costs, tariffs, lead times or regulatory burdens. The answers to those questions will give you a notion of how much resilience and diversification your network really needs.”[10]
Concluding Thoughts
The world is going to remain in a state of flux. Enterprises that can easily adapt to changing circumstances and move quickly to mitigate the effects of adverse events or take advantage of emerging opportunities are going to be the winners. As the C3 Solutions staff concludes, “Agile supply chains are decisive. Thanks to data visibility, making informed decisions is an essential attribute of agile supply chains.”
Footnotes
[1] Edwin Lopez and Shefali Kapadia, “Workarounds became integral to supply chain management during the pandemic,” Supply Chain Dive, 14 December 2021.
[2] Steve Denning, “Agile Isn’t New: What’s New Is The C-Suite Embracing It,” Forbes, 3 May 2020.
[3] Peter Rifken, “The urgency of supply chain agility,” Supply Chain Dive, 13 September 2021.
[4] Staff, “What is Supply Chain Agility, and Why is it a Game-Changer?” C3’s Yard Management
and Dock Scheduling Blog, 20 July 2022.
[5] Emma Cosgrove, “PwC: Automation is key to supply chain agility post pandemic,” Supply Chain Dive, 12 May 2020.
[6] Chase Flashman, “Supply-Chain Visibility, Agility Will Be Post-Pandemic Priorities,” SupplyChainBrain, 1 February 2021.
[7] Jerome Roberts, “What Makes a Truly Agile and Resilient Supply Chain?” Logistics Viewpoints, 15 February 2022.
[8] Cosgrove, op. cit.
[9] Peter Rifken, “3 key strategies to build an operationally agile supply chain,” Supply Chain Dive, 10 May 2021.
[10] Sarah Hippold, “Diversifying Global Supply Chains for Resilience,” Gartner, 4 February 2021.
