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Supply Chain: Avoiding Disruption by Building Resiliency
The predominant philosophy of supply chain management over the last three decades has been the “lean supply chain” and the idea of “just in time”. Both ideas try to optimize everything to attain peak efficiency.
As recently as 2020, a PR release by BusinessWire exclaims that “adopting a lean manufacturing methodology helps eliminate redundant activities that do not add any value to the process, resulting in shorter lead time and improved quality. Similarly, a lean supply chain streamlines manufacturing and production processes, creating a sustainable competitive advantage and an increase in the share of wallet.”
But as side effects of the global pandemic and geo-political tensions have run into disrupting factors, the lean supply chain approach are being questioned. The problem uncovered with the ‘lean’ approach is that it is fragile and if any piece of the logistics puzzle breaks, the costs are high. The component missing from the mix is ‘resiliency’.
Geraint John, analyst at Gartner, said that “most supply chain leaders recognize that becoming more resilient is a necessity in the current environment. However, measures such as alternative factories, dual sourcing, and more generous safety stocks go against the well-versed philosophy of lean supply chains that has prevailed in recent decades.”
A blog by Spend Matters advises that “in the absence of a functioning crystal ball, the firms that actively design resilience into their supply chains (and the products themselves) will scramble less, recover faster, and spend more time on customers and innovation rather than firefighting, expediting and paying premiums. The digital capabilities to pull this off using modern-day technology are rapidly evolving in a way that helps supplant the old enterprise technology investments rather than just replacing them.”
