Why Supply Chain Agility Is Critical Today | ISG

Supply chain modernization is now front and center of nearly every conversation in retail and consumer packaged goods (CPG). To drive growth and business innovation, supply chains must be agile enough to cope with disruptions. This was made abundantly clear over the course of the pandemic, as agile supply chains served enterprises by catalyzing new business opportunities in a uber responsive and scalable manner.

A rigid or slow supply chain can have the opposite effect, slowing down – or even running into the ground – a business’ ability to deliver a strong customer experience. Delays and drops in the supply chain result in value leakages that can be a recipe for competitive blind spots and slow reaction to competitive threats.

What is supply chain agility?

To ensure an agile supply chain, a company must adopt digital innovation that lays the foundation for smart systems and provides visibility, predictability and automatability from one end to the other end of the supply chain.

Modern supply chains are complex, as they deal with different suppliers, different customers and various segments with several thousand permutations and combinations. Every transaction depends on the supply chain to be flexible, responsive and fast.

None of these processes and systems is linear in fashion. Often, building a modern supply chain often requires companies to unlearn the traditional model.

Steps for building an agile supply chain

1. Improve visibility. The question is not just about where my inventory or assets are but how they are performing. You need to ensure visibility into decisions that are made globally across different nodes in the supply chain by different warehouse and factory managers.
2. Increase predictability. Get the insights you need to predict future scenarios based on data, patterns and co-relation. This may require integrating systems that can inform you about weather, seasonality and other variables that impact your company.
3. Translate insights to actions. Ensure timely actions on insights gathered to ensure optimized operations.
4. Create localized hubs. Every geography and region has a unique set of regulations. It’s imperative to enable customization within a standard enterprise framework to make sure you are embarking on the technology solutions that will work best for the specific locations.
5. Optimize globalization. Building global, repeatable processes and systems is key to standardization, but it also puts strain on timely decisions and speed to market.

One can operationalize these frameworks by focusing on culture, behaviors and changes within the organization. Instead of being overly focused on operations, shift to a more tactical mindset to help infuse the culture with innovative thinking and build an ecosystem to sustain and scale operations.

Lastly, instead of looking at supply chain initiatives as giant endeavors that are highly centralized, start by prioritizing business problems and deliver in bite-size chunks to provide shorter-term gratification with results in a few weeks, months and quarters instead of years. This will help drive cultural change and shift the organizational mindset so you can identify small but significant problems and solve them quickly to drive the digital innovation agenda.

ISG helps companies make their supply chains more agile – even in the most complex of scenarios. Contact us to find out how we can help you.