Supply Chain Resiliency Requires the Ability to Adapt

Who owns the task of achieving resiliency, and what does it mean? That was an overarching theme of last week’s Gartner Supply Chain Planning Summit 2023.

As there are many roadblocks, resiliency can be hard to achieve; according to recent Gartner research, 95 percent of supply chain respondents believe they will fail to meet corresponding goals by 2025.

“Disruptions challenge resiliency and the number of disruptions per year is higher than ever,” keynote speaker Ingrid Gonzalez McCarthy, senior director analyst in supply chain planning at Gartner, a Stamford, Connecticut-based research and consulting firm, said during the symposium, held last week at the JW Marriott Desert Ridge Resort in Phoenix.

Research further indicates a 4-percent cost-to-serve loss per disruption, she stated, with an annual rate of five disruptions expected per year.

The caveat: Supply chain planning can be an anecdote to avoiding disruptions. But how?

During “Resilient Supply Chain Planning from Here to Immunity,” Gonzalez McCarthy presented the foundational aspects of resiliency using the body’s immune system as a parallel. “It protects us from foreign bodies, fights infection and more,” she said. “Supply chain resilience is the same: to avoid, absorb and recover from major business disruptions.”

While there are three types of immunity — passive, innate and adaptive — resiliency comes from one’s adaptive nature, she said. However, Gartner’s research found that to increase supply chain resiliency, half of respondents added more suppliers and nearly half increased supplier resources, inadvertently adding to the complexity toward resiliency.

Responders and Shapers

To simplify resiliency efforts, Gonzalez McCarthy suggested a shift in the planning approach. First, she said, question your personal role in resilience and how to remain open to possibilities and probabilities to achieve it.

Companies are generally disruption responders or a disruption shapers. Because solutions can’t be created to impact all disruptions, choose disruptions to prepare for as well as  to avoid, Gonzalez McCarthy said. When disruption touchpoints are minimized, risk is minimized, she said. Disruption shapers experience fewer unfamiliar and high-impact disruptions than disruptions responders, according to Gartner research.

Binary thinking continues to be a predominant perspective in planning, driven by a need for precision, she said: “One plan, one number, one response, as if we can control the future with the right plan in place. This is a falsehood.” Instead, she said, embrace “being wrong” most of the time — because it is through those learning experiences that we arrive at the answer.

Companies also must be willing to change and work with a “trained” supplier base and adjust the focus of investments to find solutions, she said.

Changing Planning Worth

Echoing some of Gonzalez McCarthy’s perspectives, speaker Lusi Zheng shared knowledge-based ideologies during “Demystifying the Crystal Ball — Elevate the Value of Your Demand Planning.”

“In supply planning, we tend to look to our crystal ball for certainty and control, much like a fortune teller or psychic,” she said. But because there is no fixed answer, she said, organizations, can build plans that generate resiliency by moving beyond perfectionism.

“The optimal value in demand planning is actionable (and) collaborative and comes from a multilayered approach: a set of numbers, understanding customers, aligning organizational objectives, analyzing risks and constructing an action plan,” Zheng said.  To engage the value process, she recommended introducing assumptions, expanding the role of demand planners and better enabling stakeholders.

Zheng explained how assumptions are the “why” of our numbers, bridging the event or product with the impact created. “Assumptions occur in every step of demand planning and should be documented, managed, protected and their impact analyzed,” she said. Assumptions should be thought of as “iterative and ever-changing,” requiring multiple stakeholders to review numbers, course of action and whether intended results were met, identifying shortfalls.

The Hype Cycle

Jan Snoeckx, a director analyst of supply chain planning technology at Gartner, invited attendees to buckle in for his session, “Hype Cycle for Supply Chain Planning Technologies, 2023.” He likened technology adaptation at many companies to a roller-coaster ride: “At the beginning, there’s a lot of enthusiasm, with a climb to a peak … and after a long drop, a lot of disappointment,” he said.

Supply chain technology hype can be divided into four stages:

• New and not fully tested, including generative artificial intelligence (AI) and long-term demand sensing.
• Peak hype, but still new: AI, digital twins and autonomous planning are in this stage. While AI is proven, Snoeckx said, it could fail to meet sky-high expectations.
• On the drop, or a disappointment: These technologies, including digital supply chain planning and control towers, have been hard to deploy at some companies.
• Mature and proven: Such technologies as supply chain segmentation and data lakes are reliable — but not much of a competitive advantage because they are so prevalent.

Snoeckx recommended that companies identify technologies they aren’t using but could benefit from, especially the “low-hanging fruit” that typically takes less than five years to fully adopt. “Staying in a comfort zone can lead to missed opportunities,” he said. “Be prepared to step out of your comfort zone.”

Squaring The Triangle

In her session “It’s Time to Converge Sustainability With Planning Activities,” Laura Rainier, a senior research director on Gartner’s talent and sustainability team, advocated for supply management organizations to go on offense to “square the triangle” — putting sustainability goals and metrics on equal footing with those of cost, cash and service.

“While companies make sustainability a priority, many still treat sustainability strategies as an extra,” Rainier said. “It’s hard to make meaningful progress with that approach.”

That process, she said, has three major steps: (1) understanding the challenge, because there will be resistance when moving from ambition to action, (2) embracing a paradigm shift that includes squaring the triangle and (3) enable planning that drives sustainability, which requires accessing the right data and KPIs.

Also, she said, convey to stakeholders that sustainability can be smart business.

Making Data Memorable

Everyone loves good storytelling, and for supply management leaders, relating a story that evokes the senses when imparting information can create empathy as well as inspiration, said Matthew Luhn, the symposium’s Thursday keynote speaker.

A director, story consultant and animator, Luhn noted, during “Storytelling for Business,” that stories can result in lasting impressions among employees: “In the end, people aren’t going to be inspired because of all the data and statistics. What they are going to inspired of, and on, is the story you told.”

Weaving engaging stories into his presentation, Luhn talked about the elements of a good story. It has to:

• Have a hook, something unusual or unexpected, or an action or a conflict.
• Reflect change or transformation.
• Appeal to the audience.
• Be authentic. Don’t try to be clever, he said. Instead, be vulnerable and honest.
• Have a beginning (the set up), a middle (the build) and an end (the pay off).

Planning’s Continuous Improvement

In the session, “Keep the Momentum Going — Post Implementation Best Practices for SCP (Supply Chain Planning) Technology,” Gartner analyst Joe Graham said that a continuous improvement mindset is what organizations must adopt with supply chain planning solutions.

“We need to get back to the basics of supply chain and take a continuous improvement approach to ensure these advanced solutions have a shot at realizing the benefits and capabilities (required) to stay relevant over time,” he said.

Most supply chain planning solutions are on the cloud, which allows for more frequent updates, a good thing, he said. They require preventative maintenance, ongoing evaluation and updates for the best performance, he said.

In addition to taking a continuous improvement approach, Graham recommended that organizations identify their adoption goals “and execute a framework to push forward adoption and maturity in a feasible management way” as well as team up with “key partners to maintain and establish a data governance approach to help be (the) new supply chain planning solution.”

(Image credit: Getty Images/Primo Piano)