Supply chain resilience – preparing for a frictionless future

When you’re at sea, the waves breaking on the bow may obscure greater swells behind them. Out over the horizon, may be even larger surges. You don’t know for certain, and you can’t tell. In circumstances like these, it’s a good idea not just to deal with the here-and-now, but also to hope for the best, and plan for the worst.

The difficulty here is one of imagination: your preparedness will be in proportion to quite how bad you picture things could possibly ever get. Business in 2020 was a case in point. The supply chains of many major enterprises were wrong-footed by the scale and the duration of the COVID-19 pandemic.

Indeed, our own research[1] indicates that the global supply chains of close to seven out of 10 organizations took more than three months to recover from disruptions. As a result, many of these enterprises are now looking at how they can build greater resilience into their business models. In a recent report from Capgemini Research Institute (CRI), “Fast Forward: Rethinking supply chain resilience for a post-COVID-19 world,” a full two-thirds of organizations (66%) said their supply chain strategy would need to change significantly, in order to adapt to a new normal post-COVID-19.

They may not know whether to expect another pandemic, or something else – but whatever is over that horizon, they want to be ready.

The principles of resilience

So, then, what are the main principles of a resilient supply chain? There are four. Here they are, together with a sense of the current picture:

• Agility – the supply chain needs to be able to respond swiftly to shifts in the environment, by scaling production up or down, by reconfiguring plants and logistics networks, or by moving from traditional bricks-and-mortar to an e-commerce business model. In the survey that formed part of its report, CRI found that just over one in four organizations (27%) have a supply chain that is sufficiently flexible to support new or evolving business models.
• Diversification – businesses also need to ensure they have a spread in their supplier base, and also of their production and transportation partners. Around two-thirds of businesses responding to the CRI survey (62–68%) said they are actively investing in this area as part of their post-COVID plans for the next three years.
• Contingency planning – needless to say, supply chains need to be able to anticipate and respond to disruptions. As I mentioned in my introduction, it’s wise to hope for the best, but to plan for the worst. In the CRI report, 16% of organizations said they use a digital twin for regular scenario planning exercises. It’s not a high proportion, but it’s a promising one, considering the relative youth of this approach.
• Visibility – businesses will only be able to address all the previous points successfully if they can see everything that’s happening in the supply chain, as it’s happening. It’s sobering to note that 44% of respondents to the CRI report said they have not mapped their supply networks at all.

Future-proofing the supply chain

The steps organizations need to take are perhaps self-evident:

• Establish a resilience strategy – product portfolios should be assessed, so as to identify areas where building resilience will be critical. Resilience thinking needs to be woven into the entire product lifecycle
• Build the capabilities needed to anticipate disruptions – organizations need to address their issues with end-to-end supply chain visibility, risk monitoring and scenario planning capabilities
• Build the capabilities needed to resist disruptions – diversification and localization needs to be improved, but gradually, while focusing on customer-centric planning using analytics
• Build the capabilities needed to recover rapidly from disruptions – over time, organizations need to standardize their plant designs and material choices, and to strengthen collaboration and data sharing with their ecosystem partners so as to increase their agility.

What we have here is a blueprint for what we at Capgemini call the Frictionless Enterprise, in that it represents a smooth and seamless flow of information and collaboration between employees, their departments, and those with whom they work. In the case of the supply chain in particular, it also encompasses relationships with partners, customers, and obviously, suppliers.

Ready for anything

The steps to resilience may be obvious, but no one is saying that developing and implementing these plans will be easy – especially when businesses also have to deal with their immediate supply chain issues, such as seasonal demand, or pandemic peaks and troughs.

However, it’s worth remembering that those immediate needs are rather like those waves breaking over the bow. Of course, you need to deal with them – but if there’s anything else out there, and it’s going to come rolling in over the deep, you’ll need to be ready to face that, too.

Read the “Fast Forward: Rethinking supply chain resilience for a post-COVID-19 world” report by the Capgemini Research Institute (CRI) to learn more about how you can future-proof your supply chain for a post-COVID world.

To learn more about how Capgemini’s Digital Supply Chain practice  can help your organization build a resilient, agile, and frictionless supply chain, contact: joerg.junghanns@capgemini.com

Jörg Junghanns  leverages innovation and a strategic and service mindset to help clients transform their supply chain operations into a growth enabler.

[1] Source: Capgemini Research Institute, Supply Chain Survey, August–September 2020, N=807 organizations that faced a negative business impact due to the crisis.