Many supply chain organizations spend a lot of their time putting out fires from supply chain disruptions. The analysts at Garter say there is a better way.
Before taking a look at that, let’s define the tern supply chain disruption.
In a recent blog post, Garter analyst Anshita Mundra defines a supply chain disruption as an unexpected event that interrupts the normal flow of goods and materials within a supply chain. These disruptions can be caused by natural disasters, pandemics, political instability, economic upheaval, cyberattacks or rapid changes in consumer demand.
And disruptions can lead to delays and increased costs and inefficiencies, impacting both businesses and consumers.
A recent Gartner survey found that 44% of respondents admitted to finding themselves in firefighting situations in response to medium- and high-impact disruptions.
No surprise there, to our mind.
What’s more, over a third of supply chain organizations spend 30% or more of their time firefighting.
“While reacting quickly to disruptions is an important skill — and a sometimes-inevitable response — planning leaders would be wise to actively focus on reducing their reliance on it,” Gartner says.
Successful disruption management, Gartner says, helps prevent employee fatigue and maintain morale, keep focus on long-term goals, promotes increased cross-functional stakeholder engagement in sales and operations planning (S&OP) and creates space to incorporate lessons that reduce the negative effects of disruption the next time around.
Gartner says companies will do better by using the following what it terms proven methods for disruption management:
Prepare for supply chain disruption with advanced scenario planning:
Based on scenario analysis, Garner says companies should pre-identify key thresholds or triggers that would indicate it’s time to switch plans.
Next, communicate potential scenarios and underlying assumptions consistently to relevant stakeholders.
Gartner also recommends companies engage and collaborate with stakeholders within and outside of supply chain to develop and analyze scenarios.
Also, companies should focus as much on building a scenario-planning culture as on enabling technology.
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Use proactive measures and policies to limit the impact of disruptions:
 Gartner notes that while scenario planning plays a key role in how organizations identify risks and opportunities, many companies struggle to translate planning conversations into action. To effectively act when disruptions hit, firms should take more proactive measures.
Gartner says that the following four questions help drive planning conversations that translate into action when disruption strikes:
• Extract insights from past performance by asking, “Did we do what we said?”
• Build a plan with a high probability of successful execution by asking, “Is our plan realistic?”
• Align the plan to business objectives by asking, “Is our plan enough?”
• Make decisions during the S&OP process by asking, “What can we do now?”
Pre-defined demand and supply policies (probabilities, options, ranges, guidelines and thresholds) based on uncertainty assessments in the midterm guide decision making and can even facilitate faster local decision making and responses to uncertainty, Gartner adds.
Use existing channels to gather and share data:
Gartner says the gathering information through established channels and systems, such as the sales and operations execution (S&OE) process, helps drive forward-looking, planned responses to changes and volatility on the near-term horizon.
Additionally, companies should ensure a strong data foundation made up of not just historical but also external data to share relevant information using established channels and systems, Gartner concludes.
Any comments on Gartner’s comments on disruptions? Let us know your thoughts at the Feedback section below.
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