Is Your Supply Chain Strategy Setting You Up for Failure?
Why "Disruption Shapers" Are Outperforming Traditional Risk Management Approaches
Supply chain disruptions have become the norm. All organizations tend to believe that the best response to such events is improving their visibility, resilience, and agility. This traditional approach is challenged by new research findings which show that these measures alone might not be sufficient anymore. The main question is this: Does your supply chain operate through basic reaction to disruption or does it actively define it?
A recent Gartner study published recently provides new information about supply chain strategies by dividing companies into two groups: "Disruption Responders" and "Disruption Shapers" who either react after a risk event or reduce their disruption vulnerability beforehand.
Traditional Methods No Longer Function Effectively
Supply chains traditionally have relied on three main components which include visibility, resilience, and agility. The combination of visibility allows you to detect issues before they happen and resilience provides response alternatives and agility enables fast action at the time of disruption.
The current frequent nature of disruptions including trade wars and pandemics and natural disasters surpasses the capabilities of established strategies. Organizations constantly work to recover from disruptions only to reach full readiness just in time for the following disruption wave. The result? Exhausted teams, escalating costs, and weakened competitive positions.
The Game Changers Among Disruption Shapers
The "Disruption Shapers" operate with a completely different mindset. These organizations focus on both responding to disruptions and actively decreasing their occurrence rates. The companies which implement this approach experience fewer than seven major disruptions annually compared to conventional responders.
How do they do it? The supply chain surface area decreases when organizations reduce their supplier numbers and streamline their processes and logistics networks. A company that minimizes its exposure to potential disruptions becomes smaller in size.
A company needs these steps to become a Disruption Shaper
The two essential strategies that define "Disruption Shapers" include:
1. Supply Chain Strategy must embed risk awareness as an equally important factor to cost and speed. Strategic planning from Disruption Shapers includes disruption costs and they innovate while avoiding unnecessary vulnerability expansion.
2. Shapers simplify their supply chain networks by implementing strategic redesigns. A company needs to reduce unnecessary movement while consolidating processes and controlling its supplier and manufacturing site footprint to protect against catastrophic single-event exposure while maintaining operational redundancy.
Organizations that take control of disruption exposure through strategic planning obtain multiple competitive benefits.
Companies which strategically manage their disruption exposure create powerful competitive advantages in addition to reducing their risks. The combination of cost reduction from disruptions and improved service reliability along with market share capture from competitors' failures leads to successful business outcomes.
Organizations must take an active role in managing disruptions because it creates better outcomes than waiting for problems to happen. The organizations which transition from disruption response to disruption shaping will achieve better long-term success.
Your organization currently implements a disruption shaping approach or it responds to disruptions as they occur. Please add your comments and insights to this post.
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