Supply chain disruption

Businesses must navigate disruption’s financial and operational challenges. And they need to do so while rapidly addressing the needs of their people, customers, and suppliers. With the right actions, supply chain leaders can turn massive complexity and disruption into meaningful change.

Businesses need to create value chains with long-term resilience. This requires holistic approaches to managing the supply chain. Companies must build in sufficient flexibility to protect against future disruptions. And they need a responsive and resilient risk management operations capability.

That capability should be technology-led. It should leverage platforms that support applied analytics, artificial intelligence and machine learning. It should also ensure end-to-end supply chain transparency. This will make risk response an integral part of business-as-usual protocols.

Supply chain disruptions have severe operational and financial consequences. Planners need to address several key issues:

• Demand drops and surges by segment
  
• Supply shortages
• Inventory placement challenges
• Reduced productivity

Planners may be unable to rely on the steady-state models of most existing planning systems. Instead, they may need to make decisions based on real-time information. This will make them the “nerve center” for the flow of supply chain data.

What’s now? Five supply chain priorities for immediate action

Distribution globally continues to be disrupted. More border controls and customs regulations make wait times longer. Lack of long-haul and last-mile fulfillment capacity create extreme challenges.

Organizations are using more digital in their distribution operations. They’re introducing capabilities such as real-time order monitoring, end-to-end inventory visibility, and super-reverse logistics experiences.

But businesses can also use this opportunity to reset their operations with digital capabilities and renew logistics operating models. Doing so will help them increase operational efficiency and effectiveness. It also will enable them to emerge stronger. They’ll have supply chains that are more resilient to future disruptions.

Five key logistics actions

1. Improve visibility: Use an integrated logistics control tower to get real-time visibility into operations.
2. Increase flexibility: Repurpose assets, inventory and capabilities to balance supply and demand.
3. Communicate effectively: Proactively communicate with onsite and remote workers, suppliers, carriers and customers.
4. Support the workforce: Address the physical health and mental well-being of the core and extended logistics workforces.
5. Be a responsible steward of supply chains: Think creatively and with purpose about how to support customers, suppliers and logistics networks.

Procurement leaders need to maintain business operations, fulfill urgent demands, and mitigate supplier challenges. This is especially true during times of significant disruption to their teams, people and local communities. How?

First, focus on managing upstream supply disruptions from tier 1 and tier 2 suppliers. And rebalance short-term sourcing decisions based on supply network constraints. These are short-term efforts. Next: Secure the supply base for the medium term. Unlocking funds intelligently. And build future-proof resilience.

This approach will help manage an immediate emergency and build stronger and more resilient businesses.

Five areas for immediate attention

1. Put people first: Develop a refreshed digitally driven procurement operating model and new ways of working with internal customers, the supplier ecosystem, and external partners.
2. Secure the supply base: Manage and mitigate supply uncertainty with suppliers of all sizes.
3. Unlock funds intelligently: Double-down on responsible interventions to minimize unnecessary spending and preserve cash for future growth initiatives.
4. Build resilience for the future: Update risk management strategies to ensure resilient, purpose-led procurement decisions.
5. Innovate with purpose: Take a purpose-led approach to build greater trust, transparency, customer centricity, and innovation as economies rebound.

During COVID-19, manufacturing leaders focused on keeping their businesses stable.

They formed rapid response teams (Accenture’s supply chain resilience recommendations) to understand the situation: Production demand changes. Labor support challenges. Supply chain ecosystem constraints.

Now they need to build a business as future-proof as possible. New technology can help them increase resilience, protect operations, and support workers. This will help sustain competitive advantage and accelerate business growth.

Five actions to build agility now and in the future 

1. Understand the impact of demand disruptions - Rapidly identify the products that are most critical for stabilization and growth. Shore up associated supply chains. Reconcile critical skills to meet near-term and future demand.
2. Manage workforce safety and flexibility - Keep workforce trust by addressing physical safety, mental well-being, and their need to stay connected with coworkers.
3. Ensure manufacturing ecosystem viability - Understand contract provisions for each critical ecosystem player. This includes material suppliers, contractor companies, co-manufacturers and logistics providers.
4. Rebalance physical production network assets – In the short term, quickly decide how to redeploy underutilized assets or build greater flexibility in current assets. Ensure those decisions don’t inhibit future growth.
5. Leverage digital capabilities - Leverage digital platforms, accessible data and advanced analytical capabilities. These can help leaders respond more quickly, accurately and successfully to disruptions.