Can launching scenarios save your supply chain?
November 30, 2020
As I talked to my parents a couple of weeks ago, I felt the irony of the situation. I advise senior supply chain executives around the world on preparedness, readiness and resiliency—never more so than during COVID-19. Yet, my parents were being warned of food shortage issues in their locale. Paper towels and toilet paper are already hard to find in their area of the world.
As a supply chain executive, I hope you’re not feeling the déjà vu. Countries and cities are instituting lockdowns again.
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Unfortunately, I see many organizations experiencing the same supply chain pains they did in March, April and May. But I also see others who have moved beyond those pains. A few major differences separate the two.
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First, Having a Chief Supply Chain Officer (CSCO) who is seen by C-suite peers as a growth player helps. Those CSCOs have historically been better funded and that appears to be holding true during COVID-19. By “better” I don’t just mean with more money. I mean longer term and more strategically, managing to avoid spot-funding for emergencies that then disappears when things become closer to normal again. Usually, they’ve done this by engaging their CEOs to support their cause. More than half (53%) of CEOs of customer-centric, leading supply chains—just 10% of companies—allocate funding to accelerate supply chain transformation. That’s a vote of confidence for their Chief Supply Chain Officer.
Second, while the majority of CSCOs have accelerated the move to digital technologies, only 39% are in pilot mode. Speed always matters but at this critical time, it’s crucial.
Beyond having the Midas touch for funding and moving speedily toward digital transformation, scenario planning really is the third area where I see a select few companies making leaps and strides.
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Scenario planning reveals the right actions for supply chain resilience
Scenario planning helps companies achieve the resilience that has become so important for supply chain success during COVID-19. That’s one of the reasons Accenture and the Massachusetts Institute of Technology (MIT) jointly created a supply chain resilience stress test. It allows supply chain and operations executives to evaluate the risks presented by market interruptions, from natural disasters to country-specific shutdowns.
My colleague, Kris Timmermans, senior managing director and Accenture’s global supply chain and operations lead, explains it well: “Our stress test enables companies to run more than 40 scenarios at one time, providing unprecedented visibility into where and how their supply chains will be impacted during a major disruption.” Then they can use scenario planning to address the risks they identify.
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How a supply chain stress test works
First, we create a digital twin of the supply chain. Within that twin, we can test different scenarios. Maybe it’s the inability to get raw materials to a company in a locked-down area of the world. Or, a key vendor shuts down due to health concerns for its workers. Perhaps it’s a sudden surge in demand for a specific product. Regardless, the stress test can identify both the time it would take for a particular node in the supply chain to be fully restored after a disruption (i.e., “time to recover”) and the maximum duration a company can match supply with demand after a disruption (i.e., “time to survive”).
While the stress test will identify areas of risk for your supply chain, scenario planning helps your team plan and run the supply chain differently to address those risks. For instance, a life sciences company went live with a pilot for integrated business planning for select clinical trials in early 2020. Supply chain scenario planning-as-a-service has been used in many companies, but Accenture is helping this firm become the first pharma in the world to implement SAP’s cloud-based Integrated Business Planning for its global clinical R&D supply chain. Using clinical trial master data, the company can calculate demand with scenarios based on enrollment, dosing, and dispensation schedules. Then, they can better forecast clinical supply, doing it according to the way a study is designed. This means a reduction in clinical trial cycle time and greater speed to patients, as well as improved forecasting and inventory controls.
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During COVID-19, more than ever, it’s crucial that companies are able to be agile and real-time in their supply chain planning. Running scenarios before they happen allows for them to rapidly move to contingency plans for little to no disruption to consumer supply.
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It's not too late
No supply chain is perfect. But as I hear the worry in my parents’ voices about how they will source some basic household staples, I wish more companies had used the past six months or more to proactively plan for the second wave of COVID-19 hitting many geographies now. If your company hasn’t, it’s never too late to begin. Not only could it save your supply chain, it could save your company.
In addition to scenario planning, check out the other no-regret moves that will help your supply chain weather COVID-19. From variable cost structures to being in the cloud, there’s so much your company can do to make this time easier for your customers and your employees. I’m always available to share my ideas.
