The role of a supply chain manager is particularly challenging at the moment. Massive levels of disruption and unpredictability throw a curve ball to a profession that prefers stability and control. With several crises in quick succession including a worldwide pandemic, significant European conflict, blockage of the Suez Canal by a stranded cargo ship, conflict in Gaza, disruption of Red Sea trading due to Houthi attacks, threatening to drain the Panama Canal, plus extreme weather conditions and growing global tensions attributable to climate change, it is a chaotic state nearly.
Professor of sustainable supply chain management at UCD, Mark Pagell, states that supply chain specialists have devoted the last three decades to eliminating unpredictability and extending their influence over the entire supply chain – a strategy which proved effective until Covid hit. He noted that it came as a shock when something did not arrive on schedule as many had lost the knack of managing disruptions. At present, many businesses are still struggling with the aftereffects of Covid, dealing with surplus inventory that no one desires.
The ongoing disruptions make it even more challenging to manage with no discernible signs of stability in the near future. As per the findings from the recent Global Supply Survey by PwC, over 60% of businesses are greatly alarmed about short-term supply chain disruptions, forecasting continuance up until 2030.
According to the survey, 12% of businesses have fully revamped their supply chains to boost resilience, but 87% are still in the adaptation process, with 51% having ongoing initiatives and 36% with planned initiatives.
Mark McKeever, PwC Ireland’s procurement and supply chain director, advises that companies affected by the ongoing crises should focus on contingency planning. To achieve this, primary emphasis should be on obtaining an accurate account of the inventory, incorporating both incoming raw materials and finished goods. With a clear understanding of their own and their supplier’s current inventory, they can best judge how to distribute and manage stock.
“In the ever-evolving situation, the importance of adapting and improving supply chains is becoming increasingly evident. Neal Johnston, a business consultant and supply chain specialist at EY, postulates that technology can significantly help in disruption-proofing these networks. By amalgamating technology, the transparency across whole supply chains can be markedly increased – helping accelerate informed and effective decision-making.
The profusion of technology solutions, applicable across all sectors, can effortlessly merge with established systems, thereby augmenting supply chain visibility. To curb risks associated with unforeseen incidents, like the Red Sea crisis or the Baltimore bridge calamity, it is crucial to optimise the decision-making process of supply chains by providing holistic visibility, adds Johnston.
McKeever concurs, noting that firms are employing burgeoning digital resources such as control towers and advanced planning tools to enhance supervision over product movement across supply chains. He also highlights the trend of supply chain network redesigning for added resilience and responsiveness, albeit at potentially higher costs. Such redesigning includes moving production to fresh regions, implementing backup facilities, diversifying vendors and opting for dual sourcing.
Pagell wittily comments that the cost is irrelevant if supplies are not available.
One strategy being adopted to combat supply chain issues is increased collaboration. According to McKeever, industry surveys indicate that companies are turning towards more synergised and productive ways to confront mutual concerns and stimulate economic expansion. A third of the industry leaders are partaking in completely integrated supply chain ecosystems that encourage smoother, transparent, and efficient exchange of information, cooperation across value chains, and quicker problem-solving.
Though resilience has been a buzzword in the supply chain domain in recent times, Pagell questions whether it should be a primary objective.”
In terms of engineering and supply chains, resilience has traditionally been thought of as the capacity to revert to the previous state following a disturbance. However, Pagell suggests that this definition is outdated and that, much like nature, chain supply systems should adapt rather than revert. After a disruption, an adaptive supply chain would be altered.
A compelling instance of this adaptation in action is seen through the Norwegian state oil company’s use of technology. During the Covid pandemic, difficulty in obtaining parts led them to adopt 3D printing. Although it was costlier, it eliminated the need for inventory storage. The company then ventured to see if their service was useful elsewhere, creating an ecosystem of consumers within the oil and fishing sectors, based on skilled labour and state-of-the-art technology – a classic example of organisations, working together to tackle a challenge.
With climate change causing sustained disturbances, this kind of adaptability will become an increasingly vital requirement in the future. As Pagell points out, weather changes may result in a failed harvest, with ‘100-year floods’ occurring with more regularity. Over time, countries like Ireland could come to be viewed as unreliable sources of supply, prompting companies to look elsewhere and heralding a new crisis which could potentially overshadow Covid.
Currently, supply chain managers face immense pressure, but their skills could become highly sought after as demand rises. As more and more people are needed in the supply chain function, Pagell implies it might be beneficial for companies to hire innovatively-minded young professionals now, as the way of working will undoubtedly change. That could be a game-changer.