The Antifragile Supply Chain – Thriving Due to Uncertainty

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By Tim Payne, VP Analyst

Back in January, I blogged about a new concept Gartner was researching called the antifragile supply chain. In that blog, I raised several questions to which we would try to get answers. Now the initial phase of the research is complete, and the results are in.

So what did we discover — apart from the fact that 89% of CSCOs believe that uncertainty is here to stay and will only get more intense? (Watch The Antifragile Supply Chain – Thriving Due to Uncertainty) Let’s take a look.

Most Supply Chains Don’t Cope Well with Uncertainty

What do we mean by “coping with uncertainty?” Well, a supply chain can either lose value, suffer no loss of value or gain value when exposed to uncertainty. Fewer than 10% of companies today can produce a gain in value due to exposure to uncertainty. Not a great statistic given the prevailing level of uncertainty a CSCO must grapple with, especially against a backdrop of their CEO’s growth agenda.

The Coping-With-Uncertainty Spectrum

In Antifragile Supply Chain Management we introduced the coping-with-uncertainty spectrum which identified the three states that a supply chain can be in: fragile, resilient or antifragile. The fragile state results in a loss of value when exposed to uncertainty. The resilient state can withstand uncertainty without loss of value. However, the fragile and antifragile states lose and gain value respectively. Larger losses or gains occur when the uncertainty exposure is higher.

How To Frame “Coping with Uncertainty”

A good analogy for how a supply chain can learn to cope better with uncertainty is how organisms develop in nature to protect themselves from stressors and learn to thrive in their environments.

The “barrier” tries to stop uncertainty entering the supply chain: the fragile state. This is never 100% effective, so an “immune system” is required to try to negate the damage caused by the uncertainty that gets inside the supply chain: the resilient state. But this immunity is never 100% effective either, and can become easily exhausted with prolonged exposure to multiple uncertainties. Therefore, there is a need to evolve — to adapt and learn — to turn uncertainty exposure into an advantage: the antifragile state. This is accomplished by purposeful exposure to uncertainty that uncovers opportunities to improve rather than hiding them.

How To Move into the Antifragile State

The answer to this question fundamentally comes down to finding ways to bring the uncertainty inside the supply chain so that you learn from it and consequently evolve and adapt. The research shows that many supply chain best practices reinforce the fragile state. They are aimed at trying to build an ever-stronger barrier to uncertainty through a focus on concepts such as precision and standardization.

We need to shift into an antifragile mindset. New paradigms will help us to refocus and identify those capabilities we need to switch from fragile to antifragile.

Which Levers Do I Pull?

The burning question: “What do I have to do to get into the antifragile state?”

A few companies, such as Chinese online retailer JD.com and tech powerhouse Microsoft, have figured this out and they shared their progress with Gartner for the executive report. Our research shows that there are several capabilities that need to be switched. The top ones being most effective at bringing the uncertainty inside, with a supply chain deploying them being 2.1 to 4.9 times more likely to gain from uncertainty.

Beware! There are Bumps Along the Road to Antifragility

There are challenges and obstacles to overcome for a company wanting to be in the antifragile state:

• Clear definitions and metrics are essential so that all stakeholders are speaking the same language.
• A means to diagnose your current position on the spectrum to help direct initiatives and prioritize investments.
• Sponsorship from the C-suite. Uncertainty touches not just the CSCO, but the CEO, CFO, CRO and CIO — and so do the remedies.
• A reorientation of technology roadmaps and investments to enable bringing the uncertainty inside effectively.

Supply chains will continue to be exposed to uncertainty. But many are stuck in a fragile state. CSCOs need to take deliberate steps to enable their supply chain to become consistently antifragile to support a growth agenda.

More insights for building an antifragile supply chain:

• Join this free webinar
• Listen to podcast
• How can we help you? Connect with Gartner for Supply Chain

This newsletter provides an opportunity for Gartner analysts to test ideas and move research forward. Some comments or opinions expressed hereunder are those of individual analysts and do not always represent the views of Gartner, Inc. or its management.