How resilient is your supply chain?
“Amateurs discuss tactics; professionals discuss logistics.” – Napoleon
In a move to improve national resilience the UK government is considering intervention on the repatriation of key capabilities. At the same time many attitudes to trade with China are shifting. Europe’s future trading relationship with the UK remains uncertain whilst in the US political and economic uncertainties loom. ‘Just in time’ is now recognised as ‘just too late’ and the need for reserves takes on a new appeal.
As these issues solidify and we come to terms with life in the ‘COVID era’, supply chain strategies are increasingly under the microscope, and rightly so – all businesses rely on suppliers. Recent research* indicates that whilst a third of businesses have already altered their supplier network during this pandemic, almost half expect to change their supply chain strategy as they design their ‘new normal’. Those new normals will consider COVID-19, as well as many other risks. So as you examine your own supply chain and its exposure, we advise 7 simple steps to help develop your supply chain resilience:
- Do a quick, thorough and focussed assessment of your ‘new normal’ operating model and determine whats ‘critical’; in other words, what processes, activities and resources must be in place for the model to work.
- Identify what these ‘critical’ processes, activities and resources depend upon for their existence and effective function. Is that dependency reliant on a supplier (upstream and downstream)? If so, those suppliers are ‘critical’ – that doesn’t mean they are your largest contracts, nor does it necessarily mean you are very important to that supplier, but it does mean they are your priorities for now.
- Deep dive these ‘critical’ suppliers to assess their exposure to threats and vulnerabilities. Identify (for yourself) their resilience arrangements to prevent or withstand disruption to whatever they supply you. This means check and test – validating the presence of a plan on paper means nothing; validate their thinking, planning and capability to continue to supply. If it isn’t up to scratch acknowledge (don’t ignore) the risk, even if you feel you cannot influence them to improve.
- Identify your own resilience and arrangements to continue that process, activity or supply without that specific supplier – whats the work around?
- Combine your understanding of steps 1 – 4 to identify what degree of risk you face. What might go wrong (realistic worst cases), how resilient are you to these (prevention and response), and what should / can you do about this exposure?
- Draw conclusions – and do it urgently. Make risk based decisions about what is to be done, how and by when. Merchant in the art of the possible. Focus on ‘how’ not just ‘what’.
- Use this refreshed, ‘new normal’ focussed, brutally realistic perspective to define a supply chain strategy that equips you well enough for your journey towards a recovery.
This action need not take long and it isn’t complex; it might just help you ride out the turbulence ahead. Keep an eye on things as the situation changes, and above all, avoid wishful thinking…errrrrmm…like the plague.