Sustainability Requires Deeper Planning - S&OP for Resiliency

I am sure everyone in business now has greater appreciation for the term "supply chain" since COVID in 2020, and with that we tend to relate delays, shortages, price hikes, poor customer service and higher costs.

The most important take-away for business leaders from this is to have robust business planning with integrated sales and operations planning supported by more rigorous risk management. This week we have seen the effects of Taiwan earthquakes devastating much of the country's infrastructure. This will have many ripple effects on many supply chains. See short video here; https://youtu.be/bsDqSQwM21M

What this event reminds us is that all businesses need to be planning for disruption. We will never know when the next COVID will happen and we cannot predict earthquakes more than a few moments before they occur. But we can be better prepared.

One of the key things learned from COVID was that recovery is not by itself the goal. We can focus instead on resiliency as a new target to for business capability. Having a strong sales and operations planning process that is supported with a more indepth risk management program will take you closer to your goal line, and also further ahead of the competition. This also requires an established supplier selection and relationship management strategy knowing that business and the world can be quite dynamic. You must know the landscape of your supply base and what your options may be.

If you buy products from Taiwan, you are probably impacted by the earthquake yesterday. And this is on top of the long term threat of Chinese intervention. Have you designed a plan B for your sourcing needs? If not, you should very soon, but not just for Taiwan. Ukraine, and eastern EU and UK are generally feeling a pinch highly affected by heating gas supplies which can affect productivity. Some politicians are calling for across the board reduction in work hours for factories. Not too many years ago it was typhoons and flooding in SE Asia where disk drives were made.

Having a robust S&OP that integrates financial analysis is an absolutely mandatory basic process to support your sustainability. That means you are disciplined about proactively managing gaps and risks and costs from inventory and transportation. If you are not preparing for disruptions, you will find yourself more often waiting your turn when bad things happen around the world. We probably cannot avoid 100% of disruptions, but we can be prepared to implement plan B sooner, or at least have more options, and have a better idea of which levers to pull that will drive greater resiliency as you come out the other side. Like many things though, while it sounds simple, it's not easy. Its not software either, although some tools can help with productivity, the core issue is a proactive process, accountability and transparency, done on a regular basis. It's not just more meetings when done properly, it is an investment in sustainability.

Firms that leverage this skill set well enjoy significant benefits.

Bob Forshay, SupplyChainPro2Know