Supply Chain Transformation: 3. Resiliency, Agility & Sustainability

A global crisis & paradigm shift

The decade of 2020 started with a severe jolt called Covid19. What started as a controllable threat like bird flu or SARS quickly took over the world unprecedentedly resulting in the biggest pandemic of the last 100 years severely wrecking normal day-to-day lives across continents, and global businesses. But this was a different time, not only the medical research community developed the antidotes, but the supply chains also showed great resiliency to maintain the supplies of necessities. This created a severe economic impact and the GDP & growth of the nations were impacted hard. This was worse considering the tariff war started in 2018 between two of the global economic superpowers, The USA & China. To top it up shortages of electronic chips, Suez canal blockage were impacting the global business & `economy and across segments serving the largest blow to the automobile sector.

These threw so many challenges, questions & ?paradigms to deal with for both businesses & professionals. The next level of the Supply Chain Transformation will be influenced by the following megatrends:

• Emerging Business Models: B2B business has started mimicking B2C or D2C quite successfully. Cloud-enabled business models like SAAS, and PAAS has become a new norm for doing business. Models like quick-commerce, Social-commerce are getting traction. I personally believe that alternate fuel is disrupting the supply chain like never before, accelerated by regulations on emissions like EVs, Hydrogen fuel cells, & potentially will form new value chains in the automobile & component industry.
• Circular Economy: Covid taught us a lesson about environmental responsibility. ESG norms currently accelerating circular economy & net zero through a range of strategies, including the design of products and systems that are easy to repair, reuse, and recycle, and the development of business models that promote the sharing and rental of goods, rather than their purchase and disposal.
• Gig Work: An inclination towards Gig Economy is hinted at through short-term spurts like ‘Great resignation’, and ‘quiet quitting’ coupled with economic uncertainties & layoffs. The emergence of AI/cloud & WFH has created both tremendous opportunities and uncertainties for employees, who are facing increased stress and uncertainty. Psychological safety has become a necessity.

What are the emerging supply chain excellence models?

Looking at the above trends, there are a number of supply chain excellence models that are emerging for the new age businesses to optimize their operations and improve performance. Some of the most popular models include:

• Resilient supply chain: The resilient supply chain model is designed to be robust and able to withstand disruptions and challenges, such as natural disasters, pandemics, or economic downturns. It involves building redundancies and diversification into the supply chain to ensure the continuity of operations.
• Green supply chain: The green supply chain model focuses on sustainability and minimizing the environmental impact of the supply chain. It may involve the use of eco-friendly materials and transportation methods, as well as efforts to reduce waste and energy use throughout the supply chain.
• Lean & Agile supply chain: B2B businesses are also getting agile as cross-industry transfer of knowledge transfer is in force. The potential of lean augmented by digital capabilities has improved customer responsiveness to it's Tee.

Overall, the best supply chain excellence model for an e-commerce business will depend on the specific needs and goals of the business, as well as the industry and market in which it operates.

What is supply chain resilience?

Supply chain resilience is the ability of a supply chain to withstand and recover from disruptions or shocks. It is the capacity of a supply chain to adapt to changing circumstances and maintain the flow of goods and services to customers, even in the face of challenges such as natural disasters, pandemics, or economic downturns. To build supply chain resilience, organizations can adopt a number of strategies, such as:

1. Diversifying their manufacturing network & supplier base to reduce the risk of dependence on a single supplier.
2. Creation of right-sized inventory & capacity buffers across the network & reduction of lead times by increased localization to act global
3. Investing in technologies that can improve visibility and coordination in the supply chain with standardization of platforms, processes & systems
4. Establishing contingency plans and alternative sources of supply & Implementing risk management and disaster recovery processes for logistics, technology & financial risks

Supply chain resilience is important because disruptions can have significant impacts on an organization's operations and bottom line. They can lead to delays, shortages, and increased costs, damaging relationships with customers and suppliers and impacting the organization's reputation.

What is green supply chain?

Green supply chain is a term used to describe a supply chain that is designed and managed with the goal of minimizing environmental impacts and promoting sustainability. It also involves working with suppliers and other partners in areas like Reverse Logistics, returnable packaging, reducing plastic waste, reusing through refurbishment, and recycling materials. The key components of a green supply chain are:

1. Environmentally sustainable procurement: This involves sourcing materials and products from suppliers that have environmentally sustainable practices in place, such as reducing waste, conserving energy, and reducing greenhouse gas emissions.
2. Sustainable transportation and logistics: This involves optimizing the transportation and delivery of goods by optimizing routes & utilization to reduce the environmental impact of transportation, such as reducing fuel consumption and greenhouse gas emissions.
3. Sustainable production: This involves reducing the environmental impact of production processes, such as reducing energy consumption, water usage, and greenhouse gas emissions.
4. Waste reduction and resource conservation: This involves reducing waste and conserving resources throughout the supply chain, including reducing waste in manufacturing and packaging, and promoting recycling and resource recovery.

Implementing a green supply chain can have a number of benefits for organizations, including reduced costs, improved brand reputation, and increased customer satisfaction along with social benefits.

Breaking the walls of lean & agile:

Though Agile developed from lean using concepts like Kaizen, Kanban, VSM, Nichijo Gemba Kanri, Hoshin Kanri, etc, it essentially remained a project management methodology; while lean has the most application in the day to operations. But current digital capabilities enable the supply chain can be viewed as a network of teams that work together to deliver value to customers. Below are the parallel agile supply chain practices

• Portfolio level: The focus at this level is on aligning the supply chain strategy with the business goals and objectives. This is done at the Corporate strategic planning level through integrated Sales & operations planning.
• Program level: The focus at this level is on coordinating and integrating the various supply chain initiatives to achieve the portfolio-level objectives. Here demand-driven supply chain models are reference points
• Value stream level: The focus at this level is on delivering value to customers through the continuous flow of work in the supply chain. The teams also collaborate with each other to ensure that the end-to-end supply chain operates efficiently and effectively using Scenario Planning outcomes.
• Team level: Using agile practices, such as Scrum and Kanban, teams can adopt sprints or flows, with a focus on iterative improvement and rapid response to changing demand. Control Tower dashboards are an important capability here.
• Technical practices: The focus at this level is on implementing the technical practices that support Agile development, such as continuous integration and continuous delivery. This space is getting more & more interesting as discussed in the below section

The goal of the framework is to enable organizations to respond quickly to changing customer needs and market conditions, and to deliver high-quality products and services to customers in a timely manner.

The role of digital innovations in Supply Chain

Quantum computing, edge computing, blockchain, Web3 with 5G have the potential to significantly change the future of supply chain management. Here are the potential applications:

• Quantum computing: It has the potential to dramatically improve supply chain optimization by enabling faster and more efficient calculations. For example, quantum computing algorithms could be used to quickly solve complex optimization problems, such as routing and scheduling, in real time.
• Edge computing: This allows for data processing and analysis to be performed at the edge of the network, closer to the data source. This can greatly improve supply chain visibility and responsiveness by allowing for real-time data analysis and decision-making.
• Web3: Web3, powered by Blockchains is a decentralized web that allows for secure and trust-less transactions and interactions between users. This could have a major impact on supply chain management by enabling direct, peer-to-peer transactions to share information and collaborate.
• 5G: 5G is the next generation of mobile networks, offering faster speeds and lower latency. This will greatly improve the ability to connect devices and sensors in the supply chain, enabling real-time monitoring and data analysis, and enabling new applications such as autonomous vehicles & drones.

Together, these technologies have the potential to transform the supply chain by improving efficiency and reducing costs, toward new business models. While I need to stop here today in my series on supply chain transformation, I strongly believe this decade is going to be very interesting with its unmatched innovation potential.