A team of Portland State’s global supply chain students conducted a research study about the future of supply chain management post COVID-19. Led by the program’s academic director Daniel Wong, Haneen Abu-Khater, Evan S. Woschnik, Choul Huda and Bradley Mora outlined the factors that should be considered for the future of supply chain management from a practitioner’s perspective.
According to the researchers, the majority of companies format their supply chains to minimize total costs, failing to build resilience into the design. When the global pandemic disrupted everyday life as we know it, companies without a framework for adaptability faced a supply chain crisis, with both demand and supply affected simultaneously. The researchers detailed how to build reliable supply chain management frameworks through six key factors:
- Designing a resilient supply chain organization
- Investing in supplier relationship management and supply chain visibility
- Accelerating digital transformation
- Anticipating of new federal regulations
- Leveraging insight and thoughtful leadership from civil societies
- Setting up a supply chain control tower structure to make informed decisions during a crisis
1. Designing a resilient supply chain organization
Resiliency is the ability to bounce back and adapt to unforeseen changes or disruptions. When applying this to supply chain, it means starting off with a business continuity plan that provides the ability to monitor the global situation daily. Making, monitoring, and assessing plans for unpredictable circumstances is key to resilience. A clear outline of actions, leadership roles and communication forms should be provided to all employees to keep everyone on the same page when a disruption occurs. The idea is not to prepare for every disruption and be able to forecast it, but to be able to forecast the business reaction to the disruptions if or when they occur.
2. Investing in supplier relationship management and supply chain visibility
The authors recommend a focus on mapping, traceability and supplier relationship. Mapping can be explained as the interaction across businesses and suppliers in order to record the exact source of materials, processes and shipments involved in bringing the product to market. The transparency of mapping allows access to supply chain traceability, which creates a reduction in risk, enhances efficiency, provides security, helps navigate state and federal regulations, and more.
Positive relationships are essential in the ability to exchange information in real-time. Mutual understanding of a shared vision makes it easier for planning efforts to align resources, milestones and responsibilities. Sharing the same risks and rewards creates an equal drive between supplier and business. That way, if a disruption in the supply chain occurs, both parties can pursue resilient tactics to adapt and achieve the same objective.
3. Accelerating digital transformation
Digital technology provides the ability to detect early warning signs around the world for potential disruptions to the supply chain process. Available data with AI tools can notice abnormal trends for insight into consumer demands or material availability. Technology-driven solutions are often the backbone of risk management and resilience. Applying technology to supply chain models provides identification of disruptions before they occur to accurately predict, mitigate and actively solve or adapt to them. The earlier digital transformation is implemented into the processes, the sooner disruptions can be sought out after.
4. Anticipating of new federal regulations
The geo-political tension between countries like the U.S. and China can illustrate the importance of diversifying production location. “Supply chain reliance of rare earths is problematic. Currently 80 percent of the imports for these critical minerals come from China alone,” say the article’s authors. “This industry stands as a prime example of an over-reliance on a single source. Industries like rare earths and pharmaceuticals are being highlighted because of the pandemic; however, they were already in states of vulnerability.”
Companies can no longer rely on a single country to supply their products. China’s potential retaliation against the US, the same retaliation that previously occurred between China and Japan, of restricting export of rare earth materials is something to keep on the radar. Anticipation for new federal regulations is best tackled by predetermined options for suppliers and production locations ready to go.
5. Leveraging insight and thoughtful leadership from civil societies
Anticipations can also be made by keeping track of world history and its progression through organisations’ works such as the Gates Foundations and Schmidt Futures. Learning from world visionaries and philanthropists about future ideas is a great way to project leadership ideas.
6. Setting up a supply chain control tower structure to make informed decisions during a crisis
As described by the authors, a supply chain control tower structure consists of three sections: people, tools/tech and process. A key feature of the control tower is the immediate decision makers operate with a sense of heightened emergency. The structure should include a disruption scale with action plans based on the level of disruption. This helps in understanding and conveying the level of urgency that is needed. A control tower structure also assists in understanding the organization’s vulnerabilities through planning and assessments. Overall, it is an integral part of the supply chain framework and is arguably the most important factor.