Planning, Predicting and Responding for Competitive Advantage
A “black swan” is an improbable event with grave consequences. Yet it seems black swans are occurring with greater frequency and increasing severity. By building an Agile Supply Chain, leading Supply Chain Executives effectively prepare, predict and respond to internal and external threats.
“An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.”
– Jack Welch
We help companies seek ways to relentlessly streamline and fortify their supply chains. Leading companies don’t wait for a crisis to search for improvement. They understand Agile Supply Chains are competitive weapons to fend off evolving competitors, to innovate, to serve new customers, and to improve brand positioning.
What is an Agile Supply Chain?
To be agile is to be quick and prescient. It’s no longer “Just in Time”, it also considers “Just in Case.” An Agile Supply Chain is one that works to increase speed, leverage flexibility, and reduce risk.
Agile Supply Chains embrace short process lead times, strive for lean inventories, and are grounded in advanced analytics. They strive for multi-sourcing strategic supply, flexible workspaces, and end-to-end process transparency.
So how is it done?
Building an Agile Supply Chain
Leading companies build Agile Supply Chains by deconstructing their value streams to target and remove waste, thereby improving speed and reducing costs. They redeploy those savings from non-value-added activities to invest in technology and other risk-reducing efforts.
Improve Speed and Reposition Assets…
- Synthesize the “Voice of the Customer” – Thoroughly understand the value customers place on potential products or services. Challenge historical assumptions regarding customer needs, expectations and perceptions.
- Streamline operations – reduce non-value-add activities, analyze defects to reduce rework and warranty claims.
- Reduce lead times – move production points closer to demand to reduce waiting time, inventories, and delivery costs.
- Postpone final assembly – produce a generic product and conduct final configuration as late as possible, ideally once the customer order is received.
- Regulate product flow and shape demand using real-time, variable pricing methods.
- Invest in Supply Chain Technologies that improve visibility and establish early warning indicators to supply chain disruptions.
- Leverage predictive inventory deployment to customer locations to shorten lead-times in anticipation of strategic customer demand.
- Redeploy capital – reduce non-strategic inventory and accounts receivable. Ensure the most strategic customers and suppliers receive the most favorable terms. Invest these savings into spare capacity or multi-sourced vendor relationships, to flex in times of need.
- Cross-train the workforce to deploy employees across multiple roles to quickly take advantage of market opportunities and changes in demand.
Identify and Manage Risks…
Agile organizations regularly develop, and revise, planned responses to anticipated risks. We work with leading companies to develop their Agile Supply Chains using our risk management framework to help our clients consider the following dimensions:
- Target removal of unnecessary process complexity that slow reaction time and delay crisis response.
- Assess physical and data security through scenario planning and periodic, structured testing and training events.
- Consider third party risks, including the regulatory environment, competitors, suppliers or customers.
- Determine vulnerabilities to reputational risk from the perspective of employees, partners or other external parties.
We help companies identify and address strategic threats, in addition to day-to-day operational hazards to streamline operations and establish agile operations.
Lessons Learned
- Introduce a Supplier Management Strategy that periodically reviews suppliers’ financial performance and strategic position.
- Create Flexible Sourcing and Transportation Policies that improve economics and reduce risk.
- Locate production closer to Suppliers and to Customers. Seek options that reduce Lead Times to free up inventory (capital)
- Thoroughly vet supplier’s cost savings – when low costs are discovered to be the result of human rights violations, a company’s reputation and customer base are at risk.
- Consider Supply Chain Optimization and Visualization tools to conduct quantitative scenario planning.
- Consider asset intelligence technologies to improve supply chain visibility.
- Develop a balance of short-term and long-term initiatives to optimize results.
- Regularly conduct disaster simulations to test the effectiveness of your supply chain response.
“The best way to predict the future is to create it.”
– Peter Drucker
Agile supply chains preemptively remove waste, identify risks and address gaps to remain nimble. They run on data to help predict the future, but more importantly, they prepare for the future before it ultimately arrives. Ask us how Fisher can help your company become more agile.
About Pete Beckwith
Pete Beckwith is a partner with Fisher Management Partners, and he leads its Supply Chain Solutions Practice. He began his career at Andersen Consulting and later joined Arthur Andersen’s Business Consulting Practice, where he led Supply Chain solutions for Central Ohio. After Andersen, Pete was the Director of Business Integration and IT Strategy at Cardinal Health, a Fortune 20 company in the global healthcare distribution industry. He later served multiple executive roles at Cardinal Health, including as VP within Merger Integration and Operational Excellence, until he joined Fisher in 2015.
Pete has successfully delivered large domestic and international supply chain projects. His areas of expertise include supply chain management, business integration, Lean Six Sigma and continuous improvement. You can reach Pete at pete.beckwith@fishermp.com.