Intro (00:01):
Welcome to TEKTOK Digital Supply Chain Podcast, where we will help you eliminate the noise and focus on the information and inspiration that you need to transform your business, impact, supply chain success, and enable you to replace risky inventory with valuable insights. Join your TEKTOK host, Karin Bursa, the 2020 Supply Chain Pro to Know of the Year. With more than 25 years of supply chain and technology expertise and the scars to prove it, Karin has the heart of a teacher and has helped nearly 1,000 customers transform their businesses and tell their success stories. Join the conversation, share your insights, and learn how to harness technology innovations to drive tangible business results. Buckle up, it’s time for TEKTOK, powered by Supply Chain Now.
Karin Bursa (01:12):
Well, welcome supply chain movers and shakers. Karin Bursa here. And I am so glad that you are with me today for TEKTOK, the digital supply chain podcast. We’re going to tackle the topic of thriving through disruption and leveraging six strategies for greater resilience. These strategies are so important to your business that I had to break the discussion into two parts. So, we covered the first three strategies in part one. And today, we’re going to dive into strategies four, five, and six, so that we get that full picture of six strategies for greater supply chain resilience.
Karin Bursa (01:53):
You know what? I believe that feedback is a gift, and I need your feedback. So, please message me with your thoughts, your insights, questions, and recommendations, and, of course, your success stories and challenges. I’d really love to hear from you. While you’re there, please be sure to subscribe to TEKTOK wherever you get your podcasts, or simply go to supplychainnow.com/programs/tektok, that’s T-E-K-T-O-K, and subscribe there. I don’t want you to miss a single episode.
Karin Bursa (02:31):
You know, today’s challenges are not your fault. That’s right, today’s supply chain challenges are not your fault. But these challenges are, in fact, your opportunity to drive value for your businesses. Chances are that your supply chain wasn’t designed to prioritize resiliency. In fact, the majority of supply chains – that’s more than 60 percent of global supply chains – have been designed to do one thing. They have been designed primarily for cost efficiency rather than resilience or agility. And in today’s dynamic disruption prone global supply chains, resiliency is far greater an importance than it has ever been.
Karin Bursa (03:29):
And you know our goal here with TEKTOK is to help you replace risky inventory with valuable insights. That’s difficult to do when more than 60 percent of supply chains have been designed with only cost efficiency as a desired outcome. Those supply chain designs did not or do not incorporate agility, resilience as high priority outcomes. So, let’s talk for just a minute. What exactly is resiliency? Resilience is your organization’s ability to absorb and adapt to changing environments in a way that’s going to enable your business to deliver its products in a wide spectrum of market conditions. Resiliency is a highly desirable, critical business attribute that isn’t just about surviving in the midst of disruption, but actually thriving in a world that is filled with disruptions.
Karin Bursa (04:42):
So, in the wake of the global pandemic and so many other disruptions, supply chain leaders are now faced with the ability to balance resilience and efficiency to improve the reliability of their global networks. And a resilient supply chain – don’t get me wrong. I’m not saying that you become immune to disruptions. Many of these disruptions are not in your control. But a resilient supply chain is more agile, more responsive in the face of these disruptions. It has the ability to quickly recalibrate the business, the plans, the customer needs, the production and distribution capacities to respond to more dynamic market conditions.
Karin Bursa (05:37):
In fact, resilience has become a priority for many CEOs. It is discussed in the board of directors meeting. And as supply chain leaders, as we emerge from the global pandemic, and we have addressed a multitude of supply chain disruptions, we need to put in place practices, strategies that are going to help our businesses be more resilient over time. We know the disruptions are not going to go away. We know that the severity, and the frequency, and the length will change each time. We know that the world will always be filled with uncertainty. But instead, today, we need to be asking ourselves, not about how accurate our plan is, but what is the probability that an event or disruption will happen. And if an event or disruption happens, how will we respond? That, my friends, is resilience. And it requires us to think, and act, and invest differently.
Karin Bursa (06:48):
So, are you ready? In part one of this discussion, we talked about the first three strategies. I’m going to take you through those just really quick to set the stage for strategies four, five, and six. So, strategy number one is sense and respond. That’s right, how do I harness new data, new market signals, to sense the need in the marketplace? And then, how do I respond? How do I satisfy that demand with my ability to source, produce, and distribute goods? And the idea here is that I recalibrate with greater frequency. I ingest new signals with greater agility, greater frequency, to be able to track and make incremental changes over time. Our supply chains become these living and breathing organisms that are constantly adapting, sensing, and responding to new market signals.
Karin Bursa (07:52):
The second strategy was inventory and capacity network-wide. The first thing I would encourage you to do is to understand that not all inventory is equal. Inventory actually has a form and a function that is unique in the business. And we need to be able to optimize that inventory, not just at multiple storage locations, but by multiple form and function for our business. And we need multiple policies available to us. Just looking at something, like, 30 days forward coverage for everything in my product portfolio, not sufficient for a resilient enterprise. We also need to look at our capacity. And capacity is not just the ability to produce, to manufacture, but it also includes storage capacity and distribution capacity. And I know many of us are struggling today with capacity issues that are coming from container shortages, port closures, port backups. All of that needs to be fed into your plan and recalibrated in order to be more responsive to customer needs.
Karin Bursa (09:07):
The third was multi-sourcing network diversification. The key word here, diversification. Well, maybe there’s two key words, multi – more than one – and diversification to help me mitigate risks. So, you’re going to gain resilience and agility by looking at things like regional strategies, multiple suppliers, and the ability to tap into a network, maybe have co-manufacturers, co-packers, and different distribution partners. Go back and listen to part one, we dive into those three areas in more detail. Hopefully, you’ll get some new ideas on how you can gain resilience in your supply chain.
Karin Bursa (09:51):
All right. So, let’s tackle strategy number four. Strategy number four to help you gain greater resilience is increasing your visibility. Okay, I know some of you just sat back and went, “Yeah, right? Duh. Like, I’m talking about visibility all the time.” Well, listen, an August 2020 McKinsey report on risk resilience and rebalancing global value chains stated that 54 percent of executives don’t have clear visibility into their supply chains beyond tier one, beyond that next trading partner, the customer, the supplier. You know what? I would submit that more than 50 percent don’t even have that tier one visibility. I think that’s an optimistic number they shared with us. And many of you are struggling with visibility within your own business. Be honest with me now. Be honest with yourselves. You are struggling to get visibility of every one of your plants, what they’re able to produce, your ability to move demand or place demand on multiple production facilities. Getting a good, honest, clear read on what your inventory position is. Many of you today are still struggling with those aspects of supply chain.
Karin Bursa (11:21):
And over 20 years that I’ve been in the supply chain and technology sector, I got to tell you that gaining visibility is one of the most cited goals of supply chain initiatives. And I will often ask the chief supply chain officer, “What exactly does visibility mean to you? What does it mean in the context of this initiative?” And I get a wide variety of responses. So, I want to encourage you to do two things – two things, as you think of visibility. The first is, define what visibility means to your business or to this transformation initiative. The second, equally as important, is for you to set specific goals on how your organization is going to leverage that visibility. What are you going to do with it? It’s not just about knowing a disruption is on the horizon. It’s about recalibrating to respond.
Karin Bursa (12:24):
So, think back to strategy number one, sense and respond. Know what you’re going to do with that visibility in order to give your company an advantage in greater resilience. You know, it’s very rare that trading partners, tier one, tier two trading partners think about data structures in the same way that you do. So, their data structures, their software, the way they configure their systems, their planning horizons, all of these things are going to vary greatly across geographies and business partners. That data though is your foundation. But it’s more than just getting access to the data. It’s the ability to harness the right signal and to transform that data point, that data signal, into actionable results, actionable information for your business.
Karin Bursa (13:24):
So, how do you bring that data together? How do you tap into multiple demand signals? I want to encourage you to listen to TEKTOK Episode 568, where I discussed with Craig Ablin, who is a consumer goods supply chain expert, on levers that are driving both the digital and physical supply chain success. There’s some really good examples in there of the ability to bring that information together. To act upon the information in increasing your visibility and what you should be thinking about how you should leverage that visibility to respond to a variety of market conditions.
Karin Bursa (14:15):
Okay. So, strategy number five in gaining greater resilience, it is leverage artificial intelligence and automation. Okay. I know somebody just rolled their eyes out there. You’re probably thinking, “Karin, I cannot afford artificial intelligence. We’re a mid-sized company. We can’t have a team of data scientists.” I agree you can’t. You can not afford a team of data scientists, but you can afford an AI driven supply chain planning solution. One that brings you that expertise without you having to have a team of data scientists on board. If you want to know your first step, your first step is dumping your spreadsheets. That’s right, we’ve got to get out of spreadsheet based planning. That is introducing more risk into your business that is putting you in jeopardy. We want to eliminate risk, reduce risk, increase resiliency. Not the opposite. Not increase risk in our business.
Karin Bursa (15:26):
And this is one area that we have control over. We need to be in a position to dump these spreadsheets. And for many of you that means you need to evaluate your supply chain planning platforms for a couple of things. First, make sure you’re using the latest capabilities that are available. Understand how those platforms are leveraging artificial intelligence and machine learning to get smarter over time. That’s right, your system is going to get smarter over time. It will apply this planning science to leverage a multitude of demand signals, new data sources, and enable you to evaluate or generate multiple scenarios for your business. I know we’re not talking about the Jetsons here. All right. Come on. This is available today and it will allow you to automate many of your planning processes while giving you both greater precision as well as a bigger picture of what is impacting your customers, your suppliers – that’s right – your business. It is going to enable you to evaluate multiple scenarios and choose the next right thing and how you respond.
Karin Bursa (16:45):
You know, one Gartner survey indicated that a surge in artificial intelligence activity is coming. And that by 2022 – that’s right around the corner – 77 percent of the surveyed organizations will be leveraging artificial intelligence in planning their supply chains. And the good news, you do not need a team of data scientists. You can harness the benefits of artificial intelligence and machine learning through your planning solutions.
Karin Bursa (17:21):
All right. Strategy number six, make the move to continuous planning. That’s right, make the move to continuous planning. So, first of all, some of you out there may need to create one plan for your business, right? One plan. That means I don’t have multiple demand plans and forecasts. I don’t have multiple production plans. I bring all of this together in a single plan for my business that covers strategic, tactical, and operational planning horizons. All in one plan. I can drill down. I can zoom out. And, oh, by the way, I need that plan to support both volume metric and financial measures. That’s right, volume metric. How much and where and financial, what is my top line revenue? What is my bottom line profitability? You may be asking yourself right now. Why financial measures? Well, I just told you, top line growth, bottom line profitability. And by the way, the higher you rise in an organization, the more often your key unit of measure becomes financial. And if you’re in a publicly held company, that C-suite needs the ability to predict future revenue and profitability to be accountable to shareholders.
Karin Bursa (18:54):
So, if you’re still with me, come on. Come back with me if you’re multitasking. You’re thinking, “So, what exactly is continuous planning? What does that mean?” Well, in the simplest terms, planning solutions providers used to make you choose between being a weekly system or a monthly system. That’s right. That’s right. Yeah. Weekly system or monthly system. Not anymore. Today, your planning solution – the latest and greatest capabilities – should allow you to zoom in or telescope out to look at a multitude of horizons, to get very granular or to look at the macro trends, to be able to look at what’s happening tomorrow, three days from now, next week, next month, next year, or to evaluate my fiscal year performance. So, you need to ask your provider about the ability to support continuous planning. The ability to plan and replan, recalibrate my business as new signals come to light.
Karin Bursa (20:10):
I know you still need a cadence based plan. Absolutely. You still need to know your monthly performance, your quarterly performance. Look at how you’re doing against an annual operating plan. Absolutely. I’m not telling you that that is not important. I’m telling you that you are no longer tied only to those cadence based rules. Now, you need the ability to plan continuously to harness the latest data, to recalibrate your plan, and to enable your business to sense and respond in greater resiliency. Makes sense? Okay.
Karin Bursa (20:51):
So, those six strategies for greater resilience. So, we talked about in part one – go back and listen to this in more detail – but there was sense and respond. Harness new data, new market signals, to align your business. We talked about inventory and capacity and being able to add precision into what you’re producing, sourcing, storing, and moving to market, and understanding inventories form and function across your network. Number three was, looking at multi-sourcing network diversification. That’s a mouthful, multi-sourcing network diversification. This is going to give you the ability to gain agility, to look at surge capacity, and respond whether we do things like nearsourcing or postponement strategies or working with contract manufacturers or co-packing partners or 3PLs. This is multi-enterprise, multi-sourcing capabilities. And the value proposition is very high.
Karin Bursa (22:02):
Visibility, that was number five – excuse me – that was number four. Visibility was number four. Define what visibility means to your business, how you’re going to measure it, and what your organization is going to do with it. It’s not just about knowing that a change has occurred or a disruption has occurred. It is the ability to recalibrate your response based on that latest information. And then, artificial intelligence and automation. You’re seeing how all this works together? So, using your supply chain planning platform, leveraging the artificial intelligence, the machine learning, the ability to bring in multiple data sources to drive better decision-making each and every day. What can I automate? How can I focus my valuable human capital into the creative side of the response to looking at the scenarios that are produced and making the next right best decision for my business.
Karin Bursa (23:11):
And then, finally, strategy number six, continuous planning. That’s right, create one plan for your business. That plan needs to support multiple planning horizons that map to your strategic tactical and operational needs. It gives me the ability to ingest the latest market signals, customer signals, demand signals, disruptions, and recalibrate in how I’m going to respond. It also brings me together on a planning platform that supports both volume metric and financial measures. Just think how happy your executive team will be. It will transform your sales and operations planning process.
Karin Bursa (23:55)
Okay. I know that’s a lot. Don’t forget to listen to both part one and part two of this. This is the six strategies for greater supply chain resilience. I hope these insights are going to raise your supply chain IQ. And on the topic of raising your supply chain IQ, please tap into the wide variety of digital content that is available to you at supplychainnow.com. And while you’re there, find TEKTOK, that’s T-E-K-T-O-K, and subscribe. You don’t want to miss a single episode. This is Karin Bursa, I am your host for TEKTOK, the digital supply chain podcast. Helping you to eliminate the noise and focus on the information and inspiration you need to transform your business and replace risky inventory with valuable insights. We’ll see you next time on TEKTOK, powered by Supply Chain Now.
