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Supply Chain Vulnerability, Visibility; Building a Competitive Advantage

It is a gross understatement to say that this pandemic event has not been easy for anyone. It has been a significant disruptor of our work and personal lives, a shock to the system. How fast life can change, one day– regular routines –then the next day we are experiencing a global pandemic, an economic meltdown, borders being closed, #socialdistancing and working from our homes, if we were fortunate enough to continue working. Together, we have rallied and prioritized safety and shown the spirit of our communities. Organizations have been stepping up in the short term to convert production to essential needs goods such as ventilators, sanitizers, masks and gowns, to mention a few.

As our thoughts turn to how to exit this unprecedented event, the big question is, what now? How will the new normal be defined? There will be few industries that will avoid being restructured, reimagined, reinvented, retooled, or removed in the worst case. Workers have been and may continue to do tasks that might have never been contemplated, learning new skills, adjusting expectations and general work habits.

Competitive Advantage Through Speed to Recovery

During these times, leadership is genuinely tested; some leaders will thrive and rise to the occasion while others may fall short. While we are in difficult times, in every event, there is an opportunity to emerge stronger, to build off the lessons learned and gain a new competitive advantage in the marketplace. As companies begin to review the disruptions to their end to end operations, speed to recovery will be a competitive advantage.

A key function of a company’s operations that will be a vital part of competitive advantage is the supply chain. The supply chain enables trillions of dollars worth of goods movement globally and can be correlated to the success of companies.

Supply Chains in the Pandemic

Supply chains cover a broad scope of activities, which includes sourcing, procurement, inventory, transportation, distribution, operations, sustainability and replenishment. Some definitions of supply chain now identify it as a critical component of a company value chain, the backbone of companies and, more importantly, the global economy. When there is a shock to this global chain, such as COVID-19, it can cause significant disruption to company operations. Supply Chain Canada’s open survey recently reported that 70% of respondents had seen disruptions to their supply chain by COVID-19. Through the global COVID-19 pandemic, did your supply chain experience significant disruption? Were you shocked?

Over the years, with a focus on cost sustainability, inventory optimization and overall cost reduction (cost extraction) strategies, the pandemic is highlighting vulnerabilities, gaps and a lack of end to end visibility in many supply chains. What weaknesses and vulnerabilities did you discover? Did you have the visibility to your end to end supply chain?

Resilience, Agility & Adaptability in Supply Chain Management

In surveying recent articles on supply chain and COVID-19, a common keyword is resilience, the ability to recover from challenges. Resilience will need to be part of planning to reduce future disruptions and shock to supply chains as we head into a new normal, whatever that may be. Resilient supply chains can be characterized by preparation and planning, agility (willingness to learn and apply that learning) and adaptability (embracing change). Resilience can be achieved through a well informed and integrated approach to the overall management of a supply chain.

Resilience, agility and adaptability will be elements of building an overarching competitive advantage in supply chains as companies enter a post-pandemic world. The supply chain is not the only function in a company that would have experienced significant disruption and shock.

Moving from Supply Chain to Value Chain for A Competitive Advantage

If you are moving from a supply chain to a value chain view, a supply chain becomes one operation within a value chain, which would now include other functions such as sales, marketing, human resources, finance and other infrastructure support areas. This would be in direct contrast to a more siloed company approach.

The idea of a value chain was introduced by Michael Porter, Harvard Business School, in his book Competitive Advantage: Creating and Sustaining Superior Performance (Free Press, 1998).

Through analysis, you learn what works, why it works, what needs to change and how the pieces link to the whole and finally apply what is learned, creating new opportunities. This could include new processes, new technologies or new inputs. A value chain view is not without its limitations, such as required time investment and a need to resource expertise.

The overall approach is worthy of consideration for many companies as a robust thought process, if not in practice. The end goal of a value chain view is a competitive advantage, value creation and increased profit. What might this mean for a company?

Pandemic-Related Value Chain Challenges

With the uncertainty we are still facing, the global impacts on value chains will make the complex even more challenging. As we look to the future, there will continue to be volatility in the market that will influence decision making, resource dynamics and leadership skills. We might expect these types of disruptions to be more frequent in our globally connected world going forward. What you learn today and lead with tomorrow will minimize future shocks to your operations. This new environment will challenge us to be iterative and fast learners, applying what we know along with what we have learned.

Leadership Considerations in Supply Chain Management

The global supply chain is at a unique moment in history, and how companies address the vulnerabilities and gaps will reflect how the embedded competitive advantage within will be leveraged as part of a company value chain. While the supply chain is not the entire story through these disruptive times, how well a supply chain is managed will separate leading companies from laggards.

This raises several questions to reflect on as you and your company prepare to exit this event:

• How has your leadership style changed; does it continue to evolve?

• Did you, do you, have visibility into your supply chain?

• What do you need to do to transition to a value chain view of your company?

• What crucial decision knowledge have you learned and or gained from your experience?

• How or will these learnings be carried forward as you begin to exit current events?

• What is your plan to return to a new normal, do you have to reinvent or reimagine your operations?

• Do you have the internal capabilities and resources to address your value chain, vulnerabilities, gaps and opportunities?

About the author: Michael Quartermain, CAPM, C.Mgr., CSCMP, QMed

Michael Quartermain combines over 35 years of practical business experience with academic learning, offering a unique blend of management insights and practice. A supporter of great people delivering sustainable results by creating strong cross-functional collaboration and respecting diversity in a holistic, data-driven world view that sets clear strategic vision, drives for outcomes, and adapts to and embraces complexity. Michael has completed a Bachelor of Commerce degree (York University), Master of Laws, specializing in ADR (Osgoode Hall Law School), and a Master of Peace & Conflict Studies (University of Waterloo). Also, Michael holds certifications as a Certified Associate Project Manager (CAPM), Chartered Manager (CMgr), Certified Supply Chain Management Professional (CSCMP) and Qualified Mediator (QMed.).

Connect: https://www.linkedin.com/in/michael-quartermain/

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