Supply Chains and Integrated Logistics
The crisis generated by COVID-19 brought as one of its aspects, the notion of the extension of supply chains and integrated logistics, its impacts on the businesses of the companies, and the lives of people. In the current scenario, it became clear the perception of the links in the chain and the supply of products often have a long way to go before reaching the customer or consumer.
While several sectors had to stop their production due to the lack of inventories of items affected by the production and logistics of their suppliers, other businesses had an increase in their activity–such as retail representatives, food, CPG and hospital supplies. Crisis committees gave rise to contingency plans that are put in place and reformulated on a daily basis, as new scenarios and situations appear.
In addition to industry, logistics and retail, a third element is needed in this complex equation: the government. The performance of public management must have coordination among its elements to ensure the operationalization of demand fulfillment plans. Sometimes some restrictions imposed on locomotion or storage must take into account, for example, the impacts of logistics and distribution, otherwise more supply problems may arise. The idea of a Supply Chain Office makes sense in the current scenario.
The profile of executives within enterprises is being remodeled. If the CEOs of large corporations used to focus mainly on long-term strategic issues, such as mergers and acquisitions, high investments and strategy communications with the board, now the operations manager profile has become much more relevant at this time. Take Alan Jope, CEO of Unilever, for example, who considers 3 crucial areas in your organization today: Human Resources, Supply Chain and Operations. Many other executives are working now with this bias.
Systemic and Holistic View
It’s also necessary to think ahead. Not in what will happen in a 12-18 month period, but in an intermediate and telescopic horizon that will modify its granularity as the time of the crisis goes by. Ranging from days to weeks to months, where planning within the supply chain makes sense in the executive decisions that should be taken according to scenarios and actions recommended with this time-frame. Regarding the supply chain, it is the systemic and holistic view of the chain with all its elements that matter for these plans and action recommendations. At McKinsey these work groups like this are called “Plan-ahead teams”, and they originate in the armed forces, where in warlike environments reality changes very quickly and execution and planning are faced by different groups, but in a complementary and interdependent way in decision making and action. Any resemblance to S&OP and S&OE is no coincidence.
S&OP and Supply Chain Management have never been topics of great repercussion among big names like Harvard Business Review or McKinsey. So far.
This crisis is bringing to light the importance and recognition of the Supply Chain for business continuity and has become a daily issue in decision making at the top executive level of enterprises. Those companies that are structured and equipped to face business challenges for as long as this crisis lasts and for their post-crisis recovery will be better adapted to face their next disruptions, whether of great or lesser intensity, of great extent or localized. The world will change, and we hope this new mindset persists after this crisis.
DELMIA Quintiq provides planning solutions for this type of scenario and reality now and in the post-pandemic. Our customers are able to see their entire supply chain and plan in order to assess the impacts of all their scenarios and trade-offs, respecting all restrictions (including financial ones) and making decisions based on objective, company-oriented KPIs.
This post by Andre Miyajima originally appeared in The Delmia Blog.
See more at DELMIA Quintiq Sales and Operations Planning.
