Last year, many manufacturers strategically warmed up to the idea of supply chain resiliency and what it could mean within their customer and supplier networks. Tsunamis, earthquakes, hurricanes, and floods have shown how disasters can impact supply chains. Companies began looking seriously at what it takes to withstand, bounce back, and recover from a major setback caused by man or Mother Nature.
This year, along with other key areas, the focus will move to building operational resiliency feasibly and turning resiliency into reliability while making the supply chain “accurately speedy,” as IDC analysts said in a recent webinar outlining key supply chain predictions for 2014 (registration required).
IDC's predictions cover everything from investment in supply chain technology to managing growth in emerging markets to increasing the value of mobile and cloud-based data. But the prediction that may resonate most with the high-tech sector may be the one that tops the IDC list: Operational resiliency will be the focus of supply chain strategies in 2014 and beyond.
“Over the last two or three years, we have seen this emerging desire to be more responsive [along with] an imperative to manage complexity better and recognize the need for speed,” Simon Ellis, practice director for IDC Manufacturing Insights, said during the webinar.
Last year, we talked a lot about supply chain resiliency and introduced the concept of supply chain resiliency. As we look at the year ahead, we see a continuation of that focus on supply chain resiliency. But as we have talked to business over the last six months, it's very much about the notion of operational resiliency and how do make my operations and supply chain more pragmatically resilient, as opposed to some of the conceptual things folks have done. This will be a key theme for supply chain strategies for 2014 and beyond.
The root cause for this targeted focus is something that has driven significant supply changes for several years: complexity. Supply chain complexity is always increasing. As demand becomes more volatile, business accelerates, and cost management remains a critical priority, figuring how to be resilient — and responsive in a speedy and accurate way — rises higher in strategic planning circles.
The reality is that the pressure on supply chains to deliver in this demanding marketplace comes from internal and external sources. What we saw last year is that manufacturers do aspire to resiliency, but they do not always know where to begin. It became clear to us that the road to resiliency is a multi-year journey, and it will inform supply chain strategies for years to come. Last year, strategically many manufacturers we talked to began the process of determining the what. Our expectation for 2014 is that manufacturers will start thinking about the how and the when.
The focus on operational resiliency will also likely bring attention to another supply chain shift, Ellis said. “It's not good enough just to be fast. Companies have to be effectively fast or accurately fast.” Additionally, the transition from “what is supply chain resiliency” to “how do we do it” could very well involve:
- Examining the granularity extremes, both upstream and downstream, and using all the data available to businesses to help them be more responsive
- Further developing a “demand orientation” through demand sensing and capture
- Finding clarity around a corporate key purpose and focus via product and service segmentation
- More deeply integrating planning and execution functions as speed necessitates being more accurately fast and effective
- Improving supply and operational visibility, and
- Leveraging data to broaden and extend supply chain intelligence
What does operational resiliency mean to your organization? How does it rank among your supply chain priorities this year? What steps is your company taking to reach this level of responsiveness?