Fire Prevention Within the Supply Chain

Editor’s note: Supply Chain Management Review is launching a series of new online features in 2024, including Leadership Lens. Appearing online at scmr.com on the second Tuesday of each month, Leadership Lens will talk to industry leaders to get their thoughts on how leaders can better manage their businesses. This month, we are looking at how supply chain disruptions influence decision-making. If you are interested in future topics, you can see a full list of upcoming topics on our Editorial Calendar.

Many supply chain managers jump from one fire to another. Firefighters are highly valued in society, protecting people and structures. But fire prevention officers are even more valuable. Their efforts can help prevent the need to put out the fire – or at least limit the number of fires that must be put out.

Supply chain managers may be better served working as fire prevention officers than firefighters. It’s great to have the skills required to combat the fire, but how much value is there in a person who can prevent it from ever starting?

While it’s not realistic to stop every supply chain disruption, having plans in place prior to the disruption helps mitigate the after-effects. That’s where supply chain managers can shine.

“It means you understand the key constraints of running your organization, and you go through scenarios to make sure that you have contingency plans in place for what would shut your operations down,” explains Darcy MacClaren, chief revenue officer for SAP Digital Supply Chain. “So this is where you get into the themes of multiple contract manufacturers, different geographies. You’re operating in multiple sources for materials, and it’s this whole concept of preparing your people that disruption is the new is the new norm. We will have it and we will be prepared to react to it. We have the tools in order for us to make sure we’re reacting in the most customer-centric cost cost-effective, and sustainable way.”

MacClaren suggests the supply chain needs to be designed in reverse, meaning you are “usually putting the customer at the front and working backward.”

But, it is also a recognition among the C-suite that the supply chain should be “the center of your business.” Whenever a new product line is being prepared to go to market, supply chain considerations must be part of the equation. Multiple sourcing options and data collection efforts are a big part of this.

Value of data

MacClaren notes that the data component is critical to ensuring supply chain managers have the information needed to make quick decisions. While every disruption can’t be planned – think the low water levels in the Panama Canal that slowed container ship traffic – it is the proactive part of the management process that allows organizations to navigate these disruptions.

“That is what supply chain people are going to be dealing with,” MacClaren says. “And they need the tools, and the change management, and the training, and the organizational support to do their jobs.

“It’s this whole concept of preparing your people that disruption is the new norm, and you will be prepared to deal with it and react to it,” she adds.

The use of data – both internal and external – allows supply chain managers to build out contingencies. That includes geopolitical information, weather and much more. It is a visibility component that allows supply chain decisions to made in “concert with agility.”
The data mush meet what MacClaren calls the 3Rs – relevant, reliable, and responsible.

“It used to be pulling the information together. That is done. … it’s now what do I do with these situations that have never occurred before,” MacClaren says. “You have this holistic strategic look of your organization built. As it gets into the near term where your ability to maneuver the supply chain is limited - a shipment is coming over and they’ve shut down the main way it [travels] - now what your employees have is scenario planning. Now you have built in a very reactive model that you can respond to. … Now at least you are set up to react as best as possible … and most importantly, notification to those that are disrupted.”

How to be proactive

While the concept of risk-proofing a supply chain is well understood, how to achieve it continues to elude organizations.

“It always starts at the senior level,” MacClaren says. “Give people direction to risk-proof. It used to be an efficiency goal, not a reactive goal.”

This effort is facing two challenges at the moment: a need to shift the mindset to address issues such as labor shortages, and the need to balance a new, more modern workforce.

“There is a mind shift, and what you are seeing now is we have a labor shortage in the U.S. where people are retiring early because they can, houses are paid for, they could run these businesses in their sleep,” MacClaren says. “The good news is [the new employees] embrace the technology, the bad news is they don’t have the experience.”

And that is ultimately where the C-suite leadership needs to kick in. Leaders can embrace the data-rich environment supply chain now resides and leverage the new generation of workers to develop the risk-proofing everyone is looking to build.

“That’s a top-down decision,” MacClaren points out. “And what needs to be communicated is that we are more concerned about our ability to react. If you are in sourcing, you need to have multiple suppliers … [but] it’s a top-down decision where you build your network and are not single-sourcing.”

Given the state of the global supply chain today, it is impossible to prevent all the fires, but with the right fire-fighting equipment on hand, and the right mindset from leadership, supply chain managers can obtain value from their fire-prevention efforts.

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