Competition Is No Longer Between Companies — It’s Between Supply Chains!
The direct competition between brands is no longer relevant. The only competition that remains is between the companies’ supply chains.
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Disasters like the COVID-19 pandemic can wreak havoc on even the biggest of a company’s business. Even when your employees and office space are secure, the difference in a time of calamity lies in having a secure and resilient supply chain. In this article, I explore how the direct competition between brands is no longer relevant, and why the only competition that remains is between the companies’ supply chains. I will also take a look at different ways that leaders can employ to build secure resilient supply chains for their businesses.
When the news stories related to the pandemic started breaking on the internet, none of us could have realized the massive scale of the calamity. Given that such a disaster only happens once in a century, we can be forgiven for that. However, what we can’t forgive ourselves for is putting all the eggs in one basket when it comes to securing our business supplies.
The recent disruption of global business supply chains is mostly due to them being either concentrated in a single geographic area or following just-in-time manufacturing and lean production strategies to cut costs. Such businesses now find themselves in a precarious situation with a noticeable shift in the customer consumption patterns, where purchases are now more inclined towards local availability, followed by how responsibly the brand behaves, as against the earlier considerations of price or favorite brand/product.
While the saying goes that a chain is as strong as its weakest link, the same stands true for any supply chain. The impact of the COVID-19 crisis on supply chains can’t be more stressed. According to a recent McKinsey survey of senior-level supply chain executives, the study found that 73% of businesses that were surveyed had encountered issues with their suppliers, while 75% faced issues with production and distribution; 100% of the respondents in food consumer-goods industries had encountered production and distribution problems.
A separate IDC survey on "Supply Chain Agility in the Pharmaceutical Industry" found that 46% of respondents had faced drug shortages during the pandemic, while 70% agreed that their supply chain was very vulnerable or facing more problems with the continuation of the pandemic. 65% of the respondents in the survey also reported that they could no longer accurately plan supply and had lost faith in their demand forecasts, and a stark 43% of respondents lacked the necessary agility and redundancy to survive major business disruptions.
With businesses in the past few years moving towards globalization, they are facing increasing challenges in terms of acquiring customers, onboarding workers and vendors, finding partners and suppliers, and ensuring continuity of business in the pandemic.
Today the biggest question that all manufacturers need to answer is — Which strategies should they employ to mitigate the disruption risks for supply chains? And where should organizations start?
To thrive in the "new normal," organizations will need to rework their business models and be open to a shift in mindset. What’s needed today is true transformation by altering the very fabric on which a business operates — how the supply chain is planned, managed, and ensures last-mile delivery. In fact, I would say everything from building capabilities to changing the work culture and elevating financial performance will only be sustainable once businesses adopt this transformation.
Here is my handpicked 10-point approach for any such business looking to ensure continuity of service by building a secure and resilient supply chain:
Scale the Use of Responsible AI
A data-driven reinvention of business practices will be critical in post-pandemic growth. Businesses will need to embrace the use of responsible AI capabilities to recover and return to their pre-pandemic growth plans. Businesses would need to leverage AI across their supply chain, business processes, customer experience, and employee experience. Who does it more professionally and ethically will be the key.
Businesses should adopt the use of digital data and insights more extensively as part of their strategy. Cross-platform digitization can help them understand things clearer and faster to predict and prevent unnecessary blockages in their supply chain and vendor management structures.
Apply Systems Thinking
Leaders need to realize the importance of system thinking as the missing skill-set in this whole pandemic scenario. Businesses should utilize systems thinking to look at a holistic picture of all the interconnected ecosystems. They will then be able to predict evolving complexities and the risks associated with them.
Define New Processes and Create Multidisciplinary Teams
To be successful in the future, businesses need to define more flexible, adaptive, and resilient processes and establish multi-disciplinary teams to define new processes and innovate for new products.
Adopt a Cloud-First Approach
As business stakeholders are redefining products, services for new customer experiences, IT needs to catch up with the fast pace of delivering new applications and new functional requirements. Enterprises need to take a cloud-first approach. The cloud-first approach would allow for faster innovation with lower cost and allow enterprises to focus on core functionality instead of building resilient IT platforms.
Reduce Technology Debt
As organizations are looking to scale up their technological capabilities, including the IT and cloud infrastructure, to be ready for the new normal. Some of the areas that I would recommend reducing technology debt are:
- Modernizing any legacy systems still in operation.
- Ensuring core applications are architected for resiliency and have a good business continuity and DR solution implemented.
- Reducing the skills risk of legacy systems on Mainframe, IBM I series, COBOL, DB2, Solaris, and older 4GL.
- Embracing DevSecOPS.
- Adopting a low-code/no-code approach.
8. Develop a New Strategy for Remote Working and Social Workforce Management
Developing a remote working strategy for your business can ensure that everyone can securely access the tools they would require to work remotely, including any access to business systems — including HR, ERP, payroll, CRM, unified communication (UC), and collaboration tools, file storage, and email. At the same time, setting up an omnichannel workforce management system should also be a priority, with an increased focus on employing digital solutions to tackle the new challenges.
The IT departments need to evolve to the needs of user requests in the future, and how they would differ when working from home and not in the office. They may even have to look at allocating time to help users with basic tasks like securely connecting to the network. Also, upgrading VPN should be a priority.
Focus on Upskilling and Skill Rotation
Increasingly, companies are discovering that remote working scenario has created a mismatch between the type of skills that are needed and what their employees have. As business leaders turn to automation, digitization, and value data extraction, the workforce should be able to complement the value that is being added by the new technology.
Re-imagine Processes and Productivity for Composite AI
While businesses have been automating processes for efficiency in operations, they need to do so for every department in a post-COVID world. Utilizing composite AI to re-imagine the ways of doing business while factoring in various productivity scenarios will be an in-demand strategy in the new world.
Get HR Ready
For businesses to make remote working a more responsible process, the HR teams have to come up with their own set of remote working procedures that can communicate organizational expectations to employees and also ensure any upskilling that may be required on their part. HR and IT teams need to work in more cohesion in the new world.
9. Innovate for New Products and Services
In a new interconnected world, to drive realistic customer demand and to sustain continuity of business, organizations should look to create a ‘digital twin’ of the entire supply chain (or of key processes) to simulate and adjust for the developing scenarios.
Also, increased dependence on subscription-based models should help cater to evolving customer demands. In short, businesses need to shift to a product mindset and leverage technology as an enabler to define new services and subscription models.
10. Invest in Cybersecurity
Businesses need to ensure that their cybersecurity teams are all geared up to protect their data, applications, and resources from any kind of threats or to respond to alerts. As remote working finds a more comprehensive place in the business ecosystem, CISOs must draft new security policies (for data security, network security, app security, and remote wipe out) to accommodate for the increase in telework.
What’s in the Future for Global Supply Chains?
While globalization was the talk of the town in the '90s, I feel that eventually, global supply chains may end up becoming a victim of their own success. As businesses were over-reliant on strategies focused on cutting costs, they had increasingly become less flexible and resilient with their supply chain structures. This needs to change, and the ones to adapt quickly will be the new market leaders.
Also, the new shift in customer buying patterns will mean that it’s no longer about buying a favorite brand but buying what’s available locally. On-time availability with a choice of last-mile delivery will also factor in along with some other considerations — like which brand is known to be a more "responsible business," instead of just the price or current promotion. Business leaders need to act now relook at their strategy for building resilient supply chains with innovations around social capital management, new products, and services with subscription models. In the next few decades, the success of your business would be defined by how resilient your supply chain is instead of just the pricing and marketing campaigns.
Published at DZone with permission of Gaurav Aggarwal. See the original article here.
Opinions expressed by DZone contributors are their own.