Last week was the Kinaxis solutions development hackathon. In a hackathon, people form up into groups and within a one-week time frame, identify a market need, develop an approach to addressing that need – in many cases prototype solutions – then present those ideas to a leadership team. This year was extra fun because we used a “Shark Tank” (or “Dragons Den” for us Canadians) approach (without the snarkiness that makes the TV version so popular).
As I sat and watched the presentations, I was blown away by the depth of supply chain knowledge and the amount of creativity on display. I wouldn’t be surprised if one or more of the ideas eventually becomes another of the features that make RapidResponse great.
Our team put together some ideas around supply chain risk management. We addressed supply chain risk in two ways; the leading indicators that show when you are at risk, and a simulation to see how well your supply chain can respond to a major event. The leading indicators range from single sourcing risk to global supply risk, with a number of other factors included as well. Each of these metrics help you identify where you could potentially be at risk.
The other part of our project was based on a concept I wrote about a year ago or so; the Chaos Monkey. The concept here is to go beyond the typical metrics and indexes and to prove how resilient your supply chain is to an actual disruption.
A recent article in Fleetowner shed some light on the human aspects of supply chain management. Featuring research by Arash Azadegan (Ph.D, Professor of Supply Chain Procurement at Rutgers University), the article discusses some key traits held by the best supply chain managers. But the article alludes to something more: the collaborative human efforts in the supply chain, especially in difficult times.
Relationships are often really tested in times of crisis. We see this in many aspects of our lives, but the same applies in your supply chain. When the storm clouds move in, you need to get your product moved out, and you’ll need help.
Azadegan talks about how the “dominoes of the supply chain are now very close together – and the closer they are, the faster they fall.”
Imagine a situation where you have 24 hours to analyze, plan, and execute supply chain changes on a massive scale. Would your planning tool be up to the challenge? Would your team be able to deliver? Would all the dominoes fall?
In the Fleetowner article, author Sean Kilcarr discusses a textbook example of a massive supply chain crisis: Hurricane Sandy, which devastated large parts of the United States back in October 2012.
As Anne Strauss-Weider (from A. Strauss-Weider Inc., a management consulting firm) explains in the article, things had to move quickly as Sandy literally loomed on the horizon. The Port of New York and New Jersey was hit hard, and they “had about 24 hours’ notice before Sandy hit,” she said.
In a crisis like this, Azadegan says “jobs, inventory, and profits are at stake, and beyond that, suppliers, customers, communities, and families of employees etc. are at risk as well.” There is no time to panic, “there is only a short time that [a manager] can be visionary and academic. [These situations] are unforgiving.”
A strong retailer-supplier connection can provide big benefits for retailers, suppliers, and even the end customer, but how does one go from a perfunctory partnership to a more intimate relationship that allows for things like common goal setting and joint improvement strategies? The answer is simple. Collaboration.
Unfortunately, building and maintaining said collaboration is a heck of a lot more challenging. I recently looked at two surveys examining the retailer-supplier relationship. The first, by SCDigest, gave an overall grade of B- to today’s retailer-vendor supply chain relationships. In its inaugural year, the 2016 State of the Retailer-Vendor Supply Chain Relationships survey focused on retailers and consumer goods manufacturers. What the results reveal is a very strong prevalence of an “it’s not us, it’s them” mentality coming from both sides of the equation.
According to the survey, 98% of retailers rate their relationship with their vendors as average or above, with 96% of vendors feeling the same way. Seems positive, right? Almost. Where there’s a bit of a disconnect is how each side views themselves and the other in terms of willingness and success at collaboration. Retailers feel their own knowledge and skill in how to collaborate successfully is a non-issue, ranking it as one of the smallest potential barriers to good collaboration. Vendors however disagree. They rank a lack of knowledge and skill in collaboration among their retail partners as the biggest single hurdle they need to overcome for supply chain collaboration.
Tumultuous weather is perhaps the most commonly thought of supply chain risk related to Earth’s climbing temperature. Undoubtedly, the impact of wild weather is substantial. An increase in the number of devastating hurricanes, earthquakes, wildfires, floods and droughts should be worrying to everyone, not just those concerned for their supply chains. In 2014, three of the top five biggest supply chain disruptions were related to natural disasters. Typhoon Halong in Southeast Asia capped the list, causing a 41-week disruption at a cost of more than $10 billion for companies doing business in the region. Are we looking at a future where Mother Nature is responsible for the majority of disruptions?
Companies will need to evaluate the risk of losing a supplier in a specified geographic region, and whether there’s a case that needs to be made to diversify where raw materials are coming from, having multiple suppliers, and how far to take contingency plans. The same can be true for evaluating different transportation options. Severe weather can cause substantial delays, or even total shutdowns, of certain routes or modes of transportation. Supply chain managers need to have backup routes and options available and at the ready, and need to be able to quickly and effectively run scenario simulations to determine which course of action will allow for the smallest overall impact.
Another thought I had is whether these severe weather phenomenon will cause shortages of certain raw materials, like what we’re currently seeing with cocoa. What will that do to already unstable price fluctuations in some global commodity markets? Will supply chains be able to cope with the potential added costs? Can we expect to see an increase in civil unrest (and the associated supply chain challenges) as communities fight over dwindling resources? A good supply chain risk plan should take into account all of these factors.
As you enjoy your downtime over the holidays, here are a few of our best blogs from 2015 to check off your reading list. So grab your favorite holiday drink of choice and read on! We look forward to continuing to bring you interesting and engaging content in the New Year!
Technology and the Supply Chain: What Does the Future Hold?
A recent report, ‘Technological Tipping Points’ by the World Economic Forum (WEF), takes a look into a crystal ball, examining the timing and impact of 21 ‘tipping points,’ which they describe as “moments when a specific technological shift hits mainstream society.” A staggering number of those points are things straight out of the futuristic cartoons and early sci-fi series I loved growing up.
Preparing Skills for the Future of Supply Chain Management
There is no question that supply chain talent development has become a top of mind multi-industry challenge that takes on different dimensions for both attracting and retaining key talent. The debate is often focused on whether strategies should address a perceived “skills gap” or a “training gap.”
What Your Mom Can Teach You About Effective Supply Chain Have you ever marveled at how some women just seem to have it all together? They manage to turn a hectic household into a well-oiled machine, while I can barely manage to keep my household of two up and running! In honor of these Super Moms, I’ve pulled together the top five reasons why you should be asking your mom for more than just relationship advice.
Supply Chain Risks: Big or Small, Plan For Them All The reality is that risk comes in many forms (including anticipated risk, uncontrollable risk and unanticipated risk). It’s constantly changing. And the amount of risk being faced by supply chain professionals has been on the rise for the past 20 years.
As pointed out by Alexa, Santa does operate one of the most complex supply chains ever imagined. And as important as Mrs. Claus’s role as operations manager is, I’d like to focus on the role of the elves…the unsung heroes.
The legend is that the elves furiously make toys all year long, but the reality is that the demand has outstripped the North Pole’s capacity for many years. Over 100 years ago, Santa and Mrs. Claus had to rethink their operations. They had to start to rely on consumer products companies such as Mattel, Hasbro, Lego and others, who could build toys throughout the year with their resources and instead of waiting for a demand signal they could push those toys out into their distribution network for storage. The big benefit for Santa is that he immediately extended his distribution network and was still able to achieve a very, very high level of customer service. He was sure that if they contracted carefully with these toy makers, there would be more and more happy children on Christmas Day every year.
Does your supply chain enjoy 100% on-time delivery? A workforce with a 0% turnover rate? How about a 100% customer satisfaction rating (at least among the Nice!)? No? Santa’s does. It’s widely believed Santa Claus has the most efficient supply chain in the world. And who am I to argue with a man who can deliver millions of presents all over the world in just one night.
But I’m here to let you in on a little secret. The key to Santa’s supply chain success isn’t magic (although there’s a healthy dose of that involved as well). It’s the mastermind behind his logistics, inventory management, master production scheduling, and sales and operations planning. So who is this wizard of supply chain management? Why, Mrs. Claus of course!
Yup, that’s right. While the big man in red is off on photo ops or headlining parades, Mrs. Claus is back at the North Pole working her hiney off alongside the suppliers (aka the Elves) to ensure every girl and boy gets the perfect gift for Christmas. From overseeing the production line, to managing supplier collaboration, to analyzing data as part of her intensive market research, she manages every aspect of Christmas. And let me tell you that’s no easy task.