Calm During the Storm - Managing through a Crisis

by Punita Chhabra

The term “Supply Chain” entered our lexicon when it was coined by Keith Oliver in 1982. However, it wasn’t until the Pandemic with all its vulnerabilities exposed, that it gained widespread recognition as a critical discipline.

While catastrophic events resulting in supply constraints have occurred in the past, what distinguishes the Pandemic is its unprecedented global scale, influencing all facets of our daily lives. The impact of Supply Chain transcended industry boundaries, national borders, and professional domains. In today’s increasingly digital, connected, and global economy, reliance on a seamless supply chain is crucial. The Supply Chain leader has rightfully secured a seat at the table !

Companies that possess dynamic capability and proactively prepare for future catastrophic events are not merely survivors but thrive in times of crisis. Investing in strengthening your Supply Chain processes, tools and talent is essential for running a successful business. Listed below are some valuable insights from those who have made creation of robust, flexible and agile Supply Chains a top priority.

Preparation: Develop a plan before you need it. “If you are failing to plan, you are planning to fail”. Benjamin Franklin

1. Business Continuity Planning (BCP): Create and regularly refine your BCP. While proactive risk management addresses high-likelihood events, its equally essential to develop strategies for low-probability but high-impact occurrences. Companies that had a well-defined BCP, an extensive playbook, and a Command Center approach fared significantly better during the Pandemic.

2. Geographic Diversification: Broaden your sourcing strategy geographically. While cost considerations emphasize the identification of strategic suppliers, the Pandemic highlighted the necessity of having supply sources spanning more than one geo-political boundary.

3. Digital Transformation: Fast and data-driven scenario plans are essential for adapting to fluctuations in demand and supply. Embrace digital and technology-driven supply chain management and business intelligence solutions for prompt decision making.

4. Collaboration: Foster collaborative partnerships with both customers and suppliers. Establishing Supply Assurance contracts necessitates strong alliances with key companies, facilitating focused support during times of need.

5. Design for Supply Chain (DfSC): Prioritize “Shift Left” approach for Supply Chain. Early examination of the supply chain network capabilities is essential during product design phase to ensure support strategies and sustainability are fully comprehended and planned.

6. Inventory and Capacity Planning: Inventory can be a liability or an asset, depending on business conditions. Agile and robust inventory planning and control tools and processes are critical for adapting swiftly to change in conditions. Leverage supplier relationships to effectively balance inventory, whether it’s internal or with the supplier.

Bold and Fast Action: Winning companies have a well-defined game plan and execute it with a “maniacal sense of urgency”.

1. Establish a Command Center: Designate a senior leader overseeing a command center where issues can be promptly escalated, fast decisions can be made, and comprehensive plans can be disseminated. This is essential for a well-orchestrated response.

2. Demand planning: Establish intimate knowledge of the demand, even surpassing that of the customer to mitigate impact of the bullwhip effect. Have a dedicated supply chain intelligence officer to rationalize all inputs.

3. Leverage your Supplier relationships: Maintain transparent and effective communication channels with suppliers to ensure seamless collaboration, response and prioritized support.

4. Communication: You can never have too much communication. During turbulent times, effective and frequent communication, both internal and external, serves as a powerful stabilizing force.

5. Modify and adjust: Monitor, Act, Modify. An effective plan is one that remains flexible and adaptable. Course correct and always act with a sense of urgency. Avoid delaying decisions for the perfect solution, as there is none.

Supply Chains can be a competitive advantage for companies that invest in their people, processes and tools. Crises in the Supply Chain is not uncommon. How you respond to, and maintain calm while achieving results can be the differentiator and provide you with a competitive advantage.