Avoiding weak links in your supply chain – From our South-east Asia Director

By William Thomas, South-east Asia Director

On 28 April, ECN South-east Asia held an event to address the challenges to supply chains, considering how we can improve agility and resilience in the face of obstacles and continuous volatility. The change factors affecting supply chains today existed long before the pandemic hit, and will be with us into the future.

It’s worth noting that the lessons we learn from supply chain management can be applied to other parts of your business. When you talk about things like planning, agility, resilience, and innovation, those apply to all functions in your organization. I hope the insights from our panelists will help you no matter what your leadership role may be.

We started the session by examining some of the things – both challenges and opportunities – that affect how we think about supply chains. While obstacles such as trade wars, global pandemics, and ships blocking a transit point have gotten attention in the last few years, other factors – ranging from piracy to changing business models – can also upend your supply chain. At the same time, new technologies emerge that can make your planning and operations go more smoothly, but even then, change can be difficult.

Anticipating the impact of change factors on your supply chain has become more complicated as business models have evolved. Even the changes themselves are not as clear as they might be. For example, businesses often find themselves shifting, not from one channel to another, but instead from one channel to many. The “omnichannel” nature of supply chains creates a level of segmentation that demands a more nimble planning process and greater openness to innovation.

During our discussion we explored the use of machine learning to predict behaviors, not just crunch numbers. One particularly interesting example came up: being able to identify when your competitors are about to have a problem, which can lead to greater demand for your products. Analytical efforts often focus on customers, but by looking more closely at competitors’ and suppliers’ behaviors, you may be in a better position to predict changing supply and demand.

A company’s supply chain function can be at its most predictive when management of the supply chain becomes truly integrated within the firm. By having other functions, such as sales or marketing, contribute to overseeing the supply chain, you are in a better position to monitor for disruptions. Having people who are closer to the market allows you greater insight into what your customers are thinking, and what your competitors are doing. Increasing the accountability of other functions also encourages greater innovation, as people with more diverse perspectives have a more direct connection to the success of your supply chain.

Of course, getting others to collaborate in this sort of cross-functional planning can be difficult; it’s common for people to resist change, especially if it means taking on greater responsibility. To get others on board with this sort of collaboration, it’s useful to be very transparent about the value they bring. Taking the time to explain to people why you want them to do something, rather than just telling them to do it, can lead to much more enthusiastic cooperation, and a greater willingness on their part to contribute their ideas.

For this kind of collaboration to work, you may need to upskill your employees. Good data collection is essential, but it only has business value when that data becomes information. Knowing what questions to ask, what data to collect, and how that data relates to business decisions, is the truly useful process. One implication of that is the need for a workforce with stronger data analysis skills, having people who can ask the good questions and translate the answers into business effects. Rather than trying to hire a new generation of data scientists, companies should perhaps look instead at building the data skills of the workforce they have.

As those collaborative teams are doing their analysis and planning, they cannot just use historical data. Going back to the idea of being predictive, the degree of volatility today demands current data and real-time monitoring of supply chains. You also need to consider what really matters to you within the data you collect. One insight that emerged from the discussion was the usefulness of measuring business value in the supply chain rather than volume in the supply chain, as a way to help you focus your efforts where they can ultimately do the most good.

This brought us to a key point about business continuity planning. Such planning is often focused on singular events, but it truly should evolve into broader business risk management. It’s important to make the monitoring of risk an ongoing function with regular updates. An emphasis on prediction – a recurring theme throughout our discussion – allows you to anticipate problems, and subsequently have more options for responding because you have more time to respond.

During the event, our panelists brought their expertise and unique perspectives and the lessons from this particular topic have broader applications across the business. We hope to see you at our future events, such as our discussion of changes in manufacturing on May 27. Regardless of your industry, or your leadership role within your company, you’re sure to walk out with some insights you can use.