Building Supply Chain Resilience in a Post-Pandemic World
By: Rola Losco
At its best, a company's supply chain strategy will hum along reliably in the background, ensuring that raw materials and finished goods alike get to their destinations on time. In recent years, however, these processes have buckled under intense strain.
It took a global pandemic for many organizations to realize just how fragile their supply chains were, and how important it’s to build resilience into their processes. Now that these facts are out in the open, businesses can prioritize new methods that will give them a more accurate way to manage logistics.
While reinforcing their supply chains, organizations also have to deal with another trend that was accelerated by pandemic lockdowns: the full-scale shift to online shopping. Statista market research found that e-commerce has 81.6% user penetration in the U.S. Coupled with a prediction that 289.9 million American consumers will shop online in 2027, this is a clear sign that businesses need to serve these customers reliably.
How to Build Your Supply Chain Resilience in 8 Steps
So how can your company build the necessary resilience to stand up to the unexpected, all while shifting to accommodate a digital-first new normal? You need the right strategy, powered by the right technology. The following eight-step process, powered by the Anaplan platform, is our answer to this complex question.
1. Keep Demand Clean
There is a historical precedent to the way retailers and consumer packaged goods companies work — in units, with each part of the business working in its own silo and engaging in its own planning. In the modern, omnichannel age, however, this approach is starting to look outdated. Customers engage with brands as a whole, so it only makes sense for those brands to be more unified internally as well.
Demand projections are one of the most important elements to breaking out of silos. Brands need to have unified reconciliation processes across the business, understanding how new product introductions interact with their current assortments. They also need to create demand signals based on consumption tracking across the whole organization, allowing them to create better, more comprehensive projections.
2. Collaborate
Better collaboration with key partners is important for supply chain resilience. Businesses that don't share information with their upstream and downstream supply chain partners may end up surprised by rapid changes that cost them long spells of productivity,
Internal teams are also necessary contributors to this collaborative planning effort. Finance, merchandise, marketing, the supply chain and customer-facing sales teams are a few of the principal contributors to these efforts. Information should be shared in dollarized, rather than relying on average sale price assumptions, which could lead to misaligned financial targets.
3. Shift your perspective
When managing the data that will help them run effective, resilient supply chains, organizations need to think in terms of a new, online paradigm. The way shipping is handled today, dominated by direct-to-consumer sales and shipping, represents a major shift — and means old formulas and assumptions may be outdated.
Several processes change as a result of this new perspective. For example, bill of materials costing and distribution center fulfillment specifications are tied to the new retail model. Organizations should rethink their management of materials, processing, distribution and more, ensuring they have reliable ways to get all components sourced, assembled, packaged and shipped to their sellers or retail customers in an increasingly online-first world.
4. Increase transparency
With supply chains under threat of major ongoing disruption, businesses need a transparent way to view the status and location of their inventory. From raw materials to finished goods, everything should be visible, tracked and available for analytics.
Organizations that have full transparency of their networks can determine their true risk and liability at any given moment. Less prepared organizations may find that there is some opacity regarding the process leading from raw materials to works in progress to inventory units.
5. Implement flexible pricing and cost
One of the most impactful ways to deal with ever-changing macroeconomic conditions is to implement flexible price and costing strategies. Organizations that are too rigid may find their margins eroding as the big picture changes around them.
Businesses today have to be able to change their unit demand forecasts on the fly as their pricing adjustments shift. These organizations have to understand how their units will flow in relation to buyers' fixed-spend budgets — this is imperative to the success of dynamic pricing.
6. Simplify
When a business pares down its supply chain to the essentials in terms of vendors, fabricators and other network partners, the decision must be made intelligently. Accurate projections and analytics based on relevant, up-to-date data can help leaders see what they really need to survive.
Some parts of an organization's network are essential frontline partners. Others help deal with specific regions or provide redundancy. Still, others may be extraneous, and cutting down is a way to achieve more with less.
7. Flex your scenario-planning muscle
Some companies are reactive instead of proactive and strategic. These reaction-based businesses don't have much time for 1/3/5 scenario planning. Organizations that can find a place for this type of projection, however, are better able to cope with the unexpected.
Topline and bottom-line assumptions based on "high, medium, low" scenarios give planners options regarding their future. With these multiple projections, leaders can both hedge against major risks and make plans to exploit opportunities that may arise, rather than having to react to changes as they come.
8. Embrace innovation and automation
Companies that commit to strong technology tools, and the strategies that support them can achieve better planning performance in the supply chain and beyond. Trying to manage complex modern analytics and projection scenarios using outdated, legacy technology such as basic spreadsheets will inevitably deliver disappointing results.
Simply having technology, however, is not a guarantee of success. An implementation of the Anaplan platform, for example, can be a blank slate unless it has been configured to fit the organization's needs, with all the key personnel using the technology strategically. This is where Allitix's experts come in, making sure companies are getting what they need from their tech tools.
Working with Allitix is a way to step into a new era of projection, planning and collaboration within your supply chain and organization as a whole. Rather than going blindly into this new paradigm, your team receives key guidance to ensure your goals are met.
In today's complex retail and CPG environment, with opportunities and threats both prominent, supply chain resilience should be one of your major priorities. Contact the Allitix experts to take the next steps toward achieving an advanced state of readiness.