With shifting landscapes and an increasingly demand-driven economy, supply chain success not only requires flexibility and agility but foresight in preparing for worst-case scenarios.
The ugly truth about disruption is that it can present itself in any number of ways – bad news especially for complex supply chain networks that depend on constant dialogue between partners.
In some instances, disruption can occur as a result of an organization’s own actions. Take the Charmer Sunbelt Groups (CSG) for example. This New York-based wholesale distributor transports thousands of unique products to 21 different locations for its customers (e.g. distillers, brewers, and vintners), all while functioning in compliance with the United States’ three-tiered system governing the manufacture, distribution and sale of alcoholic beverages. Attaining greater market share aside, years spent acquiring smaller wholesalers left CSG with numerous IT, HR and finance systems that it needed to consolidate.
While CSG navigated each software update stemming from its own initiatives, how could their channel partners have proactively prepared themselves for CSG’s alterations and/or other factors that fall outside of their control? The answer lies in improving in-house communication, effectively utilizing business intelligence, and promoting collaboration across the supply chain.
Information Gaps Turn Disasters into Catastrophes
There’s no getting around it: the absence of communication is chaos’ best friend. It is difficult (if not impossible) to accurately assess and respond to natural disasters or supply chain shifts without a holistic view of operations. Supply chain participants – both small and large – often experience reporting disparities that can severely hinder their ability to adjust production and logistics if necessary. The first step to fixing this problem: inter-departmental knowledge sharing.
For example, companies should consider integrating revenue and expense processes, eliminating any loss of vital information along the business process cycle (from order-to-cash to procure-to-pay) that could affect how resources are reallocated emergency situations. If a Floridian distributor experiences departmental silos that create these inconsistencies, the next tropical storm could send their entire operation into pandemonium trying to manage delayed deliveries (a problematic task that, if mishandled, could ultimately affect customer loyalty and revenue).
Nonetheless, removing silos is only part of the battle; it creates a clear, communication channel but doesn’t address how technology is utilized to calculate and prevent misfortune.
The Business Intelligence Crystal Ball
Recent developments in enterprise resource planning, IoT technology, and analytics have pushed the needle in terms of the insights that can be derived from the data organizations produce. This is terrific for executives and stakeholders since it helps them form better, real-time decisions – a valuable asset that can make a world of difference when disaster hits. However, it is crucial that your analytics are contextualized to reflect the nature of your business, partnerships, and environment in order to provide true value.
A Japanese electrical supply distributor must account for variables that a Texas-based competitor wouldn’t necessarily (and vice-versa). The former would stand to benefit greatly from implementing a proactive risk management that takes into consideration the probability of a tsunami (a likely occurrence in Japan) occurring and designing response measures. A Failure Mode Effect Analysis (FMEA) or an equivalent risk assessment would offer a glimpse into the potential aftermath that such an event would have on imports, consumer confidence, currency and competitor activity. Furthermore, doing so will not only foster effective emergency response but increase profitability as it requires key executives and managers to evaluate supply chain performance and spot improvement points.
The Final Step: Partnerships
Now that your business has addressed any outstanding lapses in internal correspondence and optimized the way you employ data, the last component to predicting and managing external disruption is end-to-end collaboration. Developing solid continuity plans that outline manufacturing, warehousing and transportation strategies (with back-up protocols in place to account for emergencies) and establishing transparency enables channel partners to collectively analyze the implications and early signs of various environmental, social, economic or political events and adjust accordingly.
While we cannot stop hurricanes or earthquakes from happening, companies that have the right people, processes, technologies and partnerships can accurately forecast and respond to forthcoming change.
Regardless of the cause, market incidents can determine whether a shipment is interrupted or if shortages occur, making it in each partner’s best interest to constantly search for innovative approaches to improving supply chain resilience. From a competitive standpoint, the leaders among wholesalers, distributors and other members of the supply chain will be those that not only address the problems of today but preemptively eliminate the issues of tomorrow.