When the COVID-19 pandemic disrupted organizations around the world, supply chain professionals faced a situation they had never experienced before. However, despite unprecedented circumstances and the personal and professional chaos that accompanied the first months of the pandemic, the supply chain profession rose to the challenge, keeping people cared for and fed.
We see many examples of companies that used their resources to supply both consumers and essential workers with what they needed the most. Bacardi and AB InBev produced hand sanitizer. Ralph Lauren and Uniqlo shifted part of their production from clothes to face masks. Ford, GM and Tesla committed to produce ventilators and other medical equipment instead of cars.
Adaptive strategic planning is an always-on activity to navigate and succeed through any turn, in any version of the future
“We truly saw the very best of our profession and companies using their supply chain skills and capabilities for good,” said Lisa Callinan, VP, Team Manager, Gartner, during the opening keynote at the virtual Gartner Supply Chain Symposium/Xpo™ 2020, Americas. “And now, as we look to the future, we reflect on what we’ve learned. And that is the importance of adapting and finding opportunity in crisis.”
Gartner research shows that companies that achieve long-term efficient growth over their industry peers during turbulent times do so because they are better at protecting large, transformative growth bets across the business cycle. They avoid reactive responses to macroeconomic conditions and take advantage of uncertainty to break away from industry competitors.
One key difference between this crisis and previous disruptions is that high degrees of uncertainty will continue to persist and new threats — as well as opportunities — will emerge more frequently. For supply chain leaders who are naturally focused on continuity and predictability, this means becoming comfortable with two new truths:
- Just surviving the current turn cannot be the goal anymore.
- There is no such thing as the “next normal.”
In accepting uncertainty as a steady state, disrupted by intermittent periods of normalcy, supply chain leaders must pivot to a more adaptive approach when it comes to strategy, investments and leadership.
Adaptive supply chain strategy
According to Gartner research, 80% of companies still base their strategic planning cycles on an annual calendar. This means that the strategy might be outdated in the case of a disruption during the year and no resources will be available to reevaluate the new situation and pivot quickly.
Adaptive strategy is a change from the previous point-in-time exercise to a continuous adaptive process. This approach recognizes that regular changes in response to a dynamic external environment are the only way to keep pace and grow stronger. The core of an adaptive strategy is the continuous monitoring and identification of trends.
“Supply chain leaders must regularly identify trends that impact their business and present opportunities to grow and gain an advantage over competitors,” said Tom Enright, VP Analyst, Gartner. “Adaptive strategic planning is an always-on activity to navigate and succeed through any turn, in any version of the future.”
Adaptive supply chain investments
In addition to strategy, investments must be adaptive. According to Gartner research, 72% of strategists say slow budget reallocation is the biggest barrier to a more adaptive plan. Supply chain leaders must work to remove this barrier and align integrated processes such as investments and budgeting with the adaptive approach.
One step toward achieving an adaptive investment approach is capability funding. Supply chain leaders allocate blocks of funds to several initiatives. This enables them to remain flexible in directing additional funds to initiatives when priorities change.
A second option is to mimic the approach that venture capital firms use when assessing whether to fund early-stage startups. Success with a prototype or trial is the basis for developing more accurate estimates on how much further funding is needed.
Adaptive supply chain leadership
The immediate aftermath of the COVID-19 crisis demanded acute skills from leaders. They had to respond to the initial chaos and make teams comfortable with remote working environments and new structures. To help their teams deal with the shock of disruption and strengthen their organizations, supply chain leaders needed to drastically rethink what constitutes effective leadership.
Develop skills as master communicators to empower change and adaptability within the supply chain organization
It takes endurance and resilience to sustain recovery over a longer period. The next phase will demand another set of skills from leaders. They will need to balance their leadership style and develop skills as master communicators to empower change and adaptability within the supply chain organization and create a team that is able to deal with any version of the future.