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Disrupted supply chain: managing volatility & execution in challenging environments


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JP Doggett

Summary of discussion hosted by Lucy Jacobs and Neil Hill of Oliver Wight with members from Novocure, Johnson & Johnson, Solvay, Cummins, Atlas Copco, Axalta Coating Systems, Coca-Cola European Partners, Unilever, Henkel, PZ Cussons, Pentland Brands and Sony Pictures Entertainment.

Not losing sight of the bigger picture

  • It has been easy to become fixated on forecasting demand and so lose sight of end to end capacity and constraints. It's vital to take a broad view of risks and constraints under different scenarios and take a view on how much it is worth investing and where (e.g. bigger safety stocks, higher unit costs, extra capacity etc.). Without this integrated view, it often happens that one constraint is solved only for there to be another one right behind it.
  • Also important to consider whether suppliers have enough information to be able to respond to our needs and plan for the longer term. In return, suppliers can often be excellent sources of information about what is happening the the world and what risks are present as they tend to have a bigger picture view.

Understanding trade-offs and sticking to decisions at the business level

  • The process can begin with supply chain describing a range of possible scenarios and actions that could be taken in response - with associated costs and implications for customers - but finance and commercial teams need to be involved so that trade offs are understood at a business level.
  • Volatility is inherently unpredictable so often events will occur that no scenario will have envisaged but it's likely that you'll at least be closer to the right response by virtue of having had conversations around scenarios and constraints.
  • Transparency is key so getting accurate and timely data and being able to project scenarios within a system easily and quickly is important otherwise time is wasted discussing what the picture is rather than what could be done about it.
  • Also factor in human behaviour and the tendency to build in some margin to forecasts, especially if that influences allocations and people are naturally inclined to look after their corner of the business. It's vital to have an environment where assumptions can be challenged and tested.
  • Codify assumptions which means turning thoughts into numbers by quantifying things like how supplier terms may change and what it might cost to secure supply under certain scenarios.
  • When a business is in survival mode, it can be difficult to find time for these conversations with the right people involved but the alternative is time being taken up in an inefficient way because every time a planner and a commercial team member don't agree the dispute is escalated. It is worth taking the time up front to understand what uncomfortable decisions and trade offs need to be made and have the resolve to stick with those decisions to reduce the energy spent on these tactical battles.
  • Of course, emergencies happen and urgent action needs to be taken but, soon after, it's vital to start planning the recovery.

 

Sign up for the next edition of this discussion series on 29th April 11.00 GMT / 12.00 CET:

https://www.supplychainintent.com/calendar/event/69-disrupted-supply-chain-how-to-manage-volatility-and-execution-in-challenging-environments/

 

Related discussion summaries: 

 

demand-execution-white-paper.pdf OWA_Integrated Scenario Planning _2020May.pd

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