Supply Chain for Manufacturing: Dealing With Critical Disruptions

March 18, 2020
Supply Chain for Manufacturing: Dealing With Critical Disruptions

I am originally from Brazil, and I moved to Boston 20 years ago. I had never seen snow until moving there, and I was stunned by how Massachusetts and the whole Northeast is prepared for any crazy blizzard. Having snow in Brazil would be a significant disruption, because nobody would be prepared.

It was a learning curve for me to add unplanned-for "snow days" into my lifestyle. I had to learn how to drive in snow, stock up on food, enjoy the long winter, adapt to the new culture, be more flexible with my schedule, and much more. It required a meaningful shift in mindset.

Sometimes it's necessary for businesses to shift in a meaningful way as well, to deal with disruption.

Disruption is Happening

Right now, there is a lot of uncertainty disrupting the whole world. Change and disruption are truly the only constants.

One area that is being disrupted in every industry right now is supply and demand. There is a lack of raw material, workforce, and in some cases, customers.

A recent Harvard Business Review (HBR) article states that “The most vulnerable companies are those which rely heavily or solely on factories in China for parts and materials. The activity of Chinese manufacturing plants has fallen in the past month and is expected to remain depressed for months.”

Is this a result of limited predictability and planning in the supply/demand areas? Even with all forecasts that happen in this area, we are seeing some businesses shutting down temporarily due to a lack of raw materials.

The traditional methods of assessing supply chain planning do not support disruptions like this. Data flowing around business units in Excel spreadsheets won’t help the business to succeed. The reality is that all the technology available to predict the supply-to-demand ratio is becoming obsolete and requires transformation.

The good news is that there is an opportunity in chaotic situations. We can all learn and implement new approaches in how to address economy disruptions to ensure that business is still profitable in situations like the one we're in right now.

Embracing Agility

In my last blog, I spoke about overall continuous exploration. In this blog, I want to go in more detail about “embracing agility.”

As Gartner mentions in the report Drive Agility in Supply Chain Planning Technology Assessment to Accelerate Digital Business1:

“Conventional, monolithic and supposedly fail-safe methods of assessing technology are ill-suited to support the quickening pace of digital business. Supply chain technology leaders must support digital supply chain planning by seeking and embracing agility.”

In the era of data and digital transformation, it is time to embrace agility.

What does “embrace agility” mean? It is about finding quick wins amid major disruptions to navigate through uncertainty.

Here are some tips on finding these wins, excerpted from the report.

Demand-Supply technology professionals should:

  • Fuse bimodal into the organization to support long-term success by continuing to invest strategically but agilely in Supply Chain Management (SCP) technology while optimizing the assessment process for efficiency, speed and innovation.
    Bimodal is the practice of managing two separate but coherent styles of work for the enterprise. One is focused on predictability, and the other is focused on exploration. Mode 1 is optimized for areas that are more predictable and well understood. Mode 2 is exploratory, experimenting and solving for new problems.
  • Adopt an agile mindset when considering new supply chain planning (SCP) technologies. Place a greater emphasis on experimentation, testing and learning when evaluating the SCP technology capabilities to support end-to-end decision-making processes and the art of the possible.
  • Avoid cumbersome, risky and costly projects with long cycle times by building pilots and proofs of concept (POCs) into the SCP technology assessment process to gain speed to value and flexibility while mitigating risk and uncertainty.

Figure 1. Impacts and Recommendations for Supply Chain Technology Leaders2

Explore, Experiment, and Solve for New Problems

Of course, it's hard to be creative when you have to work to keep the lights on. So, it is essential to have some members of the team rotate in the roles of exploring, experimenting, and solving for new problems.

As we are talking about “disruption,” supply/demand technology professionals should apply design-based learning that integrates design thinking and design process. This is where a combination of human experience plus value stream optimization comes together to make the supply chain a more predictable environment when critical disruption happens.

Here are some examples of work that a team focused on exploring, experimenting, and solving for new problems could do:

  1. Assess critical scenarios due to major disruptions
  2. Collect data from various resources
  3. Interview stakeholders (identify behavioral, environmental, technology, and business challenges)
  4. Brainstorm quick possible solutions
  5. Prototype and test

This should NOT be a long term project. It is about exploring possibilities and testing quickly. If those tests have positive results, then in agile development the project becomes an epic (a body of work that can be broken down into specific tasks) with a goal of producing a minimum viable product (MVP).

Read the full Gartner report: Drive Agility in Supply Chain Planning Technology Assessment to Accelerate Digital Business

Putting These Tips Into Practice

Now that you know what your team should focus on, here are the steps you can take to move forward.

Assess critical scenarios due to major disruptions

Here's an example to get you started:

  • Critical scenario due to major disruption: Major natural disaster in an area where 30% of your key suppliers are.
  • Business need: be able to continue to deliver top revenue orders amid disruption
  • Focus: Identify the top critical orders that impacts business revenue and get the related suppliers switched based on history and real-time data

Collect data from various resources and consolidate it into one unified database

Find data from various possible different resources such as weather history and predictability, potential suppliers from different areas, production time, and cost, and combine all the data.

Interview stakeholders

Select key stakeholder that have been through major disruptions in supply/demand and ask questions such as:

  • How was the problem solved?
  • What solutions were applied?
  • What did not work well?
  • What could be done differently?
  • What business units were involved at that time?
  • What were the results?
  • Are there any data that was used?
  • What were the technologies used?
  • What was the time to get everything back to normal?
  • What was the business impact?

Brainstorm quick possible solutions

This is the most fun part. You've collected a ton of data, and now you can put your creativity into the game. With a group of people, start a design thinking session, where you can place various ideas on the table without judgment.

These types of brainstorm sessions can stimulate other ideas about how to quickly solve critical business issues. Don't think about the big picture here — instead, focus on the specific part of the value stream you're trying to fix.

Prototype and test

When prototyping, review how data has helped and how it can help provide real-time responses in a real future situation. Use emerging technologies such as:

  • Blockchain for traceability and history
  • Robotic process automation (RPA) to automate the process based on data
  • Low-code development tools to help the interface between employees, suppliers, partners and customers
  • Cloud applications and augmented artificial intelligence (AI) to suggest possible routes when the disruption happens

Then, based on results, go ahead and move to the epic and move towards creating an MVP.

In times of change, it's important to embrace agility and be relevant to your business. Just like I had to learn to accept the variability of snow days in Massachusetts, we should all embrace transformation in order to develop solutions that will help the world when crises occur.

Read the full Gartner report: Drive Agility in Supply Chain Planning Technology Assessment to Accelerate Digital Business.

1 Source:  Gartner, Drive Agility in Supply Chain Planning Technology Assessment to Accelerate Digital by Alex Pradhan and C. Klappich, Published 1 November 2019. According to Gartner, Inc., a research and advisory firm.

2 This graphic was published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. The Gartner document is available upon request from Boomi: Gartner Drive Agility in Supply Chain Planning Technology Assessment to Accelerate Digital Business, 1 November 2019, Alex Pradhan, C. Klappich.

About the Author

Silvia Davis is a senior product and solution marketing manager for Boomi, responsible for managing the go-to-market strategy for the B2B solutions portfolio.