A perfect storm: crises and the global supply chain reaction

Evan Quasney, Global VP of supply chain at Anaplan, explains how increasing agility with technology can help companies pivot strategically in the face of future supply chain crises.

The recent port congestion crisis has revealed just how fragile global supply chain operations really are. This summer, the pandemic caused port and manufacturing shutdowns in China and Southeast Asia. The delays that followed in production and shipping prevented order fulfilment from consumer economies internationally. 

As such, the crisis caused a domino effect that spread across the world. With ships sitting idle in ports, low availability of containers, and increased costs to solve logistical errors, the crisis was unprecedented.  

Resilient supply chains remain a critical lynchpin in the dependent relationships that hold UK industries together. From toy cars to electric cars, few sectors are unaffected by its impact. Without planning, the perfect storm of events, like that of the last 18 months, is all it takes to force the country to face price hikes, delays, and a constant shortage of goods.  

As we approach the busiest season for commerce, planning for crises has become an essential tool for companies, especially for those looking to secure critical holiday revenues and prevent frustration from consumers.  

So, what is the secret formula to protect businesses and supply chain leaders in this battle against disruption? The perfect chain mail armour is not made purely of one ingredient, it is an alloy – a mix of agility, planning, and execution. The combination of these ingredients is the only protection for businesses fighting the inevitable effects of unpredictability. This also requires compromise too – balancing out costs, shipping, and prioritisation to survive.

The power of planning: using agile technology to pivot in crises

Although supply chain disruption is relatively common, the recent impacts are something that we cannot afford to ignore. The nature and pace of disruptions in recent months have exposed how vulnerable we are when we blindly rely on traditional methodology in supply chain operations. 

Not only that, but considering that the supply chain impacts 65-80% of a company’s P&L statement, it’s no longer acceptable for businesses to rely on a just-in-time approach to planning in favour of lower costs. In fact, it is the long-term thinking and preparation that will enable businesses to answer and respond to important short-term questions in a crisis. 

With the right focus on planning and resilience, businesses and supply chain leaders can ensure that their supply chain operations become an advantage against that of their competitors, rather than a liability. To do this, organisations need to look specifically at how different scenarios can affect each part of their operations and how financial outcomes rely on the nature of their operational plans.

Without a crystal ball to predict the effects of future events – like Brexit for instance – the most important strength for businesses is agility.  

Although you cannot design a supply chain in a way that can predict the crises of the future, you can design it in a way that can prepare for them. This preparation can reduce one of the biggest challenges of the traditional supply chain model – latency. In other words, agile planning can help companies respond quickly and save more in a time when they can no longer realise their revenues and are paying higher prices for raw materials, labour, and transportation as a result of the crisis.     

This agility requires greater visibility throughout the entire supply chain and for organisations to consider all aspects in critical decision making. It will also enable them to forecast demand, associated capacity, resources and optimise cash flow. This transparency means strengthening supplier relations and engaging with all stakeholders.

Preparation is never done

Although the real action lies in the approach, the execution of all of this is essential. Incorporating stronger data into their planning can help businesses make their preparation stronger in the face of uncertainty. 

This, just like scenario planning, can help to bolster their defence by helping them answer critical questions, make strategic decisions, and face disruption with agility and resilience head-on. 

With consumers hitting the shops again as Christmas approaches, companies must abandon traditional thinking and embrace long-term planning if they are to keep up with the demands of the Christmas period and beyond. 

Honest conversations around risk, spending and labour are a key first step for businesses and supply chain leaders to make resilience a focus in their plans for the years to come.