January 2019 | Commentary | The Lean Supply Chain

Riding Out the Rapids

Tags: Logistics, Supply Chain, Visibility

Paul A. Myerson, instructor, management and decision sciences at Monmouth University and author of books on Lean and the Supply Chain for McGraw-Hill, Pearson, and Productivity Press, 732-571-7523

It seems that we are moving from crisis to crisis—tariffs, a plummeting stock market, cyber-attacks, recalls—at an ever-increasing pace. While we can't avoid these crises, we can minimize their impact with a lean, agile supply chain.

While that's easy to say, it's hard to do. Some key components to focus on include:

Supply chain visibility, both downstream and upstream. Better information sharing and collaboration with business partners and customers, along with a strong use of analytics, can help anticipate and minimize the impact of disruptions.

Supply chain network optimization. Reduce network complexities and improve responsiveness to customer needs by optimizing asset locations across the supply chain. Develop an ongoing capability to evaluate business and environmental changes that affect the supply chain to increase flexibility while reducing costs and improving customer service.

Identify and mitigate risk. Global supply chains face increased risks from demand and supply variability, limited capacity, and quality issues. Identify the sources and types of potential risk and estimate their probability and impact. Then create and implement risk mitigation plans to minimize their impact.

Strategic sourcing formalizes the way organizations gather and use information to leverage consolidated purchasing power and find the best values in the marketplace. Sourcing strategies include outsourcing, insourcing, nearsourcing, few or many suppliers, and vertical integration.

Instead of a Crystal Ball...

While it's difficult to predict the future, you can find help in a variety of ways:

Big data and predictive analytics can potentially provide insights that help anticipate or respond to events or disruptions.

Cloud technology and the Internet of Things (IoT) are expected to remove physical boundaries and create a centralized system thereby increasing supply chain efficiency and productivity.

Next-gen analytics and artificial intelligence (AI) provide real-time, accurate information and insights that enable enterprises to rapidly adapt to shifts in the business landscape. AI-based technology helps supply chain professionals to strategize by providing insights and recommendations based on the study of market trends and automated forecasts.

So how do we manage our supply chain during these turbulent times? Consider these metaphors that describe how managers navigate change.

The "calm waters" metaphor is a description of traditional practices and theories that likens the organization to a large ship making a predictable trip across a calm sea and experiencing an occasional storm.

The "white-water rapids" metaphor describes the organization as a small raft navigating a raging river.

We are currently in a "white-water rapids" phase in terms of today's global economy, at least for the foreseeable future. So it's best to strap on your safety belt and find ways to ride out these rapids.






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