“The pandemic is one in a series of global risk events which have exposed supply chain vulnerabilities”
BOSTON (PRWEB) June 16, 2020
The global pandemic has exposed hidden vulnerabilities in the global supply chain and companies must now begin a long process of re-evaluating and rebalancing the supply chain to create a new model. Global supply chain and operations consulting firm Maine Pointe, in conjunction with Michigan State University, has released its new executive management and board discussion white paper, “Is today’s supply chain model dead? Have you got its replacement ready?”
The white paper addresses the enormous pressure faced by business leaders, which includes limiting short-term disruption, supporting mid-term recovery and ensuring greater agility and resilience in the future. The pandemic has become a catalyst for rethinking how companies organize their supply chains and will ultimately lead to a rebalancing of the supply chain that addresses many of the limitations of the current model.
Is the supply chain dead?
Simon Knowles, CMO of Maine Pointe and co-author of the paper, asks, “Is the supply chain dead? No, but a new model needs to be put in place that addresses weaknesses. A more resilient supply chain will be better able to withstand the next major disruption, whatever that may be.” In the paper, Knowles suggests the purely cost-driven supply chain, which emphasizes cost savings above all else, is inflexible, ill-equipped to deal with major changes in demand - which can lead to serious shortages - and not as responsive as it needs to be.
“Existing supply chain models have been very efficient at driving down costs,” added Steven Melnyk, PhD, professor of supply chain management at MSU and co-author of the paper. “The pandemic has highlighted serious risks to the supply chain and now is the time for companies to take a serious look at whether they can simply return to their previous supply chain model. In many cases, the answer is ‘no.’ 2020 will be a wash out for many firms. However if companies want to hit their 2021 numbers they need to start assessing their model and putting in place rebalancing plans by October 2020 to build a more competitive and responsive supply chain model.”
What do companies need to do now?
The paper outlines several actionable steps business leaders must take to address both the short-term fallout of the pandemic-driven shutdowns and the need for a long-term rebalancing. The steps include:
- Conducting a review to determine what went right and what was missing in the company’s response
- Re-assessing the global footprint, building in more agility, optimizing manufacturing production and rebalancing the offshore, nearshore and onshore mix
- Building in more optionality and de-risking, including a strategy to procure critical components from two or more locations to ensure continuity
- Digitizing the supply chain operation and realigning KPIs to optimize the supply chain for greater visibility, speed and agility
- Ensuring an improved end-to-end supplier process with greater transparency and uniform standards
- Realigning the organization to inspire a new culture of digital transformation and visibility
The Maine Pointe-MSU white paper addresses several ways in which the business world will shift after the pandemic. The supplier base will have to change to better balance the risk and, as a result, a purely cost-driven supply chain will have to be replaced with one that builds in greater optionality. “This will still include a global factor,” said Melnyk. “But the long-term rebalancing will limit exposure by avoiding single region or single supplier sourcing. A balance of global, regional and local sourcing will prove to be less risky and more efficient in the long run.”
“The pandemic is one in a series of global risk events which have exposed supply chain vulnerabilities,” said Knowles. “It certainly will not be the last disruptive event, and action must be taken immediately to ensure resiliency in the future.”
About Maine Pointe
Maine Pointe, a member of the SGS Group, is a global supply chain and operations consulting firm trusted by many chief executives and private equity firms to drive compelling economic returns for their companies. We achieve this by delivering accelerated, sustainable improvements in EBITDA, cash and growth across their procurement, logistics, operations and data analytics. Our hands-on implementation experts work with executives and their teams to rapidly break through functional silos and transform the plan-buy-make-move-fulfill digital supply chain to deliver the greatest value to customers and stakeholders at the lowest cost and risk to business. We call this Total Value Optimization (TVO)™.
Maine Pointe’s engagements are results-driven and deliver between 4:1-8:1 ROI. We are so confident in our work and our processes that we provide a unique 100% guarantee of engagement fees based on annualized savings. http://www.mainepointe.com
SGS is the world's leading inspection, verification, testing and certification company. SGS is recognized as the global benchmark for quality and integrity. With more than 94,000 employees, SGS operates a network of over 2,600 offices and laboratories around the world.
About Michigan State University
Michigan State University has been working to advance the common good in uncommon ways for 160 years. One of the top research universities in the world, MSU focuses its vast resources on creating solutions to some of the world's most pressing challenges, while providing life-changing opportunities to a diverse and inclusive academic community through more than 200 programs of study in 17 degree-granting colleges. https://msu.edu/