Redefining Resilience: Unlocking the Potential of our Supply Chains

SC_B 201366 D200807 August Cover

Last week, I had the privilege of moderating a virtual Leaders in Action (LIA) event on the theme of “Redefining Resilience.”

Sixteen COOs and CSCOs of large global companies joined this interactive event to share perspectives and hear from peers on best practices for building greater resilience in their organizations, processes and networks.

With the disruption of the last six months as an indelible background, the conversations on this topic were richer and deeper than we’d previously heard within the supply chain community. It’s as if this massive stress test has revealed the latent potential of our people, partners and platforms.

Built to Last — Come What May

In line with our theme, I opened the session with perspectives on the definition of supply chain resilience. The first was from another one of our attendees, the well-respected Stanford Operations professor, Hau Lee. Hau observed that the dictionary defines resilience as something akin to a rubber band snapping back to its original position, after being pulled. This implies that we go back to where we were pre-COVID. In this case, Hau noted that we are fundamentally challenging assumptions. Paradigms have been shattered and there is no going back. I borrowed my second perspective from the world of environmental sustainability, which defines resilience as “the capacity of a system to continually change and adapt yet remain within critical thresholds.” This feels akin to what our supply chains have needed to do to stay ahead of whatever business environment lies around the next corner.

Supply chain risk is an area where leaders know they should be investing in mitigating capabilities. As is demonstrated by a previous Gartner Future of Supply Chain study, conducted pre-pandemic, some have made these investments and many others had plans to do so in the five- to seven-year horizon.

In reality, our boards’ collective appetite for “buying insurance policies” was relatively low prior to COVID-19, but now they are primed to invest based on the business case.

What Did We Learn?

Here are some key takeaways from the group sharing and discussion at this LIA event:

  • Supply chains need to be outcome-based for the current environment and built for all seasons. One of our presenters described his company’s approach to the latter as hardening assets while building network flexibility and redundancy.
  • The COVID disruption drove an accelerated level of business model transformation across industries, requiring supply chains to be highly adaptable in response. Another presenter, the COO of a large retailer, described the need to both quickly hire staff and accelerate advanced automation in its distribution centers to handle daily levels of ecommerce only seen on past “Cyber Mondays.” These moves were made concurrent to furloughing employees at brick-and-mortar stores shuttered by the pandemic.
  • Very few companies had a pandemic playbook sitting on a shelf. Based on past experience, most were better able to manage through the associated disruptions in supply versus demand, where visibility to customer forecasts and future go-to-market preferences is still a challenge. Many of our participants have paused fully automated forecasting, as a result.
  • Unchecked, CFOs and chief commercial officers can drag an organization in directions, such as extreme cost-cutting or offer proliferation, that lead to less optimal business outcomes. Balance is required and the pandemic placed supply chain in a leadership role to highlight key trade-offs, including 1. customization vs. simplification, 2. lean/efficiency vs. adaptability/agility and 3. automation vs. manually performed tasks. To quote one supply chain executive, “these trade-offs should be printed on the wallpaper in the boardroom.”
  • Partners, including industry consortia, suppliers and technology partners, were a critical factor in one company navigating from “shutdown to surge” and a pandemic-accelerated shift in its go-to-market approach. It used an industry-defined “safe shopping experience” as a critical dimension of customer care and has posted record net promoter scores post-reopening.
  • Leaders are accountable to create and measure a nimble change culture, which starts with engaged employees. Many participants noted that their work-from-home staff have hit “COVID fatigue.” Several best practices were shared for how to support staff during this difficult time, including: 1. “Meeting-free days” 2. Weekly newsletters with tips for maintaining mental resilience while working from home 3. Extended leaves of absence and 4. Flexible work arrangements.

It was energizing to hear the level of conversation and passion for such a critical topic as “Redefining Resilience.” We’re very much looking forward to the next virtual gathering of this esteemed group later this year.

Stan Aronow,
VP Distinguished Advisor,
Gartner Supply Chain
[email protected]

 

Avatar

Author Stan Aronow

More posts by Stan Aronow