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The supply chain—the phrase and the concept are ubiquitous. It’s fundamentally necessary for every business to do business. But what exactly does it encompass?
The Corporate Finance Institute defines a supply chain as “an entire system of producing and delivering a product or service, from the very beginning stage of sourcing the raw materials to the final delivery of the product or service to end-users.”
“The supply chain lays out all aspects of the production process, including the activities involved at each stage, information that is being communicated, natural resources that are transformed into useful materials, human resources, and other components that go into the finished product or service,” according to the CFI.
At ACG’s Nov. 11 meeting, World Trade Center Kansas City Director Melissa Miller moderated a discussion titled “Supply Chain Transformation: Strategies for Success in a Changing Environment” with panelists Jeremy Colwell, vice president of client successes and insights at C2FO, and Clint Rusch, president of Northpoint Logistics.
In keeping with the discussion’s title, Colwell and Rusch keyed on changes supply chains and environments are undergoing.
“First, it used to be the guy at the end of the hall who … took care of everything,” Rusch said. “When a company was good at supply chain, what that meant was they had found a way to lean out 86 cents from a shipment. They found a niche to be able to pull out a little bit of money.”
Rusch recounted a statistic he had recently seen that said for an international shipment to proceed from a production facility to the consumer, it required the coordination of 17 different companies operating in three different countries.
“When you think about the delicacy of something like that, of that system, it’s easy to break and it’s not surprising that COVID did that,” he said. “I think it has evolved to become less about the delivery of the service, the delivery of the goods and the management of the inventory. It’s become more of a business intelligence opportunity for a manufacturer, a buyer, a shipper—for any part of the chain. It’s not the guy at the end of the hall anymore. It’s not a vendor network anymore. It’s a true partnership. It’s visibility and understanding data, because we’ve got all the data. … Now it’s about being able to contextualize that data. I don’t see that going away. If anything, it’s going to accelerate.”
Colwell also spoke of developing strategic partnerships in which procurement works with sales which works with the supply chain, and they all jointly develop their planning.
“It’s joint-demand planning as the world’s changing pretty dramatically, and it’s all data driven,” he said. “We’ve learned a lot in the last two-plus years, and I think that between consumer behavior trends … supply chains have really adapted and been resilient through this entire change. So, it’s great to see the strategic partnerships that have risen out of pandemic.”
Rusch said the model of “observe, orient, decide and act “allows taking a “glut of information” and “being able to take that data point that doesn’t seem relevant” … and it creates an opportunity, a chance to win.”
Miller asked what organizations can do to anticipate and fulfill the changing buying habits caused by the pandemic. Colwell said that when the pandemic started in March or April of 2020, consumer trends were aimed at home goods and focusing on local goods but that it has switched more to services. That makes supply chain purchasing and planning harder because the trends change so quickly and service providers must quickly adapt and predict how the trends will continue to change.
“We’ve been able to provide a lot of support on where we see the trends, even based on the last couple of months,” Colwell said, “where some things are cyclical but other times it’s a lot of guessing for these clients, so we helped take the guessing out of supply chain management.”
Miller asked how clients were approaching inventory management. Rusch said the biggest change was “just in time” switching to “just in case,” that just in time can work in some segments but not in others. He predicts that trend will continue.
An audience member asked what question corporate directors should ask of their companies to assess the quality of their supply chain and logistics capability.
Rusch said the question that stood out for him was, “What’s your plan if?”—if your predictions don’t pan out, if circumstances change and you have to adapt.
“If the answer isn’t, ‘Here’s the exact plan,’ that’s a problem,” he said. “The answer can’t be, ‘Well, we’ll figure it out.’ … It’s important to make sure those discussions are happening. … I think that is the No. 1—what’s your plan if. And to challenge every assumption along the path of this question.”