World Cup and royal baby = supply chain strain

Written by Denise Oakley, international marketing manager at GXS, an award winning, international B2B e-commerce and integration services company

Major events such as the Olympics, the World Cup or even the birth of a royal baby capture attention around the globe. These positive world events can result in a tremendous boost for local economies as well as the wider global economy. Companies begin to plan months or even years ahead to ensure that they are prepared. There is one area that businesses often forget though - their supply chain.

An inevitable side effect of increased, changing demand is the impact it has in the supply chain. Most companies do try to prepare for changing demand, but few think carefully enough about the impact of a serious disruption, particularly in the extended supply chain, in areas that are outside their control. Many companies believe that there is nothing that they can do beyond managing their end-to-end supply chain as best they can.

The reality is that most supply chains will experience disruption from time to time, sometimes for reasons that could have been anticipated, but often such disruptions are totally unexpected and a failure to plan can have serious consequences. Many supply chains and transport networks are more global than we realise, forming the backbone of a global economy, fuelling trade, consumption and economic growth. When supply chains get disrupted there can be major repercussions for individual companies as well as the global economy.

When world events capture the attention, the focus is naturally on those events themselves. But in order to adequately prepare for major events, whether something on the scale of the Olympics, or something smaller, more local but still major for an individual company, a shift is needed from reactive to proactive supply chain risk assessment and management. Even planned for events have unexpected consequences, some good, some not so good. That’s the nature of the supply chain, but with the increasingly global supply chain, unexpected events may have an impact even if a company isn’t aren’t directly involved.  

The list of such impacts becomes longer every year; some of the obvious ones include extreme weather or changing weather patterns, social unrest, changing CSR requirements, new legislation, supplier failures, and inflation plus ever changing consumer demand. When an event impacts just one part of a supply chain, there can be unforeseen, unintended consequences and the effect can be felt much more widely than anticipated.

Companies need to take control and create their own plans, thinking through all of the possible disruptions and how they would continue to run their business as a result.  With luck, they will never need to face any of these problems, but they need to be prepared regardless.  However, there are ways to make this less painful than it seems.

Firstly, this is a subject that many are now looking at - supply chain resilience was on the agenda of the World Economic Forum meeting this year and should also be on every CEO’s agenda.  As global economies start to recover from an economic downturn, they need to ensure that they have supply chain recovery plans in place

There is growing concern around cyber risk, rising insurance and trade finance costs, which is leading supply chain experts to explore new mitigation options. Recent research by Accenture indicates that more than 80 per cent of companies are now concerned about supply chain resilience. Risk management needs to be an explicit, integral part of supply chain governance. Companies should consider taking the following steps:

·         Implementing a multi-stakeholder supply chain risk assessment process

·         Introducing a more adaptable, agile supply chain strategy to improve resilience throughout their extended supply chain

·         Outsource (or have an ability to move without notice) critical elements of your B2B integration process.  Look to a provider with a global platform and capability for help here.

Supply chain directors need to turn detective and thoroughly investigate their IT infrastructures as well as their operational management.  Implementing changes here can provide significant gains in resilience via improved analytics, data and information sharing and pre-programmed responses. One suggestion here is that the corner stone of IT based resilience is usually data and information sharing.

Business continuity is usually enabled through access to real time data followed by rapid dissemination of data driven supply chain fixes, but information sharing infrastructures depend on a resilient core network and appropriate communication tools. These in turn require an IT infrastructure that is flexible, scalable, secure and re-routable if they are to minimise disruptions across supply chains. Cloud based B2B integration solutions can provide a key ‘cornerstone’ towards developing a highly resilient end to end supply chain and this is certainly an approach adopted by many Japanese multinationals in the last couple of years.

However, it’s one thing being able to deploy B2B tools to help with increased resilience, but when disruption strikes in a supply chain there is a need for a co-ordinated approach. Professional networking web sites such as LinkedIn or Xing have noted the emergence and rise of the business continuity manager. This person becomes the go-to employee during a period of disruption, and is responsible for steering a company through a period of supply chain disruption. Sometimes referred to as the ‘Masters of Disaster’, these people are responsible for making today’s supply chains operate efficiently and seamlessly.

But they will only be successful if they have the tools to reach their community and a flexible, re-routable IT platform available. The ability to proactively monitor supply chains during planned and unplanned events has become a key competitive weapon that companies are increasingly becoming aware of. In the same way that a conductor controls an orchestra, the Master of Disaster needs B2B resources to take appropriate actions before major disruption impacts the business.

This is where some of the newer hosted services can facilitate better, faster and easier B2B collaboration between a company’s employees and individuals in the different organisations with which they do business. The ability to centralise and warehouse critical information is essential, and hosted information on your customers, suppliers, logistics providers and financial institutions can ensure that businesses retain access when it’s most needed. Collaboration tools are now available that provide the necessary information to remain in control, with up-to-date partner information to reduce those supply chain risks, enabling informed decision-making, and averting business disruption. Data that’s held can also include details related to e-commerce readiness, regulatory compliance, consumer product safety, and environmental responsibility.

Sometimes companies get plenty of warning of likely supply chain disruption, as with the Olympics and the World Cup, and (some) notice for the birth of a royal baby. But in many other situations there is little or no warning, and either way disruption needs to be planned for. In order to build increased resilience across a supply chain, companies need to address both their physical and digital supply chain issues. They need to ensure that their B2B platform is scalable, flexible, secure and continuously available and deployed proactively for significant competitive advantage. The mere thought of being unprepared for major world events or just responding to disruptions as they occur will prove catastrophic, so it is time to take ownership and control.