During my work consulting companies on supply chain management, I frequently ask myself this question: “Are business executives more satisfied preventing supply chain problems, or are they actually more content just solving ad hoc issues when they arrive?”. In my view, the latter is often the case: instead of investing in better supply chain planning, tools, competences, processes or resources, companies are likely to get stuck in a firefighting mode, reacting to problems instead of proactively preventing them. In this blog, I’ll discuss which dangers lie in maintaining this reactive way of working, and which benefits supply chain planning and forecasting could bring your business.”
Great supply chain planning tools and resources make the day-to-day supply chain execution smooth, but also very boring. When you compare that to the exciting feeling of a whole string of last-minute phone calls and meetings to get a customer order out by the end of the day, you get an idea of why the second situation gives you more stress, but also more excitement. When you’ve lived through a lot of these days, you have the feeling you brought a lot of value to the whole supply chain process. And even though the end-result is the same – a happy customer – all this effort could have been avoided in the first place.
What I’m getting at is that this kind of operational firefighting can look good on the surface, but it’s a tell-tale sign that a company lacks the supply chain planning tools and expertise to prepare themselves for unexpected events. Putting out fires instead of preventing them, is never cost-efficient and will have a major impact on costs or stock levels. But as people in the field like feeling the operational heartbeat of their company as they hurriedly work to get every order out each day, I’ll give you some options on how to move on from this way of working.
Kicking off from the firefighting habit isn’t obvious. SMEs and multinationals alike struggle with the fact that their companies can’t grow unless they invest in supply chain planning and forecasting. Take the Covid pandemic for instance, during this time of crisis supply chain personnel went through the wall (or several walls) to try and fix supply shortages, transportation issues or sudden increases or decreases in demand. After all this, you might think CEOs or CFOs would have learned their lesson and started investing more in support of their supply chain colleagues.
Alas. What I’ve seen, as companies bounced back from the Covid crisis, was the same feeling of hesitance and inactivity we saw up until the beginning of 2020. No Supply Chain Manager stepping up to demand change, nor anyone in the boardroom seeing the danger if this kind of crisis would happen again. At this time, keeping your supply chain planning cooped up in spreadsheets is simply irresponsible. Forgive my blunt language, but this outdated way of working has already proven to be lacking in multiple ways and has a clearly negative effect on internal supply chain processes, as well as on the services companies can give to their customers.
Risk management can’t be done with your head in the sand, I usually say, and this phrase was also the start of a recent conversation I had with the CEO of one of my customers, a premium bike manufacturer. He acknowledged that you can’t be successful in the future if you don’t invest time and money into your supply chain today. Unfortunately, a lot of companies lack just that: operational band width or financial space to work on structural supply chain change.
However bleak this situation may seem, according to me, it’s no reason not to do something about the current way of handling supply chains. Now is the time to start focussing on long-term forecasting to prepare companies for political, demographical or economical changes in the near, or further, future. As I mentioned, it’s up to the Supply Chain Manager to address this issue to the board and stress the fact that the moment is here to rethink the current way of working.
This conversation is of course not easy to start, or to finish with a satisfactory result. That’s why we at Solventure can help you prepare for this important talk by offering you our specialized forecasting expertise. We can give you a direct view how to address your current supply chain issues, and draft a roadmap to put agile and resilient processes in place on the long-term. With these arguments under your belt, you’ll be better equipped to convince your CEO or CFO to prioritize supply chain management and protect your company for any future supply chain fires.