Leveraging Supply Chain as a Force for Good

Leveraging Supply Chain as a Force for Good

As global citizens and supply chain professionals, we’re currently facing some major economic challenges impacted by social inequalities, environmental crises, and technological disruptions. More than ever, the world needs fresh perspectives, clear-eyed leadership, and bold actions.

One common result from these headwinds is the waste caused by their inefficiencies. Fortunately, identifying and eliminating waste is something supply chain professionals have a strong track record in doing. Further, supply chain’s influence on the value chain uniquely positions the profession to make significant impacts. Vanquishing these wastes is will not only benefit companies’ bottom lines, but also has the potential to grow the economic pie for all stakeholders; it’s possible to do great in business while being great for all stakeholders.

It’s supply chain’s moment to enable profound positive change that can bring about a brighter path forward. We must view addressing these threats as our calling. It’s imperative that we deliver on our mission as our very future depends on our success.

This blog offers a strategic path forward for industrial leaders based on research across 250 companies spanning 25 industries and applied industry experience that focuses on enabling organizations to realize an Agile Lean Supply Chain, which empowers greater company agility and profitability while maximizing value for all stakeholders.

Why Now?

Frequent supply chain disruption events such as the 2021 resin shortage, 2020 pandemic, and 2019 US-China tariffs have caused deep professional and personal pains, but these same pains can act as powerful motivators to embolden the change needed in supply chain approaches. Collectively leaders across business, society, institutions, and government are more open and desperately need change; however, to get to a better place that delivers results for our companies while maximizing value for its stakeholders, we need to clearly define where we want to go.

The trouble is that determining where we are and where we want to be is proving to be a moving target. More volatile markets and industry disruptions are requiring leaders to rapidly shift supply chains to cut costs and support evolving business models. Our dynamic world is rapidly altering our supply chain data inputs. Further, these critical data inputs used to shape our strategies are expanding and changing more frequently. Interestingly we don’t need more data, we just need actionable information to accomplish our desired outcomes.

In a research study we conducted with a sample group of 250 supply chain leaders spanning 25 industries, more than one third of participants highlighted information misalignment, both in communication expectations and system disconnects, as one of the top issues holding their teams back from achieving their goals.      

What can we do about this pain, which is only projected to get worse, as our supply chain data exponentially grows? As leaders, we need to capture all our invaluable supply chain input data so we can use it to make better, more impactful supply chain decisions that consider multiple options, taking into consideration several macro trends, like the three discussed following this paragraph, driving leaders to adjust their supply chain approaches. 

First, changes in one corner of the world now quickly impact another, which is fueling more multi-region, multi-supplier strategies to compartmentalize supply disruption risk. For example, the changing trade climate, including the new United States-Mexico-Canada Trade Agreement (USMCA) has added data tracking requirements for original equipment manufacturers (OEMs) and suppliers.

Second, shifts toward sustainable products are increasing part cost complexity by expanding portfolios. For example, the world’s five largest automakers by volume – Toyota Group, Volkswagen Group, Nissan Renault, Stellantis, and Hyundai-Kia – all have plans to produce both gas and electric vehicles into the foreseeable future, which will add supply chain complexity.

And third, advancements in technology from automation and artificial intelligence (AI) are spurring new market opportunities, business models, and startup competitors. For example, manufacturing labor shortages and work location preferences are pushing leaders to rethink supply chain work approaches to keep pace with the present while repositioning for the future.

Today, leaders are left with two paths forward to address our growing workloads: hire more people, which is usually not an option for most companies due to budget constraints, or get more productive.

A New Path Forward

The one certainty with the future is change. Elevating our productivity is a must moving forward to manage change and maximize impact. Deploying Agile Supply Chain to complement your existing company management methodology empowers teams with new tools to better navigate the road ahead.

As with other popular management methods, like Total Quality Management, Just-In-Time, and Six Sigma, Agile is more of a mindset than a destination. Again, Agile does not replace these proven methodologies, it simply adds in tools for managing unknowns that enhance flexibility and scalability, and therefore accelerates the information flows for non-standard supply chain work. As leaders strive to rethink and reshape what the future of their supply chain organizations look like, below are the “5 S’s” of Agile Supply Chain success that reflect how leaders are forming their organizations to win now and in the future.

5 S’s of Agile Supply Chain

Small nimble teams are organized around value add and sprints. Shared information is exchanged more frequently, ideally real-time in software. Speed to task completion is accelerated due to the iterative short-term nature of sprints. Scalable success can quickly be replicated due to the quantifiable measurement of a task via points and priority level. Sustainable success as Agile is paired with software that reinforces a repeatable system.

Enhancing productivity via waste elimination throughout the value chain should be the one driving supply chain force. Continuous improvement must be ingrained in an organization’s cultural DNA; however, a team’s penchant for incremental improvement must not be at the detriment of innovation.

To facilitate safer creative environments, leaders need to reframe “failure” not as an outcome, but as an answer to a question. This interactive innovation approach requires teams fail often and fast, and conduct ongoing micro experiments to lower the cost and risk of projects. Strive to constantly put your company out of businesses before the competition does.

As we look to the future, it’s likely that our products, supply chain organization, and supply base will be dramatically different. The automotive industry offers a real-time example as traditional manufacturers rapidly shift from the selling of cars to selling mobility services. Supply Chain leaders need to address change head on by tapping the full potential of all stakeholders to forge their company’s role in the future.

Maximizing our company’s full impact potential will require purposeful effort by supply chain leaders to incorporate a wider range of voices. The business upside is equally compelling, as it presents an opportunity to develop new markets, products, and services.

Today more than ever, leaders need to decide if they want to shape the future or have the future shape them.

-William