“Black swans.” Those once-in-a-lifetime events that take the world by surprise. COVID-19 and the resulting economic impacts is this generation’s black swan. And its implications aren’t just short-term. The good news is that they can be mitigated by applying a zero-based lens across the supply chain.

Zero-based Supply Chain (ZBSC) builds the agility needed to make cost containment and investment decisions, identify opportunities for immediate relief and risk balancing, and execute with certainty. A deep analytics backbone is what makes it possible by creating visibility, agility and resiliency.

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Visibility into the darkness

Let’s start with shining a bright light into what’s happening in supply chains, including manufacturing sites and across sourcing, distribution, and transportation. To become more agile, companies will need to capture financial and operational data at an actionable level to understand performance, make surgical cost decisions, and pivot quickly to new inputs.

They should connect systems to create full visibility across the supply chain to know where risks are developing and to take action. Some companies have established this “control tower” capability. It’s one that will endure after the pandemic subsides. And they need to build an expandable analytics platform, applying a practical mindset to action versus perfection, that allows for monitoring, scenario planning, and predictive analytics.

Talent and agility

Now is the time to rethink talent across the value chain and balance cost and safety with flexibility. The question to ask is, “Do I have what I need when I need it”? Here are five tangible actions for achieving flexibility with talent while balancing the three C’s – cost, capability and capacity:

  • Identify what work is critical across the value chain to operate in the future. The new normal will require a high degree of variability and flexibility in the talent pool.
  • Explore talent elasticity and liquid workforce pools to meet specialized needs – for example data scientists to assess new demand patterns.
  • Understand going forward what work will require physical proximity or presence to operate including work with ecosystem partners.
  • Build an ecosystem of partners to provide flexibility and balance a variability curve which will look more like the “W” curve, one that has cycles of disruption and recovery.
  • Invest in technology and digital tools to amplify human and machine intervention.

Strengthen resiliency

To prepare for another black swan event, it’s important to explore what was learned in this one:

  • Start by re-examining how existing assets and capabilities can be used, and how upcoming investments contribute to recovery while building resiliency.
  • Understand which elements of supply chain operations met the acute change in demand or were able to be re-purposed for alternative use.
  • Learn from what worked to build capabilities, including digital tools, and build resiliency to prepare for future disruptions.
  • Take stock of automation opportunities or those on the investment radar.
  • Balance short-term value with increasing long-term reliability needs.
  • Establish a robust control and monitoring capability – one that balances reliable output for customers, provides operational health and safety controls across the supply chain and value for shareholders.

Black swan, silver lining

Not a single industry, geography, or channel has been spared from supply chain disruption. But if there is a silver lining to the black swan event of COVID-19, it’s that companies that harnessed ZBSC have gained a resilience and agility that will help them navigate in the future.

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Patricia Riedl​

Managing Director – Strategy & Consulting, Supply Chain & Operations

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