Confronting Disaster with Agile Supply ChainsSupply Chain Planning
Predictive analytics in the week prior to the arrival of Hurricane Florence onto the shores of North Carolina on September 14, 2018 estimated that at least 10,000 actual or planned truck shipments to and from coastal regions were at risk of significant delay. Raleigh-Durham became the major transportation hub for the area, as logistics activity urgently moved inland, west of Interstate 95. Port Authorities, such as nearby Charleston, S.C. scrambled to process as much volume as possible to ensure safety of ships, crew, and prevent loss and damage to marine cargo, before shutting down. Most important, the safety and security of many communities came under imminent threat.
Risk is ever present. It can never be completely removed, but it can be mitigated and managed. As supply chains have become increasingly global, risk profiles have changed. While many supply chains have benefited from globalization by improved efficiency, some have become more brittle—more susceptible to disruptions from weather, piracy, organized crime, labor unrest, political upheaval, and a variety of other threats.
Even for well-capitalized multinationals, a natural disaster can carry severe consequences: damaged infrastructure, displaced employees, lost sales, and financial loss just to name a few. But for the unprepared small to medium sized enterprise, a hurricane, ice storm, or flood could mean the business could close its doors forever.
Business must be proactive. Expect the unexpected. Plan.
A key attribute of supply chains that are successfully able to rise to the challenge of catastrophic events is agility.
What is agility?
It is more than simply speed. Many companies can achieve speed under favorable conditions. Speed in transportation, speed in execution, and thanks to technology, speed of processing and sharing information are all easily accessible.
Agility is the ability to respond quickly to changing circumstances, both expected and unexpected. It is the ability to face disruption with confidence, not to be shaken by troublesome events. It is the courage to face challenges and see them as opportunities to show just how brilliant the team can be. Certainly, speed is an aspect of agility, but it is the agile rather than the merely fast that are able to overcome obstacles while keeping their eyes on the long-term prize.
There are three phases to a major disruptive event: the “Before,” the “During,” and the “After.” Companies need to be effective in all three, and take full advantage of all the tools that are available.
Good planning is at the center of the “Before” phase. Contingency and disaster recovery planning is essential. Plan B should always accompany Plan A. Understand critical issues, items, and processes. Be intimately aware of customers’ critical needs. Faced with a major disruption, the company will need to focus like a laser on its most important items, and potentially sacrifice marginal ones. Be ready to make difficult decisions. Rehearse and practice the contingency plans, asking the question “what if?” repeatedly.
In the Before phase, be aware. International Freight Forwarders, for example, are trained to keep a keen eye on world events every day. Their livelihood depends upon this level of vigilance. Maintain open communication with trading partners and agents, who can alert a company about unseen developments. Awareness can buy time to redeploy resources and take advantage of opportunities before other unprepared businesses are able to do so.
The “During” phase is all about execution, at lightning speed. Effective logistics is critical. With a plan, tactics can be engaged with confidence and courage. Tactical adjustments will likely have to be made, but a well-trained management team will be able to make solid decisions. Keep lines of communication open. Human safety, health, and welfare is always paramount.
In the “After” phase, all events, successes and failures are documented meticulously. Business costs and revenues are connected to events, and are used to adjust future expectations, forecasts, and budgets. Meet as a team to debrief, to better understand what has happened, and better realize the degree of impact that the event has had upon revenue, expenses, reputation, and infrastructure.
In all three phases of the challenge, technology is an indispensable partner. Forecasting and inventory management software will help the company identify those products that are of critical importance in the Before phase. Forecasts can be tied to externalities, for better investment and deployment decisions. Predictive analytics have become very sophisticated, and can be a tremendous help in short-term planning. Social media can be used in the During phase to monitor local events in real time. And in the After phase, event management software capabilities can help to connect events to sales trends, as an aid future planning.
Agility does not arise spontaneously. It is built purposefully and relentlessly over time. Understand what the company’s processes can and cannot do. Embrace the spirit of continuous process improvement, to address weaknesses and exploit strengths. Seeking better ways is a mindset that never ends. Plan to succeed.