Why the Future of Supply Chain Isn’t a Chain at All
Did your supply chain snap under the pressure of the COVID-19 pandemic? And are you wondering what steps you can take to avoid a similar breakdown during the next global crisis?
The well-publicized disruptions that occurred throughout CPG supply chains...
- toilet paper shelves empty in big box retailers
- flour missing for weeks from grocery stores
- breweries scrambling to track down empty aluminum cans
...must be clarifying lessons for businesses looking toward the future of supply chains.
Even though the logistics landscape is more recognizable once again, a return to normal cannot mean a return to business as usual.
If you want to face future challenges proactively rather than reactively, it’s time to think past supply chains to a world of supply networks.
How Are Supply Networks Different From Supply Chains?
At this point, I’m sure you’re wondering what exactly a supply network is.
Is it really any different from a supply chain?
The distinction might seem like a small one, but it will bring about major changes to the way your organization moves freight, manages inventory and procures raw materials.
Supply chains and supply networks share the overall purpose of aligning the production and distribution of goods to an end buyer or consumer.
In the traditional view, supply chains are seen mainly as components of cost to serve, and businesses have approached them with the primary goal of keeping that cost as low as possible.
Supply networks, conversely, are enablers of business growth. They allow your company to identify and seize fleeting but powerful instances of competitive advantage.
Supply Chains
Supply chains consist of a fixed set of suppliers, production facilities, warehouses and transportation providers that operate in a predetermined order.
Because they are linear, supply chains are susceptible to the sorts of external pressures we saw during the early days of COVID-19.
When disruptions in labor power or raw materials happen, businesses utilizing rigid supply chains have nowhere to turn to fill those gaps.
Supply Networks
Supply networks are expansive sets of suppliers, producers, warehouses and transporters that can be tapped into as necessary.
When a disruption occurs — a paper supplier runs out of stock, a packaging facility is drastically understaffed — businesses with robust supply networks can reach out to alternatives to seamlessly maintain their distribution goals.
In their most powerful form, supply networks will be open and shared between organizations to help multiple participants identify new efficiencies.
Picture how transformative this will be: If your warehousing needs reliably surge from 80% of your available capacity to 120% during Q3, an open supply network provides the visibility to find another business nearby whose storage needs are the inverse of yours.
Aligning capabilities and needs in this manner is a true win-win for both organizations, an unimaginable outcome under the current status quo of closed and proprietary supply chains.
Breaking the Chain and Building a Network Mentality
Moving toward a supply network approach will require both concrete, practical steps and a significant shift in organizational philosophy.
The following course of action will help you gain full awareness of your current state and allow you to start planning toward the future.
5-Steps to Transform from Chain to Network
- Digitize all supply chain-related documentation (if you haven’t already).
- Create a robust, consolidated data set of your own supply chain with end-to-end visibility.
- Once your data set is digestible, take stock of your current constraints.
- Learn to approach your constraints as opportunities to expand your network.
- Begin building a durable, adaptable supply network through outreach and data sharing.
Transformation Takes Organizational Buy-In (& Time)
For any of this to be possible, you will need to ensure buy-in not only from decision makers at your company, but from the executers who will carry out these steps as well.
Everyone needs to be on the same page that data sharing between organizations can actually help create competitive advantages rather than threaten them.
The most important thing to keep in mind is to start from wherever you are, regardless of how far off you may feel from being able to fully realize the potential of a supply network.
The changes I’ve outlined here cannot be completed overnight, and it may be months or even years before your supply network is operating in full swing.
But the payoff for making this transition the right way will be immense, both in terms of your organization’s efficiency and your ability to compete in a marketplace where speed and convenience are vital to your brand’s success.
Read the Full “Breaking the Chain” Research Study
Coyote Logistics has partnered with Accenture and the Consumer Brands Association to publish “Breaking the Chain,” an in-depth research study created from interviews with 20 enterprise-scale CPG shippers.
Learn what the COVID-19 pandemic taught shippers in the CPG vertical and consider the steps you can take to improve your supply chain’s durability and flexibility for tomorrow’s challenges.