Recent and ongoing global events such as the novel coronavirus crisis have highlighted the fragility of existing supply chains when they are suddenly and unexpectedly disrupted.
Fortune magazine reports that 94% of the Fortune 1000 are experiencing coronavirus supply chain disruptions. An article in Harvard Business Review warns that developing a cogent supply chain response to the Covid-19 – or new coronavirus – outbreak is “extremely challenging, given the scale of the crisis and the rate at which it is evolving”. The best response, this article contends, is to be ready before such a crisis hits.
International supply chain guru Dr John Gattorna says that organisations aiming to survive current and future supply chain disruptions like coronavirus must redesign their supply chains; with dynamic rather than static capabilities.
“Previous supply chain designs have predominantly followed a ‘one-size-fits-all’ philosophy, on the assumption that this will deliver a lower ‘cost-to-serve’,” he notes. “However, as the operating environment has become increasingly complex and turbulent, this assumption has been exposed as flawed.
“What we now have to focus on is designing a portfolio of supply chain configurations within the enterprise that are capable of servicing a large part of our target market, under conditions that can vary from stable through to extremely disruptive,” Gattorna stresses. “At the same time, we also have to be able to cater for customers that change their normal buying behaviours because of the changing situation they find themselves in. In other words, we have to embrace designs with dynamic rather than static capabilities.”
He states that the importance of fully comprehensive end to end supply chain operations is becoming paramount as organisations strive to increase customer retention through increased satisfaction.
“The top line will become just as important as the cost-line. This can only occur if we have in place the supporting digital technologies that allow precise management of our products and services as they move through the various omni-channels linking our enterprise with customers.
“Right now, we have the concepts mapped out, but the level of execution is still far from perfect in most enterprises,” Gattorna says. He asserts that many enterprises are at a “tipping point” and will not survive many more crises without decisive action.
“The future will belong to those enterprises with supply chains that can deliver reliably under all operating conditions, rather than those with simply great marketing, good products and extensive sales forces. These factors will carry a lesser influence in the coming decades,” Gattorna predicts.
Gattorna will be sharing his insights and deep experience with African supply chain professionals at the 2020 SAPICS Conference in Cape Town from 21 June to 24 June 2020.