Get Your Supply Chain Ready, Wave 2 Could Be Even More Disruptive. Don’t Be A Kook!
At the Digital Supply Chain Institute, we have done a lot of work helping companies do a “Frontside Flip” and focus their supply chains on the “New Customer.” Frontside Flip is a term that snowboarders (and skateboarders) use to describe a cool stunt that has the front side of the board facing the snow. It’s an apt analogy for business because you can’t win a snowboard competition without a Frontside Flip and you can’t win in the marketplace unless your supply chain faces the customer in a way that drives market share and revenue. While this is still true, there may be a better metaphor than snowboarding given the tremendous stress that supply chains around the world are currently experiencing.
Surfing is a sport that involves riding waves. When you have a large set of waves surfers say that the surf is “going off.” It appears that “Wave 2” of the COVID-19 pandemic might be even more disruptive than Wave 1. Surfers would say: “Wave 2 is going off.” Companies will need to do a much better job responding to the next wave. Wave 1 resulted in product shortages, wrong demand plans, and cash flow issues. And infection rates are increasing in many countries even before we enter the more dangerous flu season of late Fall and Winter. We simply cannot afford to be unprepared for a Wave 2 of COVID-19!
Surfers know that they can use the power of the wave to ride. Here are the things that good surfers and good business people do:
- Learn the pattern, even as it rapidly changes. Surfers must be able to decide when to ride and when to sit on the board. Business people have to know this too. Invest right now in a better system for demand management that allows you to accurately predict and manage demand. This will require making better use of existing data and collecting new data. As I have mentioned in a previous blog, you can get the data you want, you just might have to trade for it. Lukas Schärer, Group Chief Operating Officer for ChainIQ, a Zurich based procurement service company says, “Data that helps you understand demand is more important than ever, and data about your costs remains a high priority.”
- Be agile and resilient. Agility keeps you centered on the board; resilience means that you can get back on the board even if the wave “closed out” while you were riding it. Micron is a global leader in computer memory and data storage. Mike Lange, Micron’s Vice President of Enterprise Applications states, “Our mantra is “speed beats accuracy” – the belief that while forecasting the future has value, being able to respond to reality almost instantly is even more valuable. We re-run our production plans daily and focus on ever reducing our data latency.” Resilience means, for example, that you have two suppliers in two different territories for the same parts. The challenge is to do that without increasing costs.
- Get the right stuff. Surfers know that you need different equipment when it is really going off. You need a “gun,” which is a large surfboard that is built to survive and go fast. Your current supply chain management systems (and processes) are probably not the “gun” that you need. You should immediately upgrade your systems to capture customer data patterns. You should investigate the possibility of reducing SKUs, while still giving customers a way to get what they want. Most importantly, and most difficult, you must find a way to work across the organizational boundaries. Marketing, finance, and supply chain have to collaborate in a way that your organization has rarely seen! Craig Jones, Senior Vice President at Under Armour reports that “Teamwork has helped us navigate the current Coronavirus
wave. Teamwork with our teammates, customers, and suppliers.“
- Don’t be a kook! Kooks are the surfers that cannot predict or manage waves and do not know that there are a lot of rules and teamwork that all surfers respect. You must upgrade the skill level within your company on the new ways to manage a Digital Supply Chain and make more decisions based on data and algorithms. This means training—a lot more. And it also means hiring data scientists, data stewards, and people who make decisions based on numbers. This is hard to do when cash is tight, and budgets are decreasing due to COVID-19. The planning leader of a major company says “It is clear that a data-driven approach will result in better decisions and better business outcomes.”
Executing the four items mentioned above will help your customers and your company. Companies that take bold action now will succeed. Those that do not will wipe-out. And make sure you keep your supply chain focused on creating super high customer value!
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