Past days have been an uncommon encounter in our generation. The current pandemic has been a disrupting experience – and has quickly exposed the weaknesses in our supply chains. The resulting supply and demand impacts had and continue to have a globally disruptive effect on organisations and the people they serve.
They have uncovered the fragilities in our supply chains worldwide, disrupting companies and their workforce. The economic environment and legal framework growth and profitability are the ‘stability’ for any organisation, the most desirable conditions to run the Supply Chain (SC) of any business.
Besides stability, companies and SCM have focused on two concepts that define success today: growth and profitability. Leaders designed SC organisations, tools, and processes to manage the so-called ‘normal’ state of stability, which gave them a chance to standardising processes, inventory, and lead times whilst making the most of capacity usage and foretelling the upcoming based on past events.)
These were widely accepted principles in operation planning, like outsourcing processes that do not add value to such activities or consolidating actions for economies of dimension; however, such deeds function well as long as ‘normal’ conditions endure. Much more, managing SC has evermore become reliant on the digitalisation and collaboration of its diverse components.
We can any longer assume that the conditions of stability will endure forever. HILO events will for sure happen more frequently and much more severely. We are talking about unbalanced natural resources and relating to the Economy, IT, and Social consequences.
The inclusion of SCM in all our processes will have to adapt to such disruptions whilst carrying on successful operations. However, they were indicators possibly predicted to avoid such a global financial drop. Leaders could foresee them by making information transparent and sharing it with all partakers.
Repercussions of risk on the Supply Chain
The necessities and viability of SCM reactions to the risks detected will possibly vary according to the risk group, the industry each organisation belongs to, and geography. However, the general target of most answers is to make a more agile SC when acting in response to disruption.
We cannot any longer assume that the conditions of stability will endure forever. HILO events will for sure happen more frequently and much more severely. We are talking about unbalanced natural resources and relating to the Economy, IT, and Social consequences. The inclusion of SCM in all our processes will have to adapt to such disruptions whilst carrying on successful operations.
Most conceptual plans, including the ISO 31000:2018 standard, describe Risk Management as the repetitive behaviour of the steps covering all SC’s material elements and relating such analysis upstream to suppliers and downstream to customers.
Consequently, SCM will have to consider adopting methods already common to Disaster Relief Operations (DRO), which encompasses Procurement, assessing demand, prioritisation, receiving goods, selection, store, search and delivery, activity somewhat similar to commercial SCM.
Such actions as the confluence of interim assignment services to cope with reaction efforts, the conception of ‘war rooms’ to coordinate such assignment forces, the defying of standardised processes, inbound and outbound teamwork to the SC unfamiliar collaborators (such as government bodies, ‘No-governmental-organisations (GNGOs,) even rivals), and the substitutes hiring-practice, like suppliers, products, modes, transport and much more.
SCRM, a subsection of SCM, focuses on identifying risks and planning steps to handle such risks. SC resiliency defines to what extent it can bear up disruptions.
Post-disruption recovery
· Leaders must detect risks to the SC operation and must capture them in a ‘risk register.’ The widespread line of attack to differentiating risks is to collect them by impact and probability.
· Still, measuring the possibility of HILP events is very challenging to counteract this ambiguity and at least refine the correlation of the risk to its SC impact.
· The flexibility to have multiple options throughout measures like a company employing thorough SCRM standards will likely react quickly to disruption, with those measures that most effectively support the recovery process.
On the other hand, in most cases, recovery will take time, will generate more significant inconsistency and ambiguity. Therefore, the recovery process needs to be monitored and adjusted if considerations are anticipated in planning the response move away considerably.
Summing up: Leaders consider that growth and success paradigms will little by little lose preponderance as they are so related to the conflicts around Earth’s limited resources.
Are you monitoring and adjusting likely risks to your Supply Chain?
Dave Food
Prophetic Technology
M: +44 7775 861863
Photo by Jonathan Cosens Photography on Unsplash