Sue Williams, Managing Director at specialist business improvement firm, Hexagon Consultants, shares insights on the current challenges within the supply chain sector, discusses whether stability will return, and advises organisations on how they identify potential disruptions before they become a real-world problem.
Established in 2015 by Peter Ahye and Sue Williams, Hexagon Consultants is a specialist performance improvement firm, which provides business management, strategy and optimised growth solutions.
It seems as though disruption is the norm rather than the exception in the supply chain sector right now. Is this the new status quo for the foreseeable future? Do you see stability returning at some point and, if so, when and how?
Supply chains are a fundamental part of a business. If organisations don’t monitor and assess these functions regularly, organisations run the risk of seeing their performance significantly impacted. Not only that, but a supply chain problem can have a knock-on effect on other areas of the business.
Events of the last few years have demonstrated there can be no expectation of stability within a supply chain. While we’re hopeful that a more stable supply chain environment will return in the future, business leaders need to focus on achieving transparency across the supply chain to identify potential risks (and opportunities), which will enable plans to be prepared for the most likely outcomes.
What are the biggest supply chain pain points you’re seeing organisations struggle with right now?
Currently, the most common supply chain pain points businesses are encountering include a lack of visibility, demand volatility, and problems with technology adoption and integration.
In the current economic climate, it’s crucial for businesses to establish a holistic understanding of their supply chain. This knowledge enables leaders to conduct thorough risk assessments in relation to all elements of their supply chain function, allowing them to be prepared with strategies to mitigate the most probable scenarios before they become major issues.
At the same time, unpredictable shifts in consumer demand, often driven by market trends or global events, make it difficult for companies to forecast accurately and balance inventory levels. Lastly, identifying the right technologies (like AI, IoT, blockchain, etc.) and integrating them into the supply chain operations can be challenging due to legacy systems, high investment costs, lack of expertise or just poor data.
How are you seeing the more successful organisations solve those pain points?
Supply chain mapping is crucial, ideally collaborating with suppliers to get as far down the supply chain as possible. This will allow for complete clarity of the function of a supply chain, allowing companies to identify risks and opportunities at every touchpoint.
To combat demand volatility, as a minimum, organisations need to keep a close eye on market demand patterns and changes in behaviour using segmentation and analytics. Investing in advanced demand forecasting tools using AI and machine learning will be hugely beneficial here. In addition, using scenario modelling to understand the consequences of different demand patterns and their potential impact will help in establishing contingency plans that can be implemented should a problem arise.
When it comes to technology adoption and integration, start by selecting the right tool for the job. Start small and build confidence and capability. It’s also important to engage internal teams in the process of adopting new technology, as this will allow them to become completely immersed in new systems, support their learnings, reduce resistance and improve usability.
What pitfalls are the less successful organisations falling into when they try to tackle disruption?
Many organisations have not completed comprehensive supply chain mapping and risk assessment exercises, which identify potential pitfalls, meaning they haven’t developed alternative options ready to help mitigate possible problems.
Not understanding the implications that supply chain disruptions can have on the wider organisation also means that business leaders are led by knee-jerk reactions when issues present themselves. The unintended consequences of these crisis-driven decisions are then often felt across other areas of a business, impacting service delivery and performance.
In addition, many organisations work in isolation when reacting to a problem, missing the opportunity to work in collaboration with their suppliers, who will also be responding to the disruption, resulting in a sub-optimal solution.
Exactly what makes a supply chain more flexible and how can you make an inflexible one more able to respond to changing circumstances?
A flexible supply chain can adapt to changing circumstances whilst minimising the impact on the service delivery and controlling costs.
Having flexibility within a supply chain includes being able to scale operations, reallocate resources, react to changes and disruptions, and take advantage of opportunities. Identifying constraints, bottlenecks and risks is imperative, as is evaluating your supplier base, production and inventory management for rigidity.
Flexibility improvement opportunities within a supply chain could include;
- Diversification of the supply base
- Increasing the agility in manufacturing
- Building more flexibility into the logistics operations
- Using segmentation to minimise inventory risk whilst keeping control of inventory cost.
In your opinion, what do the next 12-18 months have in store for supply chain teams?
One of the problems organisations are going to continue to experience is the pressure to improve their sustainability credentials, particularly with the UK’s wider efforts to achieve Net Zero successfully by 2050.
There are various strategies that organisations can implement to mitigate such challenges. For example, creating a circular economy by improving lifecycle management to reduce pollution, waste and improve product life and end of life management.
Flexibility across supply chains is going to become increasingly important because it allows businesses to quickly adapt to changes in demand, disruptions and market conditions. This flexibility can help businesses respond to change, reduce costs, mitigate risks, optimise inventory, enhance collaboration and gain a competitive advantage.
We can expect to see AI and digital twins become an instrumental part of supply chains, as these technologies alleviate human error and connect decision making.
With supply chain challenges being ever present and ever changing, it’s imperative for businesses to maintain a holistic overview of their supply chain. Going forward, they should position themselves to pivot and adapt according to market conditions and customer demand.
