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Resilience and the cost of doing nothing

Supply chain resilience and the cost of doing nothing

When you’re unsure about what to do, doing nothing can sometimes seem like the best option. But believe me, that’s definitely not the right solution when it comes to your supply chain. Failure to act could end up costing your company money, draining your team’s energy reserves and putting your long-term survival at risk. Read on to find out which steps you can start taking right now to avoid these costs.

The major disruptions caused by the COVID-19 pandemic led to a huge increase in board-level awareness of the importance of supply chain resilience for market share and bottom line. However, this awareness is not always being translated into action. In some companies, the sense of urgency has ebbed away now that they are back to ‘normal’ again, with the worst of the disruption behind them. It is tempting to see supply chain resilience as a topic that can be put off until ‘tomorrow’ (whenever that might be…!) – especially when there’s no ‘quick fix’ and it all seems a little daunting. When you’re unsure about what to do, doing nothing can sometimes seem like the best solution. But believe me, that’s definitely not the answer when it comes to your supply chain.

After all, plenty of businesses are still being heavily impacted by COVID-related shortages, not to mention new disruptions such as the war in Ukraine. These disruptions should serve as reminders to us all that we’re living in a volatile, uncertain, complex and ambiguous (VUCA) world, and the next Black Swan event is just around the corner. Therefore, it’s important to ensure that supply chain resilience doesn’t disappear from the strategic agenda.

What are the costs of doing nothing?

In fact, to put it bluntly it’s time to start taking action right now. Why? Firstly because if you don’t, you risk getting stuck in firefighting mode. You will become caught up in a vicious circle of short-term knee-jerk reactions to each new problem. Besides costing you money, this will also make your team members feel increasingly frustrated and dissatisfied, until they either leave your company or burn themselves out – both of which will further intensify staff shortages and workload pressures. And the longer-term costs are even more severe.

Your lack of agility and your inability to take a dynamic approach to risk management will leave you lagging far behind those competitors who have improved their resilience. At best your reputation will suffer some damage, but at worst this could lead to a loss of customers, loss of market share and perhaps even the demise of your company.

Slice the elephant

So where should you start? That’s the million-dollar question! Supply chain resilience is such a complex topic that it’s impossible to tackle everything at once. That’s why I’m a big fan of the ‘slice the elephant’ approach. This can be used for all kinds of projects that seem too big to handle. By breaking things down into smaller pieces, you can tackle them one at a time. This step-by-step approach also works well when trying to quit bad habits, such as smoking or overeating. And to be truly successful supply chain resilience requires you to make a similar kind of lifestyle change.

Three routes to supply chain resilience

In my work with numerous customers, I’ve seen first-hand proof that there’s no one-size-fits-all solution; different routes make sense for different industries, business contexts, financial situations, supplier networks and so on. For instance, one of our customers in the food sector started by implementing integrated business planning (IBP) to improve its access to intelligence and integrated decision making between Product Management, Manufacturing, Supply chain, Finance and the Sales regions & countries.

This enabled the company to make trade-off decisions about things like capacity and key market segments, allowing it to respond faster and cope more effectively with fluctuations during the recent crisis. In contrast, the agility of one of our customers in the chemicals industry was limited due to legislation, but there was room to improve its transparency and collaboration with suppliers. By strengthening communication and collaboration within its supply ecosystem, the manufacturer succeeded in reducing lead times for certain products from three months to just three weeks and became much more agile in their response time.

Meanwhile, I helped a customer in the financial services industry to implement an S&OP process to facilitate faster and more integrated decision-making. The project included a focus on capacity management so staff and specific resources could be up or downscaled at the right evel and time. Including training and onboarding programs of the teams to ensure they had the right skills to deliver on the new expectations of them. All this helped the financial institution to protect its market share when the market bounced back sooner than expected during the pandemic.

“It almost doesn’t matter what you decide to do first, as long as you do something”

Leader's guide of value chain resilience

Don’t put it off until tomorrow

Clearly, supply chain resilience is no longer a topic that can be put off until tomorrow; the costs of doing nothing are simply too high. In order to safeguard your company’s long-term survival, it’s time to urgently start looking at how you can take the first steps. Once you have decided on the need to change and have secured the necessary commitment at all levels of the organization, the ‘slice the elephant’ approach helps you to take the first step. To be honest, it almost doesn’t matter what you decide to do first, as long as you do something! And once you have taken that all-important first step, the next one (and the next one…) will be so much easier.

If you are looking for inspiration about where to start, or if you would like more information about supply chain resilience in general, contact me or download our whitepaper.

Read more about resilience:

If you always do what you always did, you will always get what you always got
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Albert Einstein