3 Strategies for Adapting to the New-Normal Supply Chain
The COVID-19 pandemic has had an enormous impact on the supply chain industry, creating unprecedented disruptions that were exacerbated by a variety of factors that have contributed to the past and current capacity crunch.
As a result, many predict a new normal for the supply chain ahead, as we discussed in our post last week. And as promised, this week we’re digging into some of the strategies companies can take to adapt—including the following three:
1. Adopt a Zero-Based Mindset
In a July 2020 report, Zero-Based Supply Chain: Accelerating COVID-19 Recovery, Accenture offered strategies to help companies balance present needs and future opportunities during three waves of impact: “the Now, the Next, and the Never Normal.”
According to the report, each wave has a different focus:
The Now “includes an emphasis on supporting people, customers and suppliers.”
The Next "will feature refocusing the business to withstand new threats and seize new opportunities.”
The Never Normal “will require navigating rapid shifts in cultural norms, values and behaviors.”
Here’s what Accenture predicts can be expected in the never-normal supply chain ahead:
Changing consumer behavior—as reflected in evolving online shopping and delivery trends.
More unprecedented events related to COVID-19—which is what we’re seeing play out now with the emergence of new variants.
An increased focus on agility within “volatile environments”—with increased investments that support digital capabilities.
A need for more analytics and increased visibility—which will be critical to help companies adapt to changing needs.
To thrive within the unpredictable dynamics of a never-normal supply chain, Accenture recommends that companies apply a “zero-based lens” to enable enhanced visibility for business-critical decision making regarding deployment and cost containment, to help identify new opportunities “for immediate relief and risk balancing,” and to operate in a resilient manner—all of which will require robust analytics capabilities.
This type of zero-based supply chain (ZBSC) approach is one prong of a zero-based mindset, according to Kris Timmermans, senior managing director and Chris Roark, managing director—both with Accenture Strategy. In a CFO Dive article, Timmermans and Roark describe the imperative to embrace a zero-based mindset to optimize business outcomes.
“We’re in the age where companies need to embrace a holistic zero-based mindset, what we call ZBx. This mindset is underpinned by automation and digital tools and is designed to radically shift cost curves and reallocate the critical resources needed to fuel a business strategy. ZBx also creates a culture of innovation, allowing companies to achieve start‑up speed at enterprise scale,” they write.
Within this framework, the ZBSC propels change and reveals unnecessary costs by applying three “levers”:
“Value engineering, focusing on long-term sustainable cost reductions”
“These initiatives cover every aspect of the supply chain, from turning by‑products into a source of extra revenue, through reducing the number of finished goods damaged in handling and transportation, all the way to analyzing the physical footprint of plants and distribution centers to identify consolidation opportunities,” Timmermans and Roark write.
2. Adopt Innovative Supply Chain Technologies
In the new-normal supply chain, it will more important than ever to adopt cutting-edge technologies that support supply chain agility and resilience. However, with so many options available, it can difficult to know where to start.
To help address that dilemma, Gartner recently published a new resource: The CSCO’s Guide to Supply Chain Technology Innovations.
Quoted in a Gartner post that introduced the guide, Christian Titze, VP Analyst, Gartner, said, “There are many supply chain technologies on the market, and it gets increasingly difficult for supply chain organizations to decide which technologies they need to navigate their respective shifts and seize competitive advantage. Organizations that continuously evaluate supply chain technology innovations will be better prepared to incorporate new technology in their long-term strategy.”
Instead of citing specific technologies, the Gartner framework is comprised of eight “supply chain technology themes,” since some technologies are combined to achieve best results. Here’s a brief look at each theme on the list. For full descriptions and to learn more, please see the Guide.
Hyperautomation. "The key principle of hyperautomation is that everything that can be automated will be automated.”
Digital supply chain twin (DSCT). "The DSCT is a digital representation of the physical supply chain.”
Immersive experience and applications. "Immersive experience technology enables its users to perceive and interact with the virtual world.”
Edge ecosystems. "Edge ecosystems consist of edge computing and edge data-processing applications.”
Supply chain security. "Supply chain security brings together a more comprehensive approach to address security risks such as counterfeits or cybercrime holistically across the E2E supply chain.”
Environmental, social and governance (ESG). "Global supply chains have a pivotal role to play in their contribution to both map and assess ESG risks and opportunities.”
Embedded AI and analytics. "Embedded AI and analytics are software capabilities that deliver real-time reporting, interactive data visualization and advanced analytics and intelligence directly into an enterprise business application.”
Augmented data intelligence. "Augmented data intelligence is a combination of several technologies that facilitate advanced data processing on top of a data lake or platform and further allow for the delivery of insightful information, predictions and suggestions.”
3. Learn from the Resilient
Although the brutal supply chain challenges that have occurred since COVID-19 emerged have caused extreme hardship for some companies, others have managed to bounce back more easily.
Why is that?
In a SupplyChainBrain interview, Editor-in-Chief Bob Bowman spoke with Peter Bolstorff, Executive VP of Corporate Development for the Association of Supply Chain Management (ASCM), to learn more about ASCM research that offered insights into why some companies demonstrated more supply chain resilience than others in the midst of massive disruptions.
Bolstorff said findings that emerged from the research included:
Early-sensing companies fared better than late-sensing companies.
Investing in digital capabilities early on was a key factor.
Exploring how to integrate risk management with synchronized planning was important.
Creatively managing product portfolios by pivoting to include critically-needed items supported resilience.
The Digital Capabilities Model that Bolstorff referenced in the interview was released in 2019 and is the result of a collaboration between ASCM and Deloitte.
This model offers a strategic framework to build an effective Digital Supply Network (DSN)—which is a topic we’ll cover in next week’s post, so please join us.
Need help adapting to the new normal of the supply chain?
CLN Worldwide can help.
Contact us today, we’d love to hear from you.