A Roadmap for Designing an Enterprise that Thrives During Supply Chain Disruptions 

Congratulations! You’ve made it to the final installment of our series on building a supply chain that can thrive, not merely survive, during crises and curve balls. That demonstrates a certain amount of resilience on your part! We know there’s a fierce, never-ending battle for attention out there, so thank you for giving Logility some of yours. 

In the first three posts I covered steps 1 through 9:  

  1. Assessment 
  1. Justification 
  1. Vision 
  1. Explore 
  1. Collaborate 
  1. Elevate 
  1. Business Continuity 
  1. Elevate IBP 
  1. Change Management 

Now let’s examine the final three steps.  
 

  1. Alignment. Alignment has been called a “high degree of difficulty move” under the umbrella of change management. Why? Because this journey will require a new shared vocabulary, updated process definitions, new clarity around roles and ongoing synchronization of metrics and compensation. And you need to be prepared for some to say I didn’t sign up for this.  
     
    An aligned, mature organization encourages team members to think like a CEO every day. Instead of sub-optimizing (AKA optimizing locally), you’ll be expected to evaluate potential actions in light of strategic goals like improved customer service, margin growth and time-to-market. (Independent study opportunity for those interested in avoiding the sub-optimization trap: How is Elon Musk able to launch the Falcon 9 at 20% of the cost of the Space Shuttle?)  
     
  1. Culture. Leadership sets the tone, as always. There are many ways to convey an “embrace change” message. Pick one and stick to it. View disruptions as growth opportunities. Run away from the status quo. Change is a tonic. But understand that if you don’t get alignment right, culture will stagnate or even deteriorate. 
     
  1. Celebrate. If you get the first 11 right, I promise you will have plenty to celebrate. Research shows that advanced use of IBP (see step 6) will put you in the upper echelon of your peers when grouped by key supply chain performance measures. Take the time in small and large groups, inside and outside the company, to reflect on success. This practice is a powerful momentum builder.  

When you’re done, you’ll have more than a Center of Excellence, which implies a preference for or superiority of a single physical location. In contrast, you’ll have created a Nexus of Excellence. A dynamic yet stateless collection of people, process and technology on a global scale.  

Guard against complacency by constantly checking your achievements against this list: 

  • Platform has transformed us from data rich to insight rich. 
  • Teams use guided workflows with contextual drill downs. 
  • Accountability is clear and includes actionable outcomes. 
  • Planning and execution are integrated to the point where they feel like a single function. 
  • The organization is at once empowered and hungry. Achievement has unleashed a sense of how much more can be done. 

That completes our series on the 12 steps necessary for building an agile, resilient enterprise that consistently leverages people, process and technology to translate actionable insights into marketplace success regardless of circumstances.  

A Roadmap for Designing an Enterprise that Thrives During Supply Chain Disruptions. Part 1 of a 4-Part Series

The human race has long appreciated that disruptions are part of life, they come in waves, and the best laid plans don’t always result in the outcomes we work to achieve. The idiom that describes falling out of the frying pan into the fire goes back at least as far as the 1500’s. And 2,000 years ago, a Greek fable warned of being like the hare that, while being chased by a dog, decided to escape by jumping into the sea. Where it was then eaten by a dogfish.

 

Are these figures of speech and stories examples of gallows humor spun up by early supply chain professionals? We’ll never know, but it’s plausible!

The source of these musings shouldn’t be a mystery. We can all agree that 2020 has been challenging for everyone, to say the least. Remember when “all” we worried about were trade wars, tariffs and headless robot kittens on display at CES? Apparently, that was the fire. Then came COVID-19, the frying pan. If there were a Richter scale for global supply chain upheavals, COVID-19 would have to be a magnitude 8+.

Companies around the world felt turmoil on both the supply and demand sides of the business.


Throughout 2020 — as we listened to our customers and worked with them to use technology to optimize supply chain performance in the face of serious headwinds — a few themes began to coalesce and indeed demand our attention:

Given that one disruption gives way to another, what is the correct business goal? Can we help customers thrive versus simply survive? Can we at minimum present a series of options inside a planning horizon that gives planners time to evaluate trade-offs and act should they choose to? Is it better to have the opportunity to be wrong than to be completely paralyzed?

Part of Logility’s mission is helping customers during a crisis. Our customers’ supply chains are being stress-tested right now. How is our technology helping them?

What do CEOs think they are getting when they partner with us for technology and services? We think they want, and are right to want, a resilient enterprise.

Winston Churchill once said “Never waste a good crisis.” In the context of business performance, what does that mean? Strength through trials? Sounds like resiliency.

Finally, like you, we’ve seen and admired how some companies have “used” the pandemic to build new revenue streams and change operating models to reflect shifting market forces. Here are two examples:

The pandemic accelerated “ghost kitchen” plans at Famous Dave’s. Famous Dave’s, which currently has 125 locations, is also planning to add drive-thrus at both its existing locations and its planned locations. Diversifying its footprint will help the chain better recover from the COVID-19 pandemic, which led to same-store sales declines of nearly 23% at company-owned locations during Q2 2020.

Chipotle recently announced its first-ever digital-only restaurant called the Chipotle Digital Kitchen, designed for pick-up and delivery only. The new prototype will allow Chipotle to enter more urban areas that wouldn’t support a full-size restaurant and allows for flexibility with future locations.

To us, part of what’s impressive about these moves is both firms’ ability to see and seize opportunity. Of course this speaks to strong leadership, but it takes a strong supply chain analytics infrastructure to pivot like this, and it takes trust.

In contrast, and unfortunately, some of the stories we hear don’t end well. A pre-COVID study of manufacturers, conducted by Supply Chain Insights, found that after seven years only 38% were satisfied with the progress they had made implementing advanced S&OP. You can assume that once COVID-19 hit that percentage dropped.

As supply chain professionals, we have real-world knowledge of how to help companies improve the consistency of supply, react to changing consumer behavior and expectations, and of course put our customers on a path to lasting success.

We felt an obligation to share, so in March 2020 we created a task force charged with codifying an operational model and program management methodology that would take CEO-driven enterprise-wide objectives and create a persistent, systematic roadmap. We have received overwhelmingly positive feedback from this process and now want to share it with you. It’s 12 steps, and here we touch on the first three:

Assessment. Be brutally honest and ask Does the business have a problem? If so, is it a priority to fix? How does it compare to other strategic priorities? If you tackle this problem, what’s the opportunity cost? You can frame this question in many ways, including Did we miss opportunity? Did we take on too much risk?

Justification. Assume the assessment yields a definitive Yes, we have a problem, and will continue to. In order to make your case, you’ll need to quantify what it’s worth to fix the problem. You could frame this exercise as: if, in 18-24 months, we were better able to do X and Y, what would be the return on investment?

This step might be at times awkward, frustrating, and exhilarating. But know this: if the C-Suite is ever going to understand supply chain — or at least try to — it’s now.

Vision. How will the organization accomplish the journey? Can you leverage the existing technology stack, or will you need something new, modern, something that pulls in suppliers? This is not a 5-year Pollyanna statement. Focus on ruthless pursuit of measurable improvements with unambiguous results in 2 years.

There you have the first three steps in Logility’s 12-step process for building a resilient enterprise. Watch this space for steps 4 through 12. In the meantime, send us questions and comments. And for homework, jot down three ways your company could benefit from a platform that moves you from data rich to insight rich. In other words, what if the hare had had other options?

 

 

 

The classic definition of clockspeed is the rate at which a processor can complete a processing cycle, typically measured in megahertz or gigahertz. More recently the term has been co-opted as a method for categorizing industries and companies. For companies, clockspeed can be used to guide dynamic business strategy. The clockspeed framework recommends that you master the ability to quickly and continually design, assemble, fortify and sustain chains of “competencies” that deliver value to your customers.

This belief is not a knee-jerk reaction to any structural shortcomings or systemic complacency exposed by the COVID-19 pandemic. After all, markets, technologies, and competitors move more quickly than five years ago and at light speed relative to 25 years ago. Before COVID, many observers including Logility noted the need for organizational robustness and agility in the face of economic turbulence. There are always disruptions — some bigger than others.

We agree that the overall health of your supply chains is where you need to concentrate in order to boost clockspeed. Let’s consider a couple of important ramifications of this. First, note that the four-walled corporation is no longer the appropriate unit of analysis, if it ever was. Attention must now be laser-focused on the extended organization: you, your supply network, your distribution network, alliance network, and customers.

Second, you must break free from the idea that the supply chain is a given, and your job is to just manage it. Yes, the stewardship and use of a network of organizations and assets to provide value to a market remains relevant. But don’t skip a step. Thorough consideration of supply chain design paves the way for success in the activities undertaken in supply chain management.

You should embrace this way of thinking. Your competitors will if they haven’t already. In many sectors of the economy, new players and new business models are disrupting tired ways of thinking and operating. Even if the business models of “digital disruptors” don’t immediately kill off incumbents, they set a new narrative and reset market expectations.

While each major industry has developed a legacy clockspeed driven by its capital intensity, R&D costs, brand spend and competitive landscape, we believe the next decade will produce in aggregate as much change as the previous century did. In less than five years, cognitive computing has advanced from science fiction to a commercialized means of problem-solving. In automotive, health care and in the high-tech sector, clockspeeds are accelerating on top of an already blistering pace of innovation.

We’ve discovered across thousands of implementations that what distinguishes the top-performing customers from the ordinary is the ability to build supply chains that better anticipate opportunities for growth and margin improvement and are resilient enough to handle the inevitable disruptions. Superior decision-making and forecasting abilities are critical. This is how you will thrive in the sectors where your flag is firmly planted while responding to new, unmet market needs for which venture-like experiments can be launched and new lines of businesses scaled.

So as you look ahead, know this: the next decade will undoubtedly present your company with expectations different from anything you’ve experienced before…become more agile and resilient, pivot with precision, seize opportunities to grow.

The good news for Logility customers is that your relationship with us means you’ve already invested in faster clockspeed!

2020 may end up looking like a shoulder shrug in the global industry annals, but don’t spend much time thinking about that. Instead, ask how bold your company is willing to be. Many companies are evolving and thriving by increasing their clockspeed. You should too.