Point of view
By Patrick Sage, Partner at CYLAD
The COVID-19 crisis has brought to the forefront both supply chain and the Supply Chain function. A recent cartoon indicated that the Supply Chain is now as critical as coffee in managing the crisis.
It is critical for:
– Ensuring continuity of business & operations when the acute crisis occurs
– Restarting operations
– Adjusting to the ‘new normal’ in the mid-term which is sure to be volatile, uncertain, complex and ambiguous (‘VUCA’)
1. Organizing the Continuity of Business & operations
The Supply Chain teams have been on the frontline during the Covid-19 crisis, and will again be on the frontline in potential further outbreaks, be it
The “lockdown”, potentially “the first episode” of lockdown, helped organizations gain experience on appropriate crisis response, which will only be beneficial in the event of a second wave.
Documented and disseminated procedures particularly enable proper management of the initial “shock” phase.
Initial feedback shows that an orderly and coordinated suspension of operations is critical for an orderly and coordinated restart.
2. Resuming operations
This phase seems to us to be the most critical today. It takes place in a particularly uncertain and changing context, after an abrupt halt in operations. In this type of situation, “back to basics”, even if it means adapting them, is generally a relief to the organization.
We illustrate 3 key principles for the restart of operations:
2.1 – High frequency, transparency & collaboration
Without parts, components, or skilled resources, industrial or service activities will be difficult to restart efficiently. Preparing to restart operations involves joint planning, transparent to both customers and suppliers, with an adequate frequency, based on the following parameters:
A high frequency of exchange is beneficial, opening the door to new modes of information sharing (e.g. supplier watchtower, Air Supply platform in aeronautics), including at a detailed level of granularity.
In most cases, B2C sectors are accustomed to high frequency exchange, whereas B2B sectors are much less so. It will be necessary for operators not only to make forecasts, but also to establish a set of assumptions and frequently monitor deviations from that baseline.
2.2 – The art of industrial planning – Back to basics
The planning cascade is traditionally based on 3 tiled horizons:
In order to feed the steering routines or rituals with information to make the right decisions, a well-designed planning system is based on:
In ‘normal’ times, the planning system (too) often leaves room for approximations and imperfect data. Volumes and habits contribute to a myriad of mistakes.
When a crisis occurs, the rigorous application of this cascade of planning and rituals is a real lifeline. It comes with several conditions:
Restarting operations without a good control and understanding of the planning system unfortunately promises to be painful, in terms of energy spent, operational (e.g., OTD) or financial (e.g., dead stock) performance.
2.3 – Supply chain risk management
Crisis management and disaster recovery tools exist, but they are either infrequently used (Europe) or ineffective (US).
Carrying out an exhaustive analysis of the risks linked to the restart of activities is generally a useful exercise to:
3. Prepare the “New normal”
A return to “normal” is a mere hypothesis, probably not the most likely one. The current crisis promises to profoundly shift some balances and raises a number of questions:
CYLAD Consulting assists its industrial clients in dealing with these issues, in order to face the crisis or prepare for the future, whether it be through its team specialized in Supply Chain & Purchasing or its Smart Data team.
We are happy to exchange points of view and to offer our services to explore these new perspectives.