Last updated: Coronavirus supply chain: Discovering resiliency in a disruptive world

Coronavirus supply chain: Discovering resiliency in a disruptive world

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Whether earthquakes, floods, trade wars, or a pandemic, supply chains are experiencing a bumpy ride. In 2020, we’ve heard the term “coronavirus supply chain” used frequently, but rarely have the effects been equal.

While some industry supply chains have seen significant supply disruptions but only minor demand changes, others have seen minimal supply disruptions, but major demand changes – and still others have seen both.

Regardless of the industry, supply chains are experiencing pressures unlike any we’ve seen in a generation.

Visibility + agility = resiliency

Those who’ve studied and operated supply chains for decades have frequently talked about the importance of visibility, agility, and resiliency. Today these terms are on the tip of everybody’s tongue – and they’re taking on a profoundly more important role in an increasingly disruptive world.

At IDC, we define it as visibility plus agility equals resiliency.

It is not enough to be able to see, you must also be able to act.
It is not enough to be able to act, you must see where and how to act.

A company may see a problem on the horizon, but if their supply chain is too rigid, or brittle, they may simply be relegated to watching the catastrophe unfold. A resilient supply chain, on the other hand, will have multiple ‘levers’ to pull to help to avoid said catastrophe. That does not mean a resilient supply chain can avoid all problems, but even where such avoidance proves impossible, true resiliency means a faster recovery.

Coronavirus supply chain:

While resiliency cannot be achieved overnight, there are things that can be done in the shorter-term to better understand the drivers of demand volatility and supply reliability, allowing companies to better match supply with demand.

When both supply and demand are highly volatile, dynamic collaboration with both suppliers and customers is critical, as is a modern supply chain planning platform. Crown Paints, for example, are using SAP IBP to ‘improve demand planning and forecasting to help source material form around the world during the COVID-19 pandemic’.  SABO ‘keeps their automotive assembly lines moving though the pandemic with an improved view of supply‘.

Indeed, companies that have more resilient supply chains tend to be:

  1. Using integrated, cloud-based supply chain planning applications – less reliant on spreadsheets
  2. Digitally connected across functions and organizations
  3. Leveraging digital technologies like A.I. and advanced analytics
  4. Comprehensive visibility into supply (and to a lesser degree) demand risk
  5. Have predefined crisis-management resources

Although it’s ‘easy’ to see now that resiliency is critical, even five years ago IDC was suggesting that supply chain resiliency might be the most important characteristic of the modern supply chain.

While COVID -19 is globally impacting 2020, previous regional disruptions had many of the companies IDC speaks with prioritizing risk assessment and resiliency much more highly than we had seen in the past 20 years. Yet those same companies confessed that it remains difficult to detail the business case and justify the return on investment — and to build the internal capabilities necessary to be “resilient fully and financially.”

As noted earlier, it’s not enough to have visibility into supply chain risks, though that’s an important consideration; it’s also necessary to have the agility to be able to take the necessary corrective steps, both proactively and reactively, to ensure that disruptions do not persist and time to recovery is optimized.

Download
Resilient Supply Chain Planning for a Disruptive World,
a recent IDC report, HERE.

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