supply chain resilience

Supply Chain

- 3 min read

Delivering innovative Supply Chain resilience

Today, data is flowing faster with greater granularity. With more opportunities to connect and synchronize, the opportunity exists for richer, more informed decisions. However, integration across the enterprise and data synchronization remain top challenges to the possibilities at stake. To take full advantage of data and its benefits, resilience must be integrated business-wide.

A key to achieving resilience is honing and shaping your ability to introduce flexibility as a business, as an enterprise, and as a Supply Chain. Types of flexibility include:

  • Dynamic flexibility reflects the agility of the Supply Chain, particularly in its ability to respond rapidly to variations in volume and mix.
  • Structural flexibility is the ability of the Supply Chain to adapt to fundamental change. For example, if the Supply Chain’s center of gravity changes can the system likewise adapt and change?

Aligning your Supply Chain strategy

As businesses look to align Supply Chains to their product and marketing strategies, they can consider baseline flow and surge demand, which will help shape the foundation of structural capacity and flow. This leaves room for dynamic flexibility where capacity buffers can be considered in both make-or-buy decisions through to the move and deliver.

Modern companies are redesigning for uncertainty; consequently, it is no longer a one size fits all approach. Segmenting the Supply Chain and managing inventory and capacity buffers is a key lever to explore and plan. Then, the business can drive towards a Supply Chain that enables working to a smooth, even flow.

Planning for dynamic or structural flexibility

The approach to resilience depends on the kind of flexibility you want to invest in, the dimensions of flexibility you want to leverage, and the speed at which you would look for that flexibility.

Buffers protect against uncertainty such as safety stock, overtime, storage capacity, and contingency funds. The buffers can be utilized to protect against both unforeseen and predicted variability.

An intelligent and resilient plan will identify likely nodes of variation and the reliability of supply quantities linked to yield, variability in lead time caused by shipping bottlenecks, or increases in the cost of living.

Where planning resilience comes under stress is when the contingency is in the wrong location or consumed in a different time period. If it is too much or too little, responsiveness becomes fully dependent on a mix of structural and dynamic flexibility.

Resilient tradeoffs

Typically, from a cost-per-piece perspective, structural flexibility is cheaper than dynamic flexibility. However, if that flexibility goes unused, the penalties and consequences grow more significant.

Hindsight is useful for learning but needs to be projected into the future through predictive analytics which enables more reliable decisions as part of maturing planning processes.

Tradeoffs become more visible the more connected planning processes are. Connecting demand and supply leads to extensions on visibility upstream and downstream for early visibility of change and mismatches of the ability to supply. These expand to other dimensions for consideration, such as profitability, risk, and sustainability.

Profitable flexibility

All things are possible, but there is an inevitable cost to the business, society, and the environment. A holistic Intelligent Planning process enables better consideration across all dimensions found in the decision-making, empowering executives to agree on full plans that deliver on all levels of service at specified levels of risk.

Planning matters

A key to making this all work is flexible Intelligent Planning capability that enables scenarios to be calculated and compared, facilitating the ability of planning teams to make decisions. Executives can review and implement these decisions while balancing the tradeoff of risk and commerciality.

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