Take a moment and consider your supply chain. You worked to eliminate waste, use the best logistics solutions, found inexpensive packaging or dispensing options— down to the warehousing and storing products and materials. You may have even prepared for common or time-based issues like the holiday rush or a seasonal shortage in one of your materials, for example. While these measures are all excellent ways to combat the typical hiccups, they fail to address the kinds of unexpected problems that can devastate a supply chain.
A disconnect springs up with the false security of efficiency, a necessary consideration in business overall, but a cold comfort when responsiveness is needed.
Efficiency Addresses Scale. Responsiveness Does Not.
Many, if not most, efficiency measures are built with a certain output in mind. A cost-to-profit sweet spot has been predetermined— 2 pallets a day, 5,000 units a month and so on—and it’s only natural to gear your operations towards that number. Agreements with suppliers for a steady buy order, facility operational costs for a set number of working hours— this planning works well as long as nothing disrupts your supply chain. If something does, however, you’re left scrambling for a new supplier or service agency that offers none of the discounts and benefits of an established relationship.
Carefully considered invoices and deals go out the window trying to keep the proverbial or literal machines running, skewing profit expectations and sales data.
To be truly efficient, you should have open lines of communication throughout your supply chain, all the way back to raw materials, says Anupam Agrawal, a Business Administration professor at Illinois University.
You Need a Responsive Supply Chain.
If you find yourself in the unfortunate place of trying to maintain balance in a supply chain upset, time becomes a very valuable resource. The faster you can fix an issue, the less disruption it will cause down the line.
You need a supply chain that’s as focused on that stopgap solution as you are.
When you fail to connect with responsive supply chain partners while things are running smoothly, you could strand yourself in more turbulent times, exposing you to unscrupulous supply partners that will try to take advantage of the situation with ever-climbing ‘emergency’ prices and fees.
There’s No Time Like the Present.
Responsiveness can be summed up eloquently by a quote from author Richard Marcinko– “The more you sweat in training, the less you bleed in battle.”
Essentially, going through a worst-case scenario exploration voluntarily before one falls in your lap will shield you against a number of unpleasant outcomes.
Have candid discussions with your existing supply chain about important matters like max/min capacity, logistics solutions, backup manufacturing or service plans. Armed with that information, you’ll be better prepared to spring into action– or at least worry less about the partners implementing those responsive changes.
If your research finds your current supply chain to be less than flexible, focus on either changing that obstacle or finding new supply chain partners that better fit your company. As supply chain expert Doug Pasquale recently pointed out in an interview for Supply & Demand Chain Executive, transparency and real-time visibility help keep the decision-making power in your hands and your responsiveness honed.
Realistically, there's only so much you can plan for or work into your supply chain efficiency efforts, no matter how resilient or forward-thinking they may be. Sooner or later, something will test the limits of your current structure of logistics solutions, and to be successful you'll need to rise to the occasion.
With the right contingency plans in place, however, you'll never have to sweat another marketplace fluctuation, material failure or delivery-disrupting disaster again.